Stephen Says...

Stephen Says...

This is my blog

sharing occasional thoughts about things that interest me

European Union and the United Kingdom

the state of the countryPosted by Stephen Fri, June 03, 2016 13:58:54

In many ways it is a shame that commitment to “ever closer union” is not available to choose in the UK’s referendum on membership of the European Union. Both options actually on offer exclude this idealistic commitment which was at the heart of the project originally envisaged by the founding parents of European amalgamation (whose idea began with economic integration as a platform for associated political affiliation). In its absence, the only options available are:

either half-hearted consent to continued limited membership;

or attempted abandonment of such commitments as remain after eschewing the euro and the Schengen zone (these residual commitments being the common external tariff and regulation associated with the Single Market, plus certain common policies, such as the CAP, and financial contributions associated with funding them along with a set of EU-wide institutions such as the European Parliament).

Given this context, concentration on the economic dimensions of remaining or leaving is understandable. The free movement of resources across the unified or single market is most visibly manifest in the case of labour (i.e. workers’ economic migrancy): hence the consequences of immigration in the UK are a subject for debate. Likewise, the feasibility and financial consequences of alternative international trading arrangements are an issue requiring discussion. Unsurprisingly therefore these two topics have dominated the propaganda campaign being conducted on both ‘sides’ with a repellent lack of regard for the intelligence of the public at large.

With regard to immigration: it seems to me that the responsibility for dealing with any consequential congestion in relation to public services or infrastructure lies with the national government; and since immigrants are subject to taxation like the rest of the citizenry they can be presumed to pay their way like the rest of us (not to mention that they may be working in those public services anyway). Rejecting EU membership on the grounds of its impact on immigration is effectively a vote of no confidence in the UK national government rather than a judgement on the EU itself.

Regarding international trade arrangements: losing a protected price advantage of 5% (typical for manufactures) will eat into margins or value-added across the tradables sector of the economy whilst making such tradables cheaper for consumers. Since most businesses buy inputs as well as selling their output at such newly lower prices the impact on margins may be somewhat attenuated.

It is by no means clear that the financial consequences of abandoning the EU will be bad for the UK population in real terms. The Treasury’s analysis is completely bogus owing to the tragically flawed view of the country’s economic situation according to which the Treasury operates (see for details).

If, as a consequence of abandoning membership of the EU, sterling is devalued, then this will impact adversely upon the standard of living enjoyed by workers in the UK in the short term by raising the prices of tradable goods and services; but it will also increase margins or value-added in those same tradables-producing sectors of the domestic economy (hence also offsetting the impact of any reduced tariff protection).

The political choice that I might want is not available. Neither ‘side’ has made a case worth voting for. I would not make this choice on economic grounds. Is it worth having a vote?

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