Should UK stay in EU or leave? (personal view)

A few readers have asked me about where I stand on UK, EU and Brexit.

These are some personal notes – not necessarily economic (or coherent!)

  • I will probably vote Remain, though not with any particular enthusiasm.
  • I do identify as both British and European. I would like to see Britain act closely with European countries to help deal with global issues, such as the environment.
  • Post war Europe has been a great success story. Compared to the turmoil that went before 1945, Europe has come along way and the idea of working together for common laws and regulations is a good thing. Despite its failings, the European Union is part of that post-war settlement. It is worth remembering that for many European countries, joining the EU is seen as a good thing for helping to protect liberty and national security.

I don’t think the Brexit vote is as important as some would like to make out. Last year before the referendum, only 7% of the electorate stated Europe as a major issue of concern. This has risen to 30% this year, but I think the electorate had it correct last year. I’m not keen on the whole idea of a referendum on Europe and will be glad when it’s over.

The main thing is if we leave the EU, I don’t think that much would change. We might end up saving a very small amount of money (but much less than Vote Leave would have you believe See: cost of EU), but we would be effectively trying to get similar trade rules (though probably not as good) that we have now – with the exception of closing borders to EU immigrants.

I’m not convinced by the loss of sovereignty argument. Most major laws are still set by UK Parliament. Many issues, like the environment – need agreement with other countries anyway. If we left, we wouldn’t be able to abolish all EU rules, we’d have to keep many to be able to access Single Market.  Also, although it’s popular to criticise any rule and regulation emanating from Brussels, many regulations are helpful for the environment and labour protection.  I actually support max power outputs for kettles and vacuum cleaners. Reducing cost for business is not always the best thing to do.

Has the EU lost its way?

The Single Currency / Euro (not to be confused with the EU itself) is badly designed and has created a deflationary dynamic within the EU. The treatment of Greece over debt and austerity was undemocratic and infuriating from a sense of good economic policy. As an economist, it is easy to be very critical of the general European (German) economic policy of the past decade; in particular the high rates of unemployment endemic in Europe. However, that isn’t going to be changed by the UK leaving the EU. It is certainly a great boon the UK never joined the Euro, and to a large extent we are insulated from the worst aspects of the Single Currency. Though the UK government have shown you don’t need to be in the Euro to embrace unnecessary austerity.

There are also many other EU policies which could be improved a lot – especially in agriculture and fishing policies. But, although many regulations and laws are imperfect, I think it’s better than 28 individual countries going it alone.

Net immigration

Britain, like most countries, is a nation of migrants. Like many countries, the UK has benefited from immigration, and generally I do believe net immigration leads to economic benefits.

However, at the same time, I am concerned at the current levels of net immigration into the UK. The problem is not so much economic, but population density and the housing crisis. I do feel that levels of net migration is exacerbating the UK housing crisis. – which is one of biggest economic factors affecting quality of life for young people. Given the difficulty in building houses in the UK, these net migration figures are making the situation worse.

Personally, I think the rapid rise in the UK population is not a good thing. It will also lead to congestion and damage to the environment. Here I am speaking not as an economist, but in a personal (selfish) capacity. When cycling and driving I don’t want to be on clogged roads. In 10 years, that will definitely happen. Though, even if we leave the EU, the population is likely to continue rising. Net migration from Eastern Europe isn’t the only factor behind population growth.

As an economist, I definitely believe free movement of labour has economic benefits – especially for firms struggling to fill certain labour vacancies; but now the EU is 28 countries, it is leading to flows which are too high. I would like to see the EU relax its policy on the free movement of labour. Free movement of labour was a good idea when the EU was 12 countries of similar income levels, but the inequality in wages between member countries is currently too big.

However, having said all that, I happen to have very good friends who are Eastern European and they have been doing a really good job for a local business in London I know well. So this makes me change my mind again. I wouldn’t want them to have to go back to Eastern Europe because we leave the EU. So despite a personal concern over rising population and migration, I will reluctantly accept free movement of labour as price worth paying for staying in the EU.

Conclusion

I would like the European Union to succeed and I would like Britain to be part of it. If I was scoring the EU, currently, I might give them 4/10. There are so many things they should be doing better, but it’s still better than nothing. I actually think the UK has a lot to offer the EU and the slower pace of integration favoured by the UK is something the EU would do well to adopt.

As an economist, I do generally agree with the predictions that outside the EU, the UK would be worse off economically. If we lose access to the Single Market, it definitely would affect economic growth and inward investment. From an economic perspective, I would agree with this letter – Economists say no to Brexit.

In a personal capacity, I could live with lower economic growth, if it had many other benefits of leaving. Quality of life is more important than GDP per capita figures.

The final comment is that the debate (at least that covered by media) has been pretty poor. It annoys me when politicians use misleading statistics (e.g. Vote Leave’s misleading claim of EU costing £350m a week) and conjure up worse case scenarios. Comparing the aims of EU to Hitler is frankly embarrassing and wrong.

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