Should the UK Leave the European Union - Example

Should the UK leave the European Union Table of Contents 2 Purpose of the Report 2 Introduction............................................................................................................................... 3 Body...........................................................................................................................................3 What does an Independent Britain Mean?.....................................................................3 Implications of Leaving the EU......................................................................................6 Benefits of Staying in the EU..........................................................................................8 The Immigration Issue..................................................................................................11 Profiting from the eurozone Crisis by Staying in the EU.............................................13 Financial Dynamics.....................................................................................................14 Conclusion................................................................................................................................16 Recommendations....................................................................................................................16 References................................................................................................................................18 Abstract The EU is one of the major politico-economic blocs in the world. Alongside other unions like NATO, NAFTA, USAN, and ASEAN, the EU commands considerable influence in global geopolitics. Due to the individual powers of its member states (most of the world’s richest countries are EU member states), the EU cannot be overlooked in any international issue. The question of whether the UK should leave the EU has been asked since 1975, when Britain organised a referendum asking its citizens whether it should withdraw from the eurozone, then known as the European Economic Community. Since then, several referenda have been held and still the UK remains part of the EU. This paper will discuss whether or not the UK should leave the eurozone. Purpose of the Report This policy paper is for the attention of the British Chancellor of the Exchequer, and is written to investigate whether the UK should leave the EU. Introduction Britain should not leave the European Union. In fact, leaving the EU would be one of the gravest mistakes the UK has made since it came into being. The EU is one of the richest economic blocs in the world, as well as one of the most stable political arenas. There are people who have stated that Germany’s domineering presence in the EU is detrimental to Britain’s ability to gain from its membership. However, the UK should not blame Germany for its woes. Instead, it should take measures to ensure that it remains a major force, not just in Europe but the world. In this paper, the writer intends to argue that the UK should not leave the EU because the drawbacks of such a move outweigh the potential benefits. In lieu of this, the writer will present arguments to support the policy question selected for analysis, and then conclude with a reaffirmation of the stance taken in the evaluation. Body What does an Independent Britain Mean? Some scholars and politicians have argued that Britain would gain more by leaving the EU because the EU has too many problems that overlap into British territory and cause anxiety and worry among its citizenry. Some of these problems include economic struggles, slow growth, widespread unemployment, and political instability (Doyle & Winand, 2010:43). For proponents of this stance, the UK should stop being Little England and assume its true identity of Great Britain (Spero & Hart, 2013:45). However, this argument is illogical because if UK leaders feel that the EU treats the country like Little England then it is their duty to change that. Some UK politicians, especially those from the UK Independent Party (UKIP) have stated that Britain can open itself to the world once again if it leaves the EU (Diez, Bode, & Da Costa, 2011:39). It should not remain in the withdrawn, insular EU and continue being closed as well. Image 1: UK Contribution to the EU budget. Source – HM Treasury. An independent UK can aggressively pursue and sign its trade agreements that satisfy its needs, with nations that have economic growth rates 6, 7 or even 10 percent annually. By doing this, it would no longer be constrained by a rapidly ageing trade zone where growth in the region of 2 or 3 percent is a lofty ambition (Broberg & Christensen, 2010:32). By leaving the EU, the UK will avoid being overshadowed by its membership. Instead, it will be welcoming to the robust economies and citizens of its true allies in the Commonwealth (Simon, 2013:53). The UK can have trade and economic partnerships with Australia, India, Canada, and Singapore. It will continue trading with all economies across Europe, as a matter of fact (Farkas, 2013:24). Being a member of the EU is not a precondition to accessing the bloc. Switzerland and Norway are examples of countries that have ignored the EU and still remained active trade partners of its member states (Snyder, 2010:21). The United States and China, which sell more to the EU than the UK, are not even in Europe, let alone being members of the EU. Britons should live, invest, and work in a bloc of democratic countries (Makhan, 2012:29). However, that does not seem to what Europe’s elite wants. The de facto elites of the Commission have ambushed Europe’s institutions by adopting symbols of leadership and sovereignty (Gibbins, 2014:19). According to some leading UKIP luminaries, Europe has only one achievement: the euro project that has forced tens of millions into misery. Leaving the EU would allow Britain to recover its rich history of global commerce and large sums of its money (Greenwood, 2011:43). Estimates indicate that the UK can recover up to 55 million pounds a day by leaving the EU. That is equal to 72 million Euros, which totals 20 billion pounds or 26 billion Euros annually. Europe’s dwindling global competitiveness in recent times implies that countries like Britain must fight for economic changes inside the EU (Guild, & Groenendijk, 2010:58). It is also important to a stable economy like Britain to remain in the European Union. Opportunities for growth will increase, and regulations will be increasingly sensible if Britain plays an active role in formulating them (Nee, 2013:128). The Transatlantic Trade and Investment Partnership (TTIP) ¸which is a potential groundbreaker in international trade, is likely to be signed in the next few years (Oxelheim, 2010:12). In these partnerships, the United States and the EU are collaborators of fairly equal may. The absence of the UK would dilute the effectiveness and implications of TTIP. Implications of Leaving the EU Non membership would impede the ability to contribute to decision-making. Ultimately, withdrawing from the EU would lock out Britain from one of the most important international partnerships in recent times. Leaving the EU would put the UK in the same situation as Norway, which is subject to the same European adaptation process as Britain but lacks the right to vote (Hatzopoulos, 2012:103). In all likelihood, it is hard to imagine Britain, with its globalist dedication, role, and goals, being at peace with such a situation. Apart from its agricultural policies, Norway essentially operates under EU provisions (Mulligan & Simms, 2010:36). Since Europe is confronting global rivalry, there is need to move strategically. The UK is the most internationally experienced and recognised country in Europe (Heide, 2013:51). It also has one of the most diversified and conducive working environments in the world, with employees from across the world. These are strengths that are desperately required in propping a globally aggressive Europe (Whyte, 2013:57). Image 2: Results of 2011 and 2012 referendum opinion polls. Source – Etingoff, Indovino, Docalavich, Sadek, & Walker (2012:29) The resources and influence Britain has are vital for the future evolution of the EU’s security, foreign, defence, and development strategies. The EU is a safer, more stable and powerful entity with the leadership provided by the UK. Currently, Britain holds less than one percent of the global population and less than three percent of world income. With every passing year, these numbers reduce gradually (Etingoff, Indovino, Docalavich, Sadek, & Walker, 2012:31). Soon, it will be very difficult for Britain to command attention on issues that influence its growth and wellbeing if it decides to be a lone ranger. Of course, there are weaknesses. The Common Agricultural Policy (CAP) of the EU is a financial mistake that drives food prices higher than they should be (Naurin & Rasmussen, 2012:75). In addition, the EU’s regional policy wastes funds on needless highways, the EU usually interferes in matters that are best handled by member states (e.g., the legal working hours), the European legislature operates like a travelling circus, oscillating between Belgium and France, and EU policies are occasionally unfair (Heisbourg, 2012:85). Benefits of Staying in the EU Despite everything, there is a lot of benevolence within the EU that would be enhanced if the UK were to remain a member. Some of these benefits include a common market that gives UK enterprises access to whole EU, with its half a billion customers (Hogue, 2010:27). Free trade is one of the most effective wealth creation methods, and the UK would be naïve to lock itself out of this market. Despite common perception, EU membership is not expensive. Britain’s annual expenditure on EU membership, after considering the amount of funds gained by the country, is 8.3 billion pounds (Van Deemen, 2012:34). That is roughly 0.5 percent of its GDP, 130 pounds per citizen. A 2013 survey conducted by the Confederation of British Industry revealed that there was a great support among small and large enterprises for the UK to remain in the EU. 78 percent supported staying, and just 10 percent felt it should leave. 75 percent thought quitting would adversely affect foreign investment in Britain (Torella & Masselot, 2010:84). Image 3: UK GDP Growth in the last 3 years. Source – Jones, Menon, & Weatherill (2012:52) Currently, when the UK negotiates with other countries (the US, Japan, or Australia) it does so as a member of the largest trade zone in the world, which holds sway over 20 percent of global GDP. Washington, Tokyo and Canberra must seriously consider Brussels as a trading associate (Jones, 2014:108). If the UK were alone, the balance of power would be noticeably different. America’s economy is 7 times that of the UK, Japan’s is twice as big, and China’s is 5 times as big. To put this into context, it is striking to reflect on what a Chinese state-owned newspaper, the Global Times, wrote about the UK when current Prime Minister David Cameron toured the country in 2013 (Jones, Menon, & Weatherill, 2012:58). According to the newspaper, the Cameron regime should concede that China does not view Britain as a major power. It is just one of the many vintage European countries ideal for study and travel (Zielonka, 2014:25). Image 4: Comparison of UK and Euro Area 17 economic growth. Source – European Central Bank. Leaving the EU would compel the UK to liberalise its markets more for the largest economies in the world than they would liberalise theirs for the UK (Williamson, 2014:76). The country would be forced to bow to their demands – whereas, currently, Britain shapes the EU’s product policies, which in turn can become international standards (Codjoe, 2014:49). The country would also be compelled to negotiate with the EU, which would have an economy 6 times that of the UK, once it leaves. It is much better to remain in the EU and exploit its influence to find markets in other regions (Karolewski & Kaina, 2012:37). The common market is based on the four freedoms. These formed part of the Treaty of Rome that inspired the mantra that led to the 1958 birth of the European Union: free movement of people, goods, services and capital. This is also one of the most groundbreaking freedom charters in since the advent of civilisation. The Immigration Issue Although it must be acknowledged that immigration is a very sensitive subject, permitting free movement of people across the EU has been beneficial to the UK economy. In addition, it has strengthened its culture and created more employment, study, and retirement opportunities beyond the Channel for Britons (Corner, 2010:36). If Britain quit the EU, it is unclear what would befall its citizens who live and work in EU member states. In the unlikely situation, that relations became so hostile that the UK deported EU citizens out of the country, the EU would probably avenge by doing the same (Koschut & Oelsner, 2014:42). The aftermath would be catastrophic. New immigrants moving to Britain would be seriously dissuaded from moving to there. In addition, if the EU banned UK citizens from living and working in EU member states, the freedom they enjoy now would be considerably curtailed (Snow, 2010:60a). Image 5: Infographic showing Britain’s high influx of immigrants. Source – Eurostat Most of the EU citizens living in Britain are young and professional; they go there mainly to further their careers. Their ostensible non-activity rate – that includes stay-at-home parents, retirees, students, and the jobless – is 30 percent (Chorafas, 2010:18). On the other hand, the entire UK population has a non-activity rate of 43 percent. In the meantime, 32 percent of latest immigrants have undergraduate degrees in contrast to 21 percent of native Britons. Many Britons agonise over the fact that EU immigrants take or will take their benefits (Sen & Chowdhury, 2014:81). However, the reality could not be more different. EU immigrants are 50 percent as likely to access state benefits or tax waivers, according to a research conducted by scholars at University College London (Larionova, 2012:96). In 2011, the European immigrants in the UK had an average age of thirty-four, compared with forty-one for native Britons. Image 6: Contribution of Immigrants to UK economy. Source – Centre for Research and Analysis of Migration. Contrary to popular belief, UK citizens do not even finance, to a large degree, the education of the immigrants (Toje, 2010:18). This is because most of them arrive on UK soil having studied to economically viable levels. In addition, since a majority of them are of working age, native Britons do not fund most of their healthcare or pensions (Lodge, Schmueker, London, & Coutts, 2010:38). In fact, majority of them go back home bearing only good memories of Britain with them. In summary, the UK is not getting a raw deal from EU immigrants. In assessing the benefits of EU membership, it is important to consider long-term implications and not just limit our thinking to the short term (Mair & Zielonka, 2012:74). Specifically, can EU membership be more cutthroat and less amalgamated? Image 7: Long-term migration in the EU. Source – May (2014:53). Profiting from the eurozone Crisis by Staying in the EU The eurozone crises and growing euro scepticism all over the Union suggest that it is strategically positioned to achieve this. This rationale, it must be acknowledged, contradicts the general notion that the eurozone will be forced to integrate more in order to mitigate its challenges (Mathews, 2011:61). Consequently, Italy, Germany, France, and other member states will operate as one bloc, with the potential to define what occurs in the EU without considering British interests – even on issues that are important to it such as the regulation of the City. However, the eurozone will probably not accelerate towards alleged political and monetary symmetry (May, 2014:53). The rise of Euro scepticism in Europe implies elites will be incapable of manipulating people into approving more allocation of power to Brussels like they have done previously. Political symmetry is also meaningless because the biggest challenge with the periphery involves competitiveness (Wall, 2012:47). Consolidating power and distributing handouts will not remedy that. Instead, the solution is to redeem competitiveness and enhance productivity by liberalising markets (Von Dosenrode-Lynge, 2012:64). This is a difficult process, but it is starting to pick up in countries like Spain and Greece (Meyer, 2011:46). During a tour of London at the beginning of 2014, Angela Merkel said that she considered the UK to be a formidable partner to make the EU more aggressive and less bureaucratic. Finally, when discussing whether or not to exit the EU, a holistic perspective is important. This means taking into account both the advantages of staying and the disadvantages of leaving (Mpofu, 2014:34). None of the alternatives would be overly attractive. The option of remaining in the EU may be logical. Norway is an example of a country that can access the common market without being a member of the EU. This implies that it is not a member of the CAP (Barnard, 2010:42). However, there is a huge drawback: Norway has to follow all the rules of the common market without having any say (voting) on what those requirements are (Chopin & Foucher, 2013:83). If the UK were in the same situation, it would be differential to Brussels. Far apart from the damage to its independence, the rules would be created without considering British interests; this could hurt the country easily (Farkas, 2013:45). It is hard to envision how such a process would be more ideal than its existing membership. Some Euro sceptics are of the opinion that the UK should exploit its membership to the World Trade Organization (WTO) in order to guarantee access to global markets (Schweiger, 2014:67). Financial Dynamics Despite the WTO making progress in liberalising trade, it has not achieved anything in the mould of free trade in manufacturing, leave alone services, which represent over 75 percent of the UK’s GDPP (Snow, 2014:15b). For example, the British automotive industry would be forced to pay 10 percent levies on exports to the European Union (Aydin-Duzgit, 2012:49). It is no surprise why, at the beginning of 2014, Ford CEO cautioned that Britain would be severing its nose to spite its face if it made good is intention to quit the EU. If the UK left the EU, foreign firms that invested in the country as a foundation for catering to the entire EU market would move their processes across the Channel (Odmalm, 2014:26). Some UK firms would do the same thing. Unemployment would increase until salaries suffer so much so that employees would force themselves back into the market (Baimbridge, Whyman, & Burkitt, 2012:51). In summary, there are no viable alternatives to membership. The UK should remain in the EU and channel all efforts towards reforming it. The solution is not to stymie, but to fix it. Image 8: Change in Unemployment in leading EU economies. Source – Charter (2012:34) Britain benefits from its membership in the EU, and the EU gains by having Britain in its fold. The relationship is and has always been symbiotic, so it is surprising to hear sceptics claiming that being in the EU hurts the UK’s economy or political influence. The maligned nations must solve their issues (Adiong, 2010:31). However, the EU can contribute in some ways, four to be precise. First, it can consolidate market in services, which is shaky. Second, it can liberalise Europe’s markets so that the EU can trade with other world regions, particularly China and America (Charter, 2012:16). Third, it can create an advanced financial framework inspired more by capital markets than banks. Fourth, it can reduce regulation obstacles in business by minimising bureaucracy. Conclusion The UK should not leave the EU; the benefits of staying in the EU outweigh the disadvantages. Instead of quitting, Britain should take advantage of the euro crisis because all the dynamics suit Britain’s economy. It is easy to see how Germany has drawn huge benefits from the common market in goods due to its ability as a manufacturing country. Extending it comprehensively to the service industry, where the UK excels, could be similarly advantageous to the country. Alternatively, we can consider how things would look like if the Union was less bank-centric and leaned more towards capital market tools (e.g., bonds and shares) to direct funds from investors to firms. Most of the business would go through London with its legion of attorneys, accountants, and investment bankers. More trading activities and less bureaucracy would also help British businesses. It is time to convince the EU to approve such an agenda instead of exiting the bloc. Recommendations First, the UK needs to assert itself in the EU, and stop being so submissive to the zone. With its constant passiveness, one would be forgiven for thinking that the UK is a smalltime player in the EU, yet it has the third largest GDP in the zone after Germany and France. Assertion would require a combination of diplomatic, political, and economic pressure that would reaffirm its position as a major power within the EU. Germany and France do not have any significant strategic edge over Britain, apart from the fact that they know their might and are not afraid to use it. Secondly, rather than leave the EU, the UK should use its global influence to increase its presence in the EU. No other EU member state has as much international influence as Britain, yet it always seems maligned in the eurozone, seen as a subordinate to Germany and France and a spectator in most important developments. This should change. Finally, the UK should drive its own agendas with other countries, and still retain membership in the eurozone. It should not be looking to the EU, at all times, to decide whether or not it should trade with other countries, or the circumstances under which it will remain within the zone. 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