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EU trade benefits fantasy

Jonathan Lindsell, 11 March 2013

Last month we saw how BIS and DfID used an inappropriate formula to calculate the EU’s economic benefits, and how leading Coalition politicians are using these figures unquestioningly.

To demonstrate quite how wrong their calculations are, let’s look at the claim that the EU makes each household £3,300 better off each year. According to the 2011 census (the same year as the study), there were 23.4 million households in England and Wales, 2.37 million in Scotland and 703,000 in Northern Ireland, total 26.473 million.

That would mean EU membership was worth £87,360,900,000. Given that UK GDP was £1.44 trillion in 2011, this would mean a huge 6.04 % of the country’s economy rested on EU membership. This sounds like a great figure for the pro-EU side, so why aren’t they shouting it from the rooftops?

Because it’s absurd.

To claim that so great a proportion of the economy was dependent on the single market would make any politician a national laughing stock.  It would reveal the fatal weaknesses of pro-EU arguments.

It doesn’t end there, though. The 6% figure sounds just-about reasonable to the voter. It’s palatable, believable. However, the BIS/DfID study misquoted the formula they used to calculate £3,300. It doesn’t apply to households. It applies to individuals (p.89).

Well there were 63.2 million people in the UK in 2011 (census). So if the government had correctly used the pivotal formula their figures depend on, they’d have estimated the EU was worth £208,560,000,000.

A sweet 14.44% of GDP. No wonder they accidentally used the per household figure.

For more of our work on Britain and Europe, including books, research papers and objective teaching materials for use in schools, visit here.

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