Alex Deane is Executive Director of the GO Movement.
Today’s report from the Treasury is the latest attempt to scare the population into remaining in the EU. The Treasury’s analysis is all too predictable, but it is equally deeply flawed.
It does not address the structural under-performance of the EU, or explain why just two months before the referendum the UK continues to see employment growth, house price appreciation, record migration into the UK, and record new business start-ups, not to mention a rejuvenated stock market.
If the risks the Treasury claim were real, we would have seen the UK economy grind a firm halt given the alleged uncertainty. Instead, the opposite has happened.
HM Treasury’s record of economic prediction is extremely weak. Osborne has missed every Budget target since he became Chancellor in 2010. He predicted we would clear the budget deficit by 2015. A year on and he has missed that target by over £70 billion or almost equivalent to the entire education budget.
Since he has become Chancellor, in five years, he has added £572 billion to the UK’s total public debt, taking it to £1.57 trillion. Why should he be believed when he attempts to forecast for 2030?
Not only this, but the Treasury failed to foresee the financial crisis in 2008/9 and subsequent credit crunch, which was the single greatest global contraction since the 1930s. Incredibly, the Treasury had no plan B strategy, so sure were they that growth would continue.
They have consistently underestimated the credit crunch impact and its severity and have consistently underestimated the scale of the government’s fiscal deficit. Their analysis has been seriously flawed in the past and this latest document is flawed again.
The claim that the average family would be £4,200 worse off should the UK leave the EU and the economy would contract by 6 per cent to 2030 completely misrepresents the picture.
Remaining in the EU is the greatest risk to economic stability, while leaving provides the opportunity for the UK to direct policy much more closely and effectively to domestic needs.
The Treasury fails to address the under-performance on the EU economy which has for a generation been the slowest growing region on earth. The reasons for this chronic failure, which has led to unemployment in the EU of over twice the UK level, can be laid firmly at the EU’s door.
Primarily the single currency has caused division and divergence in the EU with deflation, emigration, and socially unacceptable levels of unemployment across much of the EU.
Secondly a failed regulatory regime has stifled innovation and productivity, adding to costs and making it harder for the wealth-creating small and medium sized companies to compete. Wasteful over-regulation also adds tens of billions of pounds of costs for our manufacturers.
Thirdly, as accepted by the Remain camp, mass uncontrolled migration depresses wages. This adversely impacts UK employees’ salaries but it also hits the Exchequer through lower tax receipts.
The EU needs to address this long term under-performance and it has not done so. It has had well over a generation to try and, instead of learning from its mistakes, it continues to compound its errors with ever greater centralisation further damaging EU economies.
The Treasury would like us to believe there will be chaos when we leave. If this is so why, two months before the referendum, does the UK continue to be the jobs magnet of the EU?
Why does Deutsche Bourse want to merge with the London Stock Exchange? Why were house prices up 9.7 per cent across the UK over the year?
Why is Britain considered the world’s most significant soft power, ahead of the US, France and Germany? Why has the FTSE 100 risen by 9.5 per cent over the last three months? Why are new company start-ups greater in the UK than France, Germany and Spain combined?
Many independent reports have come to the opposite conclusion to the Treasury’s. Capital Economics, one of the UK’s most widely respected economic consultancies, has argued that the UK would prosper outside the EU.
Many other respected reports also concur with this view, including Tosca Fund’s analysis and a recent report by UK stockbrokers Peel Hunt. Even the PwC report for the CBI agreed that post 2020 the UK would grow faster outside the EU.
Most of these reports highlight not just the £12 billion per annum membership fee saving but also the UK’s ability to adopt far more appropriate regulatory regimes as an independent country rather than the current inefficient and cumbersome EU structures.
Our ability to adopt a more sensible migration policy, rather than no migration policy, will help provide the skills we need but also protect salaries.
Our ability to direct trade and investment towards faster growing areas, particularly in the area of our strategic advantage, services, is also key. Service sector liberalisation in particular has been an area greatly overlooked by the EU to the UK’s detriment. As an independent country we can address this.
Today’s Treasury report is truly predictable and depressing. No doubt there will be a daily diet of similar government tomes. The report completely misses the point. The risks to the UK economy are far greater should we remain in the world’s most dysfunctional and slowest growing bloc.