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22 October 2013

Jonathan Faull: Can the UK afford to turn its back on Europe?

EU single market benefits to the UK are between five and 15 times Britain's net EU budget contribution, argues DG MARKT's Faull in the Parliament magazine.

The single market can be said to be the main organising principle of modern economic Europe. All European countries, big or small, position themselves in relation to the EU market. Countries queuing up to join the EU, are adopting EU rules as fast as they can to modernise their economies and gain access to the single market. Turkey, with a trade volume of €9 billion per year with the UK, is in a customs union with the EU and is negotiating to join as a full member, although no one can say if and when it will finally join. Ten of the twenty most competitive countries in the world are in the EU or closely tied to its market. But the single market is not perfect.

A lot has been done, particularly in relation to the free movement of goods, capital and people, but services and the digital economy require a lot more effort. The expansion of the EU as well as the financial and economic crisis, has increased both the difficulty and the potential gains of getting the job done.

So what about the UK in all of this? Can Britain really afford to turn its back on its continent and every other country in it? Some facts: the British government estimates that the single market benefits the UK to the tune of between €31 and €92 billion every year. Around 3.5 million British jobs are linked to the single market. Those single market benefits are between five and 15 times the UK's net EU budget contribution.

Arguing successfully for free trade as a single entity at the WTO, the EU as a trading bloc, accounts for €10.9 trillion worth of trade, more than the United States. The EU is the UK's most important trading partner by far. Over 300,000 British companies and 74 per cent of British exporters operate in other EU markets. The UK also has a balance of trade surplus in services with the rest of the EU (+0.88 per cent of GDP); by way of comparison, Germany has a deficit of -1.05 per cent. Around 2.4 million citizens of other EU countries live in the UK, while 1.4 million Britons live abroad in the EU.

They do not come for welfare: in February 2013, 16.4 per cent of working age UK nationals claimed a working-age benefit from the department for work and pensions, against only 6.4 per cent of nationals from other EU Member States.  

Some will say that we can leave the EU and stay in the single market. Probably we can. It can be negotiated. As we have seen, there are many countries attached to the single market outside the EU. But the single market has rules, like any modern economy, to ensure a level playing field and fair competition. The reality of modern Europe is that economic rules are made in Brussels. And that will not change. The only question is whether Britain will be at the table shaping them or just receiving them by email after some form of consultation, without the active involvement of its ministers, MEPs, and stakeholders. That is the real choice.

Full article

© The Parliament Magazine

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