It is increasingly clear that many of those campaigning to quit the European Union don’t care about getting their facts right. Myths about the economy, sovereignty and immigration are recycled on our airwaves on a daily basis – often without being challenged.
Those who want to stay in the EU are not entirely innocent. Some suggest that 3 million jobs would be lost if we quit the EU, when it is actually 3 million jobs that are linked to trade with the EU. Even in the worst case scenario, trade wouldn’t totally vanish.
But the Leave camp has made an industry out of mythology. Here are seven of their deadliest economic sins.
Sin 1: UK sends EU £55m a day
This figure ignores the budget rebate Margaret Thatcher famously secured by brandishing her handbag. In addition, half of what we send to the EU gets sent back to Britain. The best figure for our net contribution is £17 million a day. If that sounds a lot, consider that it works out as 26 pence per person per day.
What’s more, it is misleading to suggest that, if we quit, this sum would be available for building hospitals, or paying off the deficit. If we lost full access to the EU’s single market, which accounts for almost half our trade, the economy would be hit and the UK’s budget deficit would rise, not shrink. We would have less money to spend, not more.
Sin 2: EU needs us more than we need it
Eurosceptics are fond of pointing out that we have a big trade deficit with the EU – £62 billion in 2014. Other member states would, they say, lose more if our trading relationship broke down. In fact, we’d be the desperate ones. We rely on exports to the EU for 13 per cent of our GDP, but the EU’s exports to Britain are just 3 per cent of its GDP.
Sin 3: UK can be in the EU’s single market without free movement
Every country with full single market access has signed up to free movement. That includes not just other EU countries, but also members of the European Economic Area, notably Norway. Even Switzerland, which only has partial access to the single market, has had to open its borders. There’s no reason to think Britain could be different.
Sin 4: City will thrive if we quit EU
If we lose full access to the single market, financial institutions based in the City of London will probably lose the passport that lets them operate freely across the whole EU. Banks will have to shift part of their business elsewhere in Europe, meaning we’ll lose high-paid jobs and the taxes that go with them. Even losing a fraction of this money-pot would be damaging – financial services account for nearly 10% of our economy and 11% of taxes.
Sin 5: Canada would be a good model post-Brexit
Boris Johnson toyed with the idea that we should copy Canada, which is not a member of the EU but has just signed a free trade deal with it. Canada doesn’t have to accept to free movement, or pay into the EU’s budget. But it also doesn’t have a passport for its financial services industry, and it pays tariffs on some exports.
Sin 6: UK could keep the 50-plus trade deals the EU has cut with the rest of the world post Brexit
The EU has made free trade deals with other countries, including many from the Commonwealth. But the UK is not legally a party to them, and we would have no automatic right to piggyback on them if we left. Starting negotiations from scratch could take years. In the meantime, exporters would suffer.
Brexiteers also blithely suggest it would be easy to cut new trade and investment deals with the likes of the United States, China, Japan and India. But the EU is already negotiating agreements with all those countries. If we quit, we’d have to play catch-up and we’d lack the clout to get deals as good.
Sin 7: EU red tape costs business £600m per week
This figure presents half the picture, weighing up the costs without the corresponding benefits. The source of the £600 million figure is a study by think tank Open Europe of the 100 most expensive EU rules, according to our government’s assessment of their impact. When the Leave camp uses this figure, it doesn’t mention that the same study cites the government as saying these rules would have a benefit of £1.1 billion a week – giving a net gain of £487 million a week. It also doesn’t say that the UK government, not Brussels, is the biggest source of red tape – particularly British planning regulations.
There are, of course, plenty of opportunities to streamline regulations, both EU and home-grown. But giving only one side of the cost-benefit analysis is economically illiterate.
This piece is being simultaneously published in The Standard.
Hugo Dixon is the author of The In/Out Question: Why Britain should stay in the EU and fight to make it better. Available here for £5 (paperback), £2.50 (e-book)
Edited by Jack Schickler
As an Italia Radiology Consultant in UK for many years I wonder why the remain camp does not challenge the distorted claim about the EU immigrants flooding social services: about the so called NHS being flooded. Being a Radiologist, therefore in a service that a hospital provides to all clinics, wards, departments and GPs and having worked in several places in UK from London to Crewe, to Derby and Great Yarmouth I can tell very easily that the impact of the EU migrants on the NHS is not bigger than 5%. Obviously the Outers are putting in the same pot all the migrants (EU and non-EU ones by which the proportion still will be of not more than 10%) – hardly a flooding. School places inundated by EU migrants: well the figures also here have to be seen in context as the vast majority of extra non-UK pupils could be from non-EU countries. EU families (when the EU migrants have families) tend to be fairly small: Italian, German, French, and in general us western European also – like the British – produce too few babies. The Eastern European families could be more productive but to flood all the school system they really need to be in their millions. Much more productive families are from non-EU countries, but again the Outers judge in same pot EU and non-EU quotas as they are all EU ones. Therefore I invite, no, I say, I urge investigation on these issues to dispel this anti-EU myth.
All of these without not even mentioning how much is the balance of what us EU migrants (only EU not rest of the world as this referendum is only about the EU) pay in taxes and contribute to UK social services and society compared to what we take out.
I, too, get fed up with hearing the same old half-truths being peddled by Brexiters. However, continuing on the “medical” theme I understand there is a psychological condition known as “confirmatory bias” whereby people process information that is consistent with there beliefs differently from how they process information that is inconsistent. Information that is consistent is remembered, seen as relevant, and reinforces beliefs. Information that is inconsistent is more likely to be ignored, discounted or forgotten. The Brexiters that I know all seem to suffer from this condition.
Sin 4 may be worse than you suggest here.
1. It seems there are good reasons for believing that the UK has been deeply involved in the whole offshore money business for a long time (for example, see http://foreignpolicy.com/2016/04/04/britains-empire-of-tax-evasion-panama-papers-mossack-fonseca/ ) .
2. If the FT is to believed, David Cameron acted to limit EU action against the offshore banking business, so if the UK were not part of the EU, I’d suggest that much of what goes on in the City would be closed down sharpish. The effect of that on the UK would be very substantial. Losing the EU passport may be just the beginning.
Sin 2 is 100% not a sin. It’s a fact. “Other member states would, they say, lose more if our trading relationship broke down.” That’s true of all of them except 5, and none of those are among the most important EU members. You then compare the EU as a single entity with one member state, the UK. But the EU isn’t in practice a single entity – it’s made up of the member states, who act in their own interests. To say that they would lose more individually is absolutely true. You’re confusing ‘member states’ with ‘the EU’.
Sin 1 is a sin, I’ll give you that – but you haven’t debunked it. You use incomplete information and myths yourself here, by including what we get back from the EU in subsidies – the point is our elected government does not decide how that money is ultimately spent, so including that in the contribution figure is absolutely fair. Leaving the rebate out is not though, I agree. But then you say “it is misleading to suggest that, if we quit, this sum would be available for building hospitals, or paying off the deficit. If we lost full access to the EU’s single market, which accounts for almost half our trade, the economy would be hit and the UK’s budget deficit would rise, not shrink. We would have less money to spend, not more.” The remaining contribution, 26p per person per day, or whatever it is, is still too much. We should be sending 0p per person per day. But you’ve just asserted that the economy would be substantially hit and no other factors which come from leaving would lead to a recovery. That’s a huge and baseless assumption.
The rest of the ‘sins’ you identify are pretty subjective. You’re just picking holes, which may or may not be there. But explaining away is not the same as explaining why you’re right. Which you haven’t done.
A major myth out of the Brexit camp is that governance in the EU is not democratic. In fact it is more democratic than Westminster. Policy can only be decided by the Council of Ministers, all democratically elected national leaders, and the EU Parliament – elected MEPs. The EU Commission is non-political, the civil service of the EU charged with implementing these policies. They do not make policy.