Leave or remain? What will leaving really cost?

Leave or remain? That’s what we Brits are being asked to decide on very soon.

Right now, it is almost impossible to turn on the TV or open a newspaper without seeing and hearing about Brexit and Bremain. Discussion programs dominate, with particular emphasis on the economy but, the strange thing is, there’s more passion than persuasive data. At the end of program, there’s a common audience complaint, “we still don’t feel we have enough information to make a decision.”  And about what? Well. the economy of course.

Amazingly, according to the website www.fullfact.org “There is no definitive study of the economic impact of the UK’s EU membership or the costs and benefits of withdrawal”, as the House of Commons Library says. So, no wonder there is such a dearth of information. Why no such study has ever been commissioned I have no idea but couldn’t help wondering if both sides feared the answer. Or perhaps no-one expected it ever to be needed.

Then suddenly it struck me, try to estimate it! Health warning: there are going to be some figures coming up.

 

According to the fullfact.org website, the UK net payment to the EU, after rebate, contributions to farmers and poorer areas, like Cornwall is £8.5 billion pounds a year, that’s eighteen in and nine and a half back. That’s about two pounds a week or a hundred pounds a year, each.

If we left, we’d get that back, but there’s a cost. Of course we’d still get access to the single market, but we’d have to pay tariffs on our exports to EU countries. The UK exports about £325 billion a year, of which 44% or £143 billion goes to Europe. The tariff charged is 4.7% to non-EU countries and so, if we became one of those we'd need to find  £6.7 billion annually.

There was a massive project called simply 1992 which was a collection of actions to ease movement of people, goods and money around Europe. The estimate was that it was worth over 1% of the GDP of each country, and the UK participated fully. If we leave, we'll lose that The UK’s GDP was a whopping £1.86 trillion in 2015, and that means that losing the benefits of project 1992 will cost us £18.6 billion every year.

What that shows is that we will have to pay something like £25.3 billion to get back our £8.5 billion, so, far from being better off, it will cost the country around £16.8. Numbers will billions in don't mean that much, but it translates to us all being to the bad, about 4 pounds a week each, every man, woman and child. Put another way, leaving Europe will cost every two children family at least £800-00 a year.

This analysis has been very simple. It assumes that we don’t lose a single European customer. We haven’t thought about what has to be sacrificed to find the tariff to keep the price to the European customer the same. Obviously that additional tariff cost has to be found and it can only come from profit, which hits investment, or cost, which means salaries or investment or parts, and we haven’t discussed the knock-on effects of those possibilities. We haven’t discussed the cost of “taking back control”, the Brexit camp scream about interference from Brussels, but haven’t talked about the cost of setting up or expanding the UK’s “independent” standards bodies. We haven’t talked about the cost of all those experts and consultants that will be needed to negotiate our relationship with Europe and all the additional civil servants needed to exercise that control that has been taken back. If all those are added in then 4 pound each figure will rise but by how much is speculation.

I want the UK to remain in Europe for us all to continue to be better off.