Brexit would not harm UK trade and investment
Anna Sonny, 7 November 2014
The Prime Minister will have even multiple fires to put out on the subject of the EU in the coming weeks, with the upcoming debate on the European Arrest Warrant, the distinct possibility of another UKIP victory in the much anticipated Rochester by-election, the investigation into the £1.7bn top-up payment demanded by the European Commission and the warning of his Nordic allies not to mess with the free movement people in the EU. As the headlines show, the debate over Europe revolves mostly around sovereignty, immigration and extortionate EU budget contributions.
When it comes to the economic axis of the argument, the UK government seems to rest safe and secure in the belief that our EU membership gives us a de facto advantage in trade and investment. Michael Burrage questions this automatic assumption in his report: Where’s the Insider Advantage? In this detailed study, Burrage looks at whether the Single Market really has been of immense benefit to UK trade, by comparing UK exports to EU and non-EU nations between 1960-2012.
In the top 33 fastest-growing markets for UK exports of goods between 1993-2011(the life of the Single Market), the EU1 1 (EU members before 1995, minus Britain), ranked 26th. The superior growth of UK exports in world markets compared with the EU’s Single Market suggests that fears of losing valuable trade are imagined rather than likely.
Burrage also finds that while entry to the Common Market in 1973 boosted foreign direct investment straight away, there is no evidence that this has continued. Only one EU member – Ireland – and three other European countries have consistently been more attractive to foreign investors than the UK: Iceland, Norway and Switzerland. The fact that the latter three countries are all independent European nations silences the claim that foreign investors would desert us if we left.
The success of these non-member countries, in particular Norway, who is part of the European Economic Area and Switzerland, who has successfully negotiated bilateral agreements with the EU and other world economies including China, shows that the predicted ‘outsider disadvantages’ are mostly unfounded, and provides a wider scope and a stronger case for the options available to Britain in the case of Brexit.