Leaving aside Boris Johnson’s bluster and recent unsubstantiated claims that the EU has banned children aged under eight from blowing up balloons and forbidden the recycling of tea bags, there is a really positive vision for the UK remaining an integral part of the EU.Over the last 40 years the UK’s prosperity has been based on Britain’s EU membership with free trade and open markets. It has also advanced social protection and contributed to the well-being of some of the world’s most vulnerable people.
Surveys of business leaders and City institutions back Britain staying in the EU, so as to safeguard the single market and the free flow of British financial services, including the single financial passport that allows banks to operate across Europe.
Sir Gerry Grimstone, chairman of Standard Life sums it up: “The principle behind the single market – to encourage the free movement of goods and services – has created an environment that gives individuals and businesses the confidence to invest for the long term and it would be potentially damaging to the UK economy and therefore to companies such as Standard Life if the UK were to leave it.”
Recent economic surveys, including from the CBI, the London School of Economics and Oxford Economics model the adverse impact of an exit on the UK economy and the government’s ability to stick to high levels of funding for public services, such as the NHS.
The Bank of England describes the EU vote as “the most significant near-term domestic risk to financial stability.” According to the CIBI, the UK economy could lose more than half a million jobs by 2020 and would be unlikely to recover from the impact fully even after 15 years. In addition, the shock of a British exit could cut economic output between 3 and 5.4 per cent in 2020, depending on what sort of deal Britain managed to negotiate with its trading partners. In the CBI’s more optimistic scenario, per capita GDP would be 0.8 per cent lower in 2030 than if the UK stayed within the union.
Brexit also carries the risk of disruption to the UK’s energy supply and increased prices of up to £500m pa in the 2020s by being excluded from the EU’s internal energy market according to a National Grid sponsored report. It would also lead to uncertainty regarding regulatory regimes undermining badly needed new investment in infrastructure.
In the event of a Brexit vote, a decade could be lost with enormous costs and disruption as exit negotiations take place to address issues as varied as cross-border security, supra-national regulation regarding the safety of medicines, car manufacturing, farming and fishing. In addition, the two million UK ex-pats face a wall of worry regarding eligibility to pensions and healthcare benefits. Moody’s compounds the gloom with talk of potential credit downgrades to the UK’s largest companies thereby increasing borrowing costs, cutting growth and deterring foreign investment. Downgrades to the UK could also hit sterling leading in the worst case to a period of stagflation.
The Brexit complain about Project Fear, but in reality modelling the UK economy on non-EU countries such as Vanuatu, Nicaragua, Peru or Macedonia does not make a compelling economic case for leaving the EU.
I am excited that the EU Referendum presents a once in a lifetime opportunity to ensure that as a successful and prosperous country at the heart of the EU, Britain can take the initiative and propose solutions to the enormous political and economic challenges of migration, terrorism, financial stability and growth, as well as protecting the environment and narrowing the inequalities in society.
In my view, for the UK to remain in the EU, the world’s largest trading block, gives the greatest level of security and stability in a rapidly changing and volatile world. This provides the right backdrop for my business and clients to prosper.