Most people, if pushed for an opinion, see
Britain's membership of the EU as a trade-off between politics
and economics. They tend to dislike the loss of sovereignty, but
believe that it must be set against a gain in prosperity. Thirty
years to the day since we became members, it is useful to assess
whether this impression is justified.
There have been three recent cost-benefit
analyses of EU membership. Two of them - by the Institute of Directors
and the Institute of Economic Affairs - concluded that Britain
would be better off outside. The third, by the US Senate, considered
the consequences of Britain joining Nafta, either by leaving the
EU or by negotiating some form of dispensation. It found that
the economic impact would be slight either way.
Perhaps more surprising is that the Treasury,
too, has traditionally come down against membership. Throughout
the 1950s and 1960s, a series of Treasury papers argued that the
loss of developing markets, the inflationary consequences of higher
food prices and the increased regulation of our economy would
outweigh the advantage of preferential import penetration into
the Continent.
But our political leaders have always seen
the bread-and-butter issues as secondary to the question of high
politics. Harold Macmillan agonised about the prospect of Britain
being squeezed between two mighty continental powers, one European
and one American.
Edward Heath was prepared to make huge concessions
over agriculture, fisheries and Commonwealth preference in order
to purchase his place at the Brussels table. Far from seeing EEC
membership as an economic proposition - which is, more or less,
how he sold it to the voters - Mr Heath saw it as a political
opportunity, for which he was prepared to pay an economic price.
This is not necessarily dishonourable. A
politician ought to be prepared to act according to what he sees
as the long-term national interest, even at short-term cost -
although it would have been nice if Mr Heath had been more candid
about this at the time. But was he right in his own terms? Has
the balance of advantage tilted convincingly in Britain's favour
over the past 30 years?
In many areas, it is possible to quantify
the economic impact of our EU membership. Take, for example, our
contributions to the Brussels budget, which currently stand at
£12 billion a year. To put it another way, we have handed
over some £50,000 to Brussels since you started reading
this piece.
Other aspects of EU membership can also
be quantified, if not quite so directly. The Common Agricultural
Policy affects us in various ways: it raises our tax as well as
our food bills, while placing our farmers at a competitive disadvantage.
One recent study concluded that Britain would be better off by
at least £10 billion a year if it ran its own farming policy.
The Common Fisheries Policy, too, has done
measurable damage to our coastal economy. Some 65 per cent of
the stocks covered by the CFP fall within British territorial
waters, yet our quota amounts to less than 25 per cent.
Trade is a little more complicated. As the
member state that conducts the highest proportion of its commerce
with non-EU countries, Britain has been especially penalised by
the Common External Tariff. On the other hand, EU membership has
meant that British ministers have had a say in the setting of
common standards.
Yet this dilemma, so important in the early
1970s, has been made almost redundant by the World Trade Organisation's
dismantling of tariffs around the world. Not so the cost of Brussels's
social, employment and health and safety regulations, which fall
not only on those businesses that are selling into the single
market, but also on the 85 per cent of our GDP that is derived
either domestically or from exports to the rest of the world.
Our argument is not that leaving the EU
would make everyone richer. The economic consequences of withdrawal,
although on balance positive, are likely to be marginal. What
is absurd, though, is for ministers to answer any criticism of
closer integration by claiming Britain has no future outside the
EU. Swiss, Icelandic and Norwegian citizens all enjoy far higher
standards of living than their EU counterparts.
No businessman would go into negotiations
having first informed the other party that, whatever the terms
offered, he was determined to sign - especially if he was the
client rather than the salesman. Over the past 30 years, Britain
has run an average trade deficit with the other member states
of £30 million per day. We have the muscle, should we choose
to exercise it, to negotiate a looser and more congenial relationship
with the other members. By insisting that the only choice is between
full integration, euro and all, and outright secession, the Government
risks pushing the country ineluctably towards secession.
