Britain's Place in the EU in the Wake of Election Results

The recent elections for our MEPs has provided not only members of parliament in Westminster pause for more thought but also those in the European Parliament.  With Marinne Le Penn’s French National Front gaining 25% of the vote, Beppe Grillo’s anti-establishment Five Star party gaining 21% of the Italian vote and UKIP 27% of the UK vote there is a clear indication of discontent among voters for the status quo.  Voters on the continent are probably only objecting to austerity while those in the UK are looking for a chance to have a debate and vote on whether or not the UK stays as part of the European Union.

It does, however, open up the possibilities of some reforms and may give David Cameron the opportunity to gain some reforms in order for him to win an in/out referendum vote in 2017.  The chances of this happening have also gone up as UKIP may be a creditable opposition after 2015 and at the expense, maybe, of the LibDems who are pro Europe.  The Labour party will also have to respond to this issue with, perhaps, support for the referendum in 2017.

The UK joined the European Community in 1973 and voted in a referendum in 1975 with 66% of votes cast in favour of joining. It is generally believed that most yes votes thought that they were electing to join an economic Union and not an ever developing political Union.  It came at a time when the UK was performing badly economically, and was seen as the ‘sick man’ of Europe.  The European Union was created in 1993 following the Maastricht Treaty when the UK agreed to join but without committing to a single currency.

The main advantage for this was to gain access to a community of some 500m people without the imposition of trade duties and other trade barriers.  This has been the case, however, it has not been all one way. In March 2014, the continent exported £19.1bn to the UK and the UK exported £13.1bn to the continent.  As a comparison, the UK’s exports to non-European countries were £13.6bn and imports were £15.7bn.  However, in joining the EU the UK lost a proportion of its markets to its previous trade partners in the Commonwealth due to import restrictions and duties imposed by the EU on non EU countries.  There is no guarantee that any of these markets could be regained if we exited the Union but better terms for export contracts would be a major consideration.  The quality of our manufacturing since the 1970s has improved dramatically and UK industry become a serious competitor and supplier of equipment to many of the growing global markets and industries.  This would only be enhanced if trade barriers could be reduced.  There would, obviously be a threat to our exports to the continent but with the continent exporting more to the UK than the UK to the continent there should be room for a favourable outcome to trade negotiations with our former partners.  As our industry is often in niche products they are not so easily replaced by customers particularly where they are of a high quality.

An area at risk should we exit the EU would be the global companies that have set up in the UK because of our membership of it and the favourable trade terms that we receive.  It would be essential to negotiate good terms with our former partners if we are to keep some of this industry, however, there is more to the decision by these companies to set up in the UK than just trade terms.  These would include taxation, subsidies, transport, political stability and an educated work force.  All of these are within our powers to maintain and an improvement would be an advantage to our indigenous companies as well as to foreign companies. In addition there may be other alternatives such as the European free trade area (EFTA) either as a member of the EU or, like Switzerland, a non EU member.

As one of the stronger members of the Union the UK has been a net contributor to the budget with only one year when we were not a net contributor.  Since joining we have paid £401bn into the budget and received £134bn in rebates and aid.  On these figures alone, there would be a large benefit to the UK’s exchequer. 

For many British people the main problem of membership is the plethora of regulations and directives that are governing our lives.  Many of these rules would probably have been introduced by the UK government anyway and may not be rescinded if we left the Union.  The main issue for most people would, however, be that any legislation governing our lives in the future will have been approved by Parliament and will be seen to be the more legitimate for that.  We are told that we have benefitted from our membership of the Union because of the agreements that have been made and which cover all countries that are members.  These include, inter alia, legislation on climate change, on cross border controls, on food quality, on health and safety and on immigration.  Co-operation between the various agencies in each country has been strengthened by membership of the Union to the benefit of everybody.  Many will say though that all of that could have happened through international negotiations anyway and would not disappear on an exit from the Union.

The declared ambition of the EU is for ever closer political union and the introduction of the Euro was a step towards that.  Many think the next logical step is for a fiscal union with a central tax authority.  The problems in many of the southern countries of the bloc are thought to have been, at least, partly caused by their difficulties in collecting the taxes due to them.  More control by the larger northern countries is thought to be necessary in order to avoid the problem re-occurring in the future.  This, however, involves giving up more sovereignty which will not be welcome by most countries and years of negotiation would lie ahead for that to happen.  If Britain left the EU, that would not be a problem.