This is the first article in a series setting out the risks of voting to Remain a member of the EU.
The pro-EU campaign makes no secret of its core message: it has already given up on arguing that the EU is a positive thing, an institution to trust or like. Rather, the Remain campaigners’ ambitions for Britain extend as far as arguing that we should stay in this costly, bureaucratic, failing experiment because it’s the devil we know. “Risk” is therefore their new favourite word.
But voting to stay in the EU is far from a risk-free exercise. A Remain vote would be taken by the eurocrats as a sign of approval to carry on as before. That’s a risky message to send to people who believe that more integration is always the answer to every problem.
The fundamental untruth in the Remain campaign’s rhetoric is their implication that Britain’s current relationship, however unappealing it may be, is on the table. That isn’t so: there is no status quo on the ballot paper. Either we vote to Leave, which means making our own democratic decisions, or we vote to Remain, which means giving a thumbs up to further integration. Neither future is certain – no future ever is – but Leaving gives British voters the power to influence what happens, while Remaining outsources numerous crucial decisions and powers to a set of unaccountable officials with a woeful track record.
What financial risks would we be opening ourselves up to if we were to vote to Remain?
Bigger payments to the EU budget
Let’s start with our direct contributions – for which we can find a clue in the history of our relationship with Brussels. In the four decades since British voters last got a say on the EU, the direction of travel has been overwhelmingly one way. As the EU institutions have grown, and their powers have become more wide ranging, the direct cost to British taxpayers has ballooned. In 1976, Britain’s gross contribution to the then EEC, expressed in 2014 prices, was £2.8 billion. The Treasury forecasts that in 2016 our gross contribution will be £18.98 billion. The trend looks set to continue – by 2020, HMT predicts, the bill will be £20.6 billion.
Nor is this the only risk when it comes to our EU contributions. Remember that extra £1.7 billion which Brussels demanded from the UK in 2014 – the one Cameron said he wouldn’t pay then did? That was a direct consequence of Britain’s economic growth - we faced a larger bill because our economy grew faster than other Member States. In effect, it’s a tax on success – what Dan Hannan calls the ‘prosperity surcharge’. The better we do, the harder we work, the more we innovate, then the more we pay.
Despite the vast bounty received in budget contributions, EU officials still aren’t happy with the way they get the money. They feel that having to go to the Member States for approval of a new budget every few years compromises their autonomy – rather than show solidarity (translation: cough up their taxpayers’ money without complaint), these pesky Prime Ministers and Presidents increasingly feel that their voters want to see them bang on tables and demand reductions. Even if it’s just a charade, it’s a show that the inhabitants of Brussels would prefer not to have to play along with. After all, why should the leaders of a wannabe superpower have to beg for an allowance from anybody?
Wouldn’t it be easier, they reason, for the EU just to raise money directly? Then they could be truly free, and answerable to no-one but themselves.
The idea of a direct EU tax has long been a dream for integrationists. Of course, they normally don’t call it an EU tax – in a glorious exercise in euphemism, the Commission prefers to refer to it as “bring[ing] the European Union closer to its citizens”. Technically, that’s correct – direct taxation would bring the EU so close that it could dip its hands into your wallet.
They never miss an opportunity to propose it, either. Over the years there have been suggestions of EU taxes on energy, on corporations and even on emails and text messages sent internationally. Each has foundered so far, but the eurocrats’ way is to keep throwing a policy at moments of crisis until it eventually sticks. Only a couple of weeks ago, the German finance minister proposed an EU-wide tax on petrol to fund the policing of the borders of the Schengen Area.
Bailing out EU countries
The process of integration is supposedly a trade-off – risks are shared with other Member States, and in return each agrees to behave within certain rules intended to reduce the risk of economic, fiscal or banking crises. However, the EU has so far suffered from an unhealthy inconsistency between the two. Brussels tends to be insistent that risks – and therefore costs when things go wrong – should be shared, but rather more relaxed when it comes to enforcing the discipline which is meant to ensure countries avoid disaster in the first place. Think of Greece, for example, which was allowed into the Euro despite not really have displayed the fiscal discipline which was meant to be an entry requirements to the single currency, and which then sucked up hundreds of billions in bailouts when its economy crashed.
The risk of future bailouts being required has not gone away. Only a few days ago, the Italian Government was using the threat of blocking Merkel’s plan to stem the flow of migrants as leverage to win a more relaxed attitude to Italy’s fiscal policies.
Is British money safe from being used in such bailouts? Well, everyone thought so in 2011 when the Commission gave the Government a “black and white” guarantee that Britain would not have to contribute to Eurozone bailouts. But then last summer, Commission officials simply announced that they expected Britain to contribute to the latest Greek bailout anyway. The Chancellor fought off the attempt, this time – but he was no doubt aided in doing so by the looming possibility of Brexit. Will Juncker back down so easily the next time he demands our money for a bailout, if by then Britain has voted to stay in the EU? The Eurozone countries have sufficient votes on the Council of Ministers to essentially do whatever suits them – and getting British taxpayers’ money into the bailout pot would suit them very nicely.
Losing out to the Eurozone
It’s common for pro-EU campaigners to argue that Britain has “the best of both worlds”, sitting inside the EU but outside the eurozone. There is, however, a serious question to be asked about how long such a situation can be sustained for.
So unpopular is the single currency that all but the most extreme europhiles desperately avoid any suggestion that Britain might ever join it – and those that once argued that we should now do their best to conveniently forget that they ever uttered the words. These attacks of amnesia are strategically understandable, if not particularly honourable.
But the issue cannot be avoided. The fact remains that the Euro is a central part – indeed, an obsession – of the EU project. Its members wield a large amount of power within the EU institutions, and understandably seek to strengthen the position of the Eurozone through further EU integration. The Prime Minister has repeatedly made clear that he recognises this trend, and views it as a risk to the UK – that’s why one of his few remaining renegotiation demands is that we should be given a guarantee that non-Eurozone member states should not be discriminated against.
The problem with such a guarantee, even if it is granted, is that it would be worth precisely nothing. Not only have we seen the value of guarantees from Brussels already (in that “black and white” promise on Greek bailouts) but the EU’s openly stated plan is to focus on further and faster integration to ensure the future of the Euro. The key to this risk is the now-infamous ‘Five Presidents’ Report‘, in which the most senior EU officials present a ‘roadmap towards a complete economic and monetary union’.
The report envisages four unions – economic, financial, fiscal and political – noting that:
‘All four Unions depend on each other. Therefore, they must develop in parallel and all euro area Member States must participate in all Unions.’
In other words, the plan is for all Eurozone members to act as one in order to drastically deepen their integration on all four fronts. That will leave any pledge to respect the interests of non-Eurozone members with the status of little more than a tatty piece of paper. We will be outvoted more and more, whether we like it or not, as the EU’s activities focus more and more on serving the interests of those Member States which are pursuing those four unions in order to sustain their shared currency. Inevitably, if a future British Prime Minister came to complain about the growing costs to Britain of such unfair treatment (including the proposal that the EU should replace the UK on international financial bodies such as the IMF), then the reply would be a simple one: ‘why not come and join us?’
EU membership is already vastly expensive, and it is only set to get worse. The term ‘ever closer union’ is the slogan of the EU experiment for good reason – the project has never stood still, and is constantly looking for new opportunities to extend its budgets and powers. A vote to Remain risks giving the green light to yet more bills, yet more bailouts and yet more integration.