On 23rd June Britain will vote in a referendum on whether to remain in the E.U, or to leave. The vote will play a key part in shaping the economic and political future of Britain. Below is an attempt to summarise the principle arguments from both sides. Within the E.U, the UK is unique in defining its relationship with the organisation strictly in economic terms. The geo-political aspects of the advantages or disadvantages of the E.U do not, therefore, feature much in the campaign.
- The Leave campaign wants to regain sovereignty over policy making – particularly on who can settle in the country and thereby gain access to public services. It wants the government to decide who should come into Britain to work, using a point-based system.
- The E.U is described as a spent force led by an unaccountable elite, while ‘meddling from Brussels’ causes unnecessary costs to the economy. The approximately £8.5bn net payment for EU membership could be better spent elsewhere.
- Britain would be able to sign favourable trade deals with other fast-countries and regions. Our trade deficit with the E.U means that Brussels will probably allow our exports similar access to the E.U as we enjoy today. A libertarian wing of the Leave campaign argues for a unilateral end to all import tariffs, which would make trade negotiations interesting!
- The Remain campaign argues that the E.U is our largest trading partner, the largest source of foreign direct investment, and is the world’s largest free-trade area. Any disruption to our relationship with it will cause economic damage. E.U negotiators are unlikely to offer the U.K the same access to the E.U market as before, since it would risk encouraging other traditionally euro-sceptic countries – such as Denmark- to follow Britain’s example.
- They argue that being a member of the E.U is not what holds back our exports to faster-growing parts of the world – just look at Germany, which exports around nine times as much as us to China.
- In return for the £8.5 bn net contribution, we have a seat at the policy-making table and can help set the rules. The Remain campaign acknowledges the need for reform of the E.U. The Remain campaign argues that if we were to leave we may well still have to obey E.U trade rules, and also pay an annual fee. But we will have no voice, or votes, in Brussels and unable to push for reform.
- On E.U immigration, we are reminded that the economy and the Treasury’s tax receipts benefit from their presence. And that the U.K operates border controls and therefore can, and does, turn away E.U citizens with criminal records.
Written by Tom Elliot – deVere Group International Investment Strategist