Remaining in the European Union is vital for Britainby Richard Lambert / June 19, 2013 / Leave a comment
Police guard the ECB ahead of the Blockupy protests of June 2013 © Michael Probst/ AP/ Press Association Images
Would Britain fare better if it were outside the European Union? The Prime Minister has promised an In/Out referendum in 2017 and the polls say that a vote today would have us heading towards the exit. Would that, as Eurosceptics claim, be a chance to shake off the costs and constraints of an economically and politically sick continent, and to build a prosperous future in a wider, more dynamic world? Or would it instead represent a reckless gamble—one which would damage Britain’s future prosperity?
Full disclosure: I have always been a believer in Britain’s role in Europe. As editor of the Financial Times in the 1990s, I supported the case for the United Kingdom’s membership of the euro. Pro-Europeans like me have had quite a few disappointments to cope with in recent years: the failure to complete the single market; design flaws in the eurozone that were brutally exposed by the global financial crisis; and today’s bleak economic outlook. But so far, most of the arguments on either side of the debate have been based on assertions, rather than hard data.
On the Eurosceptic side there are wild estimates of the costs of EU membership, and on the other, improbable figures about the number of jobs that would be at risk if Britain left. Nick Clegg has suggested 3m—but such figures should be taken with a pinch of salt.
However, the evidence is clear, for those willing to look for it. From an economic perspective, the risks associated with leaving the EU would be significantly greater than the costs of staying inside. Let’s start with the supposed costs of our membership of the EU, which are not as great as it is often claimed. The UK’s contribution to the EU budget, in net terms, is about £8bn a year, according to the Treasury, or around 0.5 per cent of GDP. That is far less, per capita, than the EU average of €244.
It’s most unlikely that we would save all our gross annual contribution of £13.8bn in the event of a British exit. To take one example, farmers receive EU subsidies of around £3.4bn a year from the EU. They are a formidable lobbying group, and would be pressing hard for compensation…