Brian Monteith is Communications Director of Global Britain. He is also a former Conservative and Unionist Member of the Scottish Parliament.
The decision of the Mayor of London to announce that he is seeking to return to the House of Commons next year is a big moment in this year’s political story. But we should not lose sight of the fact that the original purpose of his event that declared at was the paper of his chief economic advisor, Gerard Lyons, entitled The Europe Report: A win, win situation.
Whatever becomes of the political career of Boris, we all owe him a debt of gratitude for commissioning and publishing this report, since it puts to bed the scaremongering that has been doing the rounds about the costs of leaving the EU – much of which has come from members of the current Cabinet.
Lyons researched four scenarios to give the report objective balance, although there are two that are the most likely – namely, either Britain leaving an unreformed EU or staying in an unreformed EU (since the chances of real reform remain slim: all the evidence points to leaders of the EU and national leaders of member states being highly reluctant to concede any significant changes.)
If David Cameron is in a position to renegotiate Britain’s membership the prospects are that he will come back with rather little, but push for us to accept it. At Global Britain we like to call it the Cauliflower Compromise. It goes rather like this…
The Prime Minister has made a commitment of an in-out referendum and having reneged on his cast iron promise for a vote on the Lisbon Treaty cannot this time back down, he needs to have something, anything, to show the public that he has won some reforms.
The EU leadership elite give it some thought and tell him they were already thinking of abolishing the cauliflower directive1, what if they were to postpone that until 2025 and instead offer the UK an exemption from its provisions – it would be hailed as a victory for Cameron’s negotiating skills.
Thus in 2017, Mr Cameron’s PR people and the BBC, dramatise a last-minute all-night struggle in Brussels. He lands bleary-eyed at Northolt at dawn, the TV cameras are ready and he emerges from the plane waving a bit of white paper. Renegotiation has triumphed and the Prime Minister can hold the referendum advocating continued membership.
The Lyons paper shows why such an outcome would be foolish. London’s GDP is currently put at £350bn but by 2034 Lyons estimates it could grow to the following:
- £640bn if the UK remains inside a reformed EU but adopts pro-trade policies; £615bn if the UK leaves an unreformed EU but adopts pro-trade policies;
- £495bn if the UK remains inside an unreformed EU; and,
- £430bn if the UK leaves an unreformed EU without adopting pro-trade policies.
The key message from these scenarios is that London is far better (some 20 per cent) being outside an unreformed EU than remaining inside it and, furthermore, that we also have nothing to fear from leaving even a reformed EU – for the difference in economic growth of a total of four per cent GDP over 20 years is marginal, and could be surmounted by having the right trading policies.
The Lyons paper gives vital ammunition to Cameron – or any other future Prime Minister. such as Boris – who has the chance to renegotiate Britain’s EU membership, for it shows that being free to trade with who we want, how we want is far preferable to being in an unreformed EU straightjacket.
But whether people believe in the UK remaining a member or not, the obvious position for our politicians going into any renegotiation should be that we are prepared to leave the EU, since it would be more attractive for London and the rest of the UK than staying in an out-of-date and declining economic bloc.
For a pro-trade UK economy outside the EU, London’s GDP of £615bn would create 900,000 new jobs over the 20 years – while staying in an unreformed EU would see GDP reach only £495bn, creating only 200,000 new jobs. Any politician dedicated to growing and sharing prosperity, to fighting poverty and alleviating distress cannot ignore those figures.
The Lyons report should not be seen in isolation. Only this week, Ruth Lea also produced a report showing how the Commonwealth offers huge economic potential and how it will grow in the future while the EU faces continued relative decline.
Similar research carried out by Global Britain, based upon the most comprehensive and robust data available from the United Nations’ population division of its Economic and Social Affairs Department, suggests that over this century the European Union will decline economically, militarily, politically and culturally – primarily because it will be a shrinking market, relatively unattractive to investors – while the USA and Asia will become more powerful than today in all of those fields.
Between 2013 and 2025, the population of the EU, excluding the UK, will increase from 446 million in 2013 to 450 million in 2025; but by 2050 – only 37 years away – it will shrink to 439 million. By 2100, it will be under 400 million. Between 2025 and 2100, the EU-27 will lose 53 million people more than the entire combined present-day population of Spain and Portugal. By 2050, the EU’s working age population (including Germany, Italy and France) will decline by 54 million while the UK’s will increase by three million.
The shrinking and ageing population of continental EU will mean more demand for state-provided healthcare and pensions, with fewer active people to provide them, resulting in a shrinking tax base and leading to higher public sector debt and tax rates. Meanwhile sharply-diverging demographics within the EU will make its “one-size-fits-all” policies on public finance, taxes, the labour market, agriculture, immigration, environment and energy, etc, ever more ineffective and divisive.
For the British people, the economic rationale of integration into the EU’s contracting market will become ever more questionable. Nobody said: “the EU’s my oyster” – why should the UK limit itself to trading with the world through the EU when, like most other countries, it could trade freely in the way that suits it best? Boris is looking to return to Westminster – but in the Lyons report he already has the beginnings of a free trade manifesto. If he doesn’t pick it up, somebody else will.