by Guest Author Richard Barber
3. The Economy
Brexiteers: If we leave the EU our economy will prosper by being freed from the European shackles that currently bind us. “Leaps in the dark” have worked well for the UK in the past and will do so again if we have the courage.
The LSE’s independently funded Centre for Economic Performance has estimated that Brexit would lead to a long-term fall in the UK’s GPD of 1.3–2.6% — and if reduced trade led to a reduced productivity trend, the drop could be amplified to between 6.3–9.5%.
HM Treasury, the IMF and every investment bank in London has delivered its own analysis of what a British exit would mean for the UK economy: and almost without exception, they paint a gloomy picture.
On the other hand there is not one single reputable study that shows that leaving the EU would be favourable to the UK economy in the short, medium or long-term.
Most expect the inevitable combination of political instability and uncertainty to trigger a steep slide in sterling (Goldman Sachs forecasts a fall of up to 20 per cent). A sterling slide of this magnitude would put upward pressure on inflation, the UK would be downgraded by the rating agencies, and the confidence of foreign investors upon whom the UK relies to fund its giant trade deficit would be undermined.
The result could well be:
- higher borrowing costs for the government and private sector.
- the Bank of England could be forced to raise rates sooner than expected, even as the economy was deteriorating.
- the shock of Brexit could drive the UK economy back into recession, even this year (“a view privately shared by senior Treasury officials” — The Economist).
4. Cost
Brexiteers: We pay far more into the EU than we get out of it. Our EU levy is greater than all the £££ saved by “Austerity”. If we stop paying Brussels we can put an end to Austerity and devote the levy to funding school, hospitals and infrastructure in the UK.
It is wrong to say that “we pay ‘far more’ into the EU than we get out of it”. In 2015 we paid in £17.8bn. and received back £11.2bn (made up of the Thatcher rebate, regional & agricultural subsidies, research grants to companies, infrastructure projects and international aid from EU which includes part of the UK’s international aid commitment of 0.7% of our national income). So the UK’s net outlay is in fact £17.8 minus £(11.2) = £6.6bn. This deficit is:
- less than 1/3 of the deficit claimed by the Brexiteers
- just 0.8% of the size of our economy (incl. Govt spending) of £750bn
This is a small price to pay for access to the a Single Market of 500M people and the many other benefits of membership.
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