EU costs and benefits: an impossible balancing act

 

No-one knows. If anyone asks you about the economic costs and benefits of leaving the European Union, that is almost always going to be the best answer.

It is also the answer to most questions about the economic costs and benefits of staying in. These are not questions that economists or anyone else can give a sensible answer to - not least, because no-one can say with any confidence what the terms of Britain's NON-membership of the EU would be.

The deputy prime minister has suggested that three million jobs "rely directly on our participation" in the European single market. The source for this number is not entirely clear - though the number is similar to past estimates of the number of jobs that are directly or indirectly dependent on Britain's trade with the EU.

The Fullfact website has some useful due diligence on the subject.

To state the obvious: those jobs would not necessarily disappear if the country left the EU. Norway, for example, has access to the single market without being formally part of the EU.

Jobs at risk?

Economists get a bit irritated when these debates are framed in terms of the "jobs at risk". What should matter, in the view of most economists, is what all this means for our rate of growth and our national income per head - in other words, what should matter is how our relationship with the EU is likely to affect our national prosperity. What a given level of income means for the quantity and quality of Britain's jobs depends not on the EU but on how our labour market works.

I suspect this is a lost cause for the economists. Most politicians will tend to talk about the economic impact in terms of jobs, and so will most voters. The point is that even if jobs were lost, we cannot assume that all those people would suddenly be out of work.

Lifting the burden

Lord Lawson and other supporters of British withdrawal would say that lifting the burden of European bureaucracy would create a lot more employment, and income - and open the eyes of British business to the many opportunities available outside Europe.

That is possible. It is also possible that being outside an increasingly integrated European Union would fundamentally undermine the City as a global financial centre and cause many global businesses to quit the UK. All of this is worth debating, and no doubt will be, here and elsewhere, in the years to come.

The relative economic costs and benefits of membership would be uncertain, even if we knew exactly what the terms of Britain's departure would be.

But when Britain's future - inside or outside the club - is so uncertain, it is difficult to even know where to start.

 
Stephanie Flanders Article written by Stephanie Flanders Stephanie Flanders Former economics editor

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  • rate this
    +2

    Comment number 94.

    The economics are on the EU's side, but I don't think I can go into a booth & vote for an undemocratic system. What do you do if the EU govt turns ultra toxic? Smile & endure?

    The EU parliament cannot introduce legislation or approve it. The only democratic element within the EU is the Council of Ministers, yet this is the aspect of the system that is to increasingly to have its power reduced.

  • rate this
    +1

    Comment number 93.

    "Though we all know really, that leaving the EU would be completely bonkers."

    ...or staying might be

  • rate this
    0

    Comment number 92.

    86.Chippsin

    "...That's exactly what we said when we got married..."

    ===

    Well I suppose there had to be the odd one or two. Loose covers over the settees, so as to keep them looking new (not that you can see that) too?

  • rate this
    0

    Comment number 91.

    Yes but no but.
    Though we all know really, that leaving the EU would be completely bonkers.

  • rate this
    +1

    Comment number 90.

    @81
    That may be case but you dont need a bureaucratic tax hungry monster, legislating to restrict & be protectionist, to do that. Can be done with individual States making their Civil Servants together w/appropriate Minister get out there & negotiate.

    Folly of your & current EUs position is that that negotiating is still being done along with 2 lots more & it costs a bomb & gets us nowhere.

  • rate this
    -5

    Comment number 89.

    84. MM

    On Ted Heath: Sometime in the mid sixties when we failed to get into the EU as Gen. Chas. de Gaulle said we would be a pain in the posterior I recall taking with Ted about the reasons for the EU - summary they were never just economic!

    It is daft to see the EU just as a money club! It never was and never will be - we must stay within it or we will roll back history two hundred years!

  • rate this
    0

    Comment number 88.

    A bit like what Billy Connelly said about Scotland leaving the UK, "we can't do that - who would we blame for everything?"

  • rate this
    0

    Comment number 87.

    There wasis relevant point on topic to 82 which corrected (what a luvly word. Correct! ) in 85 and that relevance is this. Spiel. Political spiel from a government NOW engaged in its re-election and desperate for good marks and hanging on to power. Consumption of which is.... down.

    EU will now imitate a snail for the summer months to September, when l hope l am allowed to continue wooing Angela.

  • rate this
    +1

    Comment number 86.

    79.Ivan The Cerebral
    "Imagine getting married, but saying "I think I'll see if the marriage works out before having kids, or getting a home in joint names etc."

    That's exactly what we said when we got married as regards such a long term committment as having children (a house can easily be disposed of). Seemed only sensible to us, and forty years later can only say it worked for us.

  • rate this
    0

    Comment number 85.

    82 correct ion :) Everything correct.

    Whoops a mundo, Germany has bank support in place at $2bn. They are a joke.

    Should sum the amount $2trillion. Sorry, yup $700bn with the Landesbanken. $1.3 Tn with the major banks.

    That is the reason for a Fiscal Compact and Spama├čnahmen ;)

    Ford just lost $2bn this quarter.

  • rate this
    +2

    Comment number 84.

    Ref 33.mr_market

    Agreed. Edward Heath apparently knew well enough precisely what the overall outcome of the EU would ultimately be, and he unashamedly lied to the people about what would follow

    Every PM since has failed to right the wrongs, perhaps hoping for a seat on the gravy train later on, by telling the whole story

  • rate this
    -1

    Comment number 83.

    Some people saying when BRIC countries can trade with europe outside EU, why UK cant. Hold on a minute India and China sell things at rock bottom prices because they have huge human resources to work for low wages. Can UK sell the goods at the same rate? If yes then your argument is valid. If you want to sell a good at 10 times higher price than what a BRIC country could sell, better be within EU.

  • rate this
    0

    Comment number 82.

    A little note on http://www.bbc.co.uk/news/business-22449541 German industrial output rises.

    These figures are... rubbish. Auto orders down 13%. Energy use down. Inflation (growth) down. Imports down. Germany's stats people are milking the bull.

    How convenient for surprise upturn as the EU turns awsy from the Austerity monster.

    Germany has bank support in place at $2bn. They are a joke.

  • rate this
    0

    Comment number 81.

    There are cross border issues - pollution, fishing, migration, crime, finance etc. that cannot be solved by national governments. We elect MEPs to Brussels to do this. The real failing in this regard is the UN NOT the EU! We have to accept not all INTERnational agreements can ever be in our national interest, and remember we are a nation of 60million in a world of c.7 billion - Grow up Britain!

  • rate this
    0

    Comment number 80.

    Stephanomics - how arrogant can you be.....

  • rate this
    -1

    Comment number 79.

    The UK's position all along has been pretty absurd re the whole project.

    Imagine getting married, but saying "I think I'll see if the marriage works out before having kids, or getting a home in joint names etc."

    The precautions make a mockery of the whole purpose, and how long would one wait either, even if one got one's way?

  • rate this
    0

    Comment number 78.

    @74

    AND I DO NOT sit in a factory!. . . . You obviously have absolutely NO understanding of exports if you think that were only capable of exporting cars!
    Transit shut down here and was re opened in Greece. No one was told, but it was obviously planned because it was up and running within 10 days, thanks to your lovely EU, so don't forget that when your singing it's praises

  • rate this
    +1

    Comment number 77.

    @56.
    vstrad

    The rest of the EU runs a trade surplus with the UK, so they would be cutting off their nose to spite their face if they put obstacles in the way of free trade between the EU and a non-member UK.

    I wonder why that is, the expression rip off Britain comes to mind, Swiss exporters to the UK referred to here as treasure island, as they could make such huge profits, selling to us !!!

  • rate this
    +2

    Comment number 76.

    BJK @71. Quite right - the EU is not a club. I think most people (perhaps many politicians) have not realised that it is increasingly a Union of countries moving steadily towards a central/federal government. If thats what everyone wants fine-but lets not sleep walk into a United States of Europe in which what are currently national governments (e.g Westminster) deal only with local state issues

  • rate this
    0

    Comment number 75.

    @74

    Taxes are ALWAYS due on entry to the country it's going to. The exporter pays his taxes here, the importer pays their taxes on entry to the destination country, whatever those taxes may be . . . . WE DONT JUST EXPORT BLOODY CARS!!!!!!

 

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