Disadvantages of EU Membership

Disadvantages of EU membership to UK include:

  1. Cost. The  costs of EU membership to the UK is £15bn gross (0.06% of GDP) – or £6.883 billion net. See UK government spending. (UKIP claim that the cost of EU membership in total amounts to £83bn gross if you include all possible costs, such as an ‘estimated’ £48bn of regulation costs – or  £1,380 per head [1]. The ONS have estimated a net contribution cost of £7.1 bn. See actual cost of EU membership
  2. Inefficient policies. A large percentage (40%) of EU spending goes on the Common Agricultural Policy. For many years this distorted agricultural markets by placing minimum prices on food. This lead to higher prices for consumers and encouraging over-supply. Reforms to CAP have reduced, but not eliminated this wastage. A big existing problem with CAP is that it has rewarded large land-owners, with little reflection of social benefit. See: Transfer of funds from poor to rich landowners (Guardian) Though the UK is guilty of rejecting limit on CAP
  3. Problems of the Euro. Membership of the EU doesn’t necessarily mean membership of the Euro. But, the EU has placed great emphasis on the single currency. However, it has proved to have many problems and contributed to low rates of economic growth and high unemployment across the EU. Fortunately, the UK stayed out of the Euro. See: Problems of Euro.
  4. Pressure towards austerity. Since 2008, many southern European countries have faced pressure from the EU to pursue austerity – spending cuts to meet budget deficit targets, but in the middle of a recession these austerity measures have contributed to prolonged economic stagnation. In particular, Greece was forced by its creditors to accept austerity, when some economists have argued this is counter-productive.
  5. Net migration. Free movement of labour has caused problems of overcrowding in some UK cities. The UK’s population is set to rise to 70 million over the next decade, partly due to immigration (of which 50% is from EU and 50% from non-EU). Immigration has helped to push up house prices and led to congestion on roads. (See: immigration and housing) The concern is that in the EU, the UK is powerless to place a limit on immigration from Eastern Europe because free movement of labour is a cornerstone of the EU. See: Impact of immigration on UK economy
  6. More bureaucracy less democracy. It is argued that the EU has created extra layers of bureaucracy whilst taking away decision making process further from local communities. For example, the British Chambers of Commerce has estimated that the annual cost to the UK of EU regulation is £7.4bn. The introduction of Qualified majority voting (QMV) mean that on many decisions votes can be taken against the public interest of a particular country.

 

Evaluation of these problems

government spending by dept.
Source: Gov.UK – though they give confusing figure of EU spending at £3bn, which is less than agreed measure, so I adapted figures to use £14.7bn – which is generally accepted.
  • The cost of the EU is a relatively small percentage of overall UK government spending. (See: EU In perspective)
  • The UK has received regional funds over the years, which has helped economic regeneration of areas like South Wales and North East..
  • The CAP and other policies are in a long slow process of being reformed. If the UK stays in the EU it could, in theory, help to promote policies which work in the long-term interest of the UK and reform inefficient policies like CAP.
  • An estimated 3.5 million jobs are linked to trade with Europe. Some jobs may be threatened if tariff barriers were to rise outside the EU.
  • The UK is third largest recipient of inward investment in the world. Access to the Single Market is one factor in encouraging this inward investment. The investment is important for UK economic growth and jobs.
  • Some EU bureaucracy has been beneficial in promoting competition, e.g. forcing mobile phone networks to limit charging when using mobiles abroad.
  • UK newspapers have tended to exaggerate and even misinform readers about ‘EU rules and regulation’. This is a list of Euro myths – where UK newspapers have blamed EU regulations, but it was actually inaccurate or misplaced.
  • Issues like farming and fishing and the environment are global issues which need to be tackled within a European framework, it is insufficient to have just a national policy on fishing and the environment because the issues by nature require global co-operation, e.g. solve global warming, over-rishing.
  • The EU Health Insurance Card enables EU citizens to receive emergency healthcare on the same terms as the citizens of the EU country they are visiting (often free). (Euro-movement)
  • By staying out the Euro, the UK has retained independence over monetary policy,  fiscal policy and the exchange rate. The UK doesn’t have the same pressure to pursue austerity as countries in the Eurozone have. This shows that the UK can combine membership of the EU with flexibility over economic policy.

net-migration-outflows-inflows

  • Migration works both ways. Many British people have emigrated to take advantage of opportunities elsewhere in Europe. An estimated 748,010 Britons live or work in the European Union (link). However, net migration has been running at around 200,000 a year since early 2000s.
  • EU migrants are net contributors to the UK Treasury. Although they cost the UK in terms of public services, they contribute relatively more in taxes. The main reason is that migrants are more likely to be of working age 20-40.  Therefore, they need relatively less health care and no pensions. The UK native population is rapidly ageing – this places stress on public finances because of a greater need for health care and pensions. Without net migration, there would be a greater strain on public finances.
  • The free movement of labour enables a more flexible labour market, with immigrants able to fill gaps in the UK labour market, such as nursing and plumbing. Also the additional labour increases UK productive capacity and helps increase real GDP. (see impact of rising population) The large numbers of net migration to UK in recent years, may reflect a temporary situation of relatively higher growth in UK than Europe, and may subside when (if) the Eurozone recovers.
  • Problems attributed to EU migration are more due to general government policy – e.g. cuts to share of GDP spent on health care.

 

 

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