European trade or EU-dependent trade: a crucial distinction
Jonathan Lindsell, 31 March 2014
The pro-EU pressure group British Influence has published research updating key economic indicators of the EU’s importance. They admit that the figures used until now – 3 million jobs and £3,300 per household – are outdated. Their new numbers, commissioned from the Centre for Economics and Business Research (CEBR), suggest that 4.175 million jobs (13.3% of national workforce) were ‘associated with exports to the EU’ in 2011. ‘Total income associated with demand from EU exports was £211 billion or £3,500 per head…in 2011,’ CEBR writes.
The paper made headlines – the Financial Times reported on its main claims, while the Independent focused on the regional breakdown, which suggests that Brexit would ‘would hit the North and Midlands hardest’. This contradicts the report itself, firstly since CEBR shows a 6% decline in West Midlands EU jobs and London overexposed, and especially because of two crucial caveats that the CEBR makes clear:
‘This piece of research does not imply that the estimated jobs would be lost if the UK were to leave the EU’
‘This research does not quantify the effect of imports and an analysis of net trade; this is an analysis purely of the demand associated with exports to the EU’
The paper accepts that some workforce growth is simply natural UK economic expansion. Likewise CEBR accounts for the growth of the EU (from 16 to 27 countries [Croatia not a part by 2011]) but maintains there is employment above and beyond this, particularly in ‘professional, scientific and technical services’ and ‘business administration and support services’.
The paper contains strong economic analysis and explains trends in rising UK workforce productivity. However, from the perspective of the EU debate, it still boils down to one thing: our trade with the EU does not depend on EU membership. If Britain votes to leave, and if the exiting government ensures good access to the European market along the lines of Norway or Switzerland, these 4.2 million jobs and the associated exports would be fine – nothing would threaten them.
In this context, today’s comments from British Influence director Peter Wilding seem overstated:
“It would be absurd to claim that all (4.2m jobs) would evaporate overnight if we were to withdraw from the EU. But it would surely be an act of madness to jeopardise economic reality, based on facts, in favour of little more than a pipe dream of alternative trading relationships articulated by those who propose that we should walk away.”
Wilding ignores a host of considerations: whether Britain could get a better deal outside, the growing importance of non-EU trade, the benefits and costs of migration, the EU’s effect on foreign investment, the weight of regulation and the question of sovereignty.
Wilding’s delay tactic could actually be used to oppose any change, in any policy area, ever. He’s arguing to stay with the norm, rather than try to innovate. He’s saying, “If it ain’t broke, don’t fix it” whilst ignoring most of the ways in which the EU is, in fact, broke.