Why We Can Leave: The Top Ten EU Myths About Withdrawal Exposed

An extract from David Campbell Bannerman’s document “The Ultimate Plan B: A Positive Vision of an independent  Britain outside The European Union.”  Read more and download a copy here, or request a printed copy via the contact page.

Myth 1: “Britain will lose three million jobs as a consequence of leaving the EU”.

The Reality:

If Britain leaves the EU it will put in place of its EU membership a UK/EU Free Trade Agreement to preserve the benefits of trade with the EU. The EU sells much more to us than we sell to them: in 2009, the UK’s trade deficit in manufactured goods with the EU was £34.9 billion. So, in theory, if there was the very worst case of a trade war and no trade at all with the EU, the UK would lose the three million jobs which depend on trade with the EU (10% of all UK jobs), whilst the EU would lose some four million jobs7. This simply won’t happen, as the EU would not want to lose their biggest customer. Even the Lisbon Treaty requires the EU to make a trade agreement with a nation that leaves the EU (under Article 50), and the EU already has these trade agreements with many of the world’s nations including Switzerland and Norway.

Myth 2: “Britain will be excluded from trade with the EU by tariff barriers.”

The Reality:

The world has changed considerably since the UK joined in 1973. The EU has free trade agreements in place with 53 countries to overcome such tariffs and the UK/EU trade agreement would have no such tariffs, particularly if it merely replicated current EU membership arrangements. Indeed, the EU is very keen on free trade agreements for it is negotiating a further 74 such agreements and is seeking to open negotiations with an additional 12 countries. The EU now exempts services and many goods from duties anyway. This meant that in 2009 the UK charged an average customs duty rate of only 1.76% on non-EU imports. This is so low that it makes the EU Common Market, a customs union with tariff walls, pretty much redundant.

Myth 3: “Britain cannot survive economically outside the EU in a world of trading blocs.”

The Reality:

Major economies such as Japan (the world’s third largest) are not in trading blocs, but are very successful with international trade and global investment. Nor is the EU the place where most economic growth is taking place: the EU’s share of world’s GDP is forecast to decline to 15% in 2020, down from 36% in 1980. The EU is now more of a straightjacket than a life support machine to Britain. The EU already has Free Trade Agreements with individual countries across the world, regardless of such trading blocs. Countries such as Norway and Switzerland are not in the EU, yet they export far more per capita to the EU than the UK does. This suggests membership of the EU is not required for healthy trading relationships to exist between independent nation states and the EU. In addition, Britain’s best trading relationships are generally not with the EU but outside it – such as with the USA and Switzerland. The think tank Global Britain found that some 47% percent of UK exports go to the EU compared with 63% for Germany and 64% for France. However, 18% of British exports go to the US whereas for Germany, it is only 7%. Indeed, the largest investor in the UK is not even an EU country – it is the USA. Furthermore, the latest UKTI Report ‘Inward Investment Report 2010/11’ has found that the three top countries investing in the UK in terms of the numbers of projects are the non-EU countries of the USA, Japan and India. Moreover, the USA is the top destination for UK foreign investment. In addition, Britain’s exports to non-EU countries are surging ahead as these economies show high growth levels whilst the EU has been relatively sluggish.

Myth 4: “The EU is moving towards the UK’s position on cutting regulations and bureaucracy.”

The Reality:

EU directives and regulations are subject to a ‘rachet’ effect – once they are in place they are highly unlikely to be reformed or repealed. Less than 10% of Britain’s GDP represents trade with the EU yet Brussels regulations afflict 100% of the UK economy; an economy which is the world’s sixth largest. More importantly, 80% of Britain’s GDP is generated within the UK, such as Londoners buying Scottish whisky, so at least 80% (90% if trade to the Rest of the World is included) need not be subject to EU laws once the UK is free again. In 2006, former Competition Commissioner Verheugen estimated that EU over-regulation alone costs some €600 billion per annum across the whole EU. In 2010, Mats Persson of the Open Europe think tank stated EU regulation has cost Britain £124 billion since 1998. This figure was based on the UK Government’s official Impact Assessments of the cost to the UK of various EU Directives and Regulations. Independent studies have put the net cost of the EU membership and its attendant 100,000 plus Directives and Regulations at between 4% and 10% of the UK’s GDP. A Treasury report in 2005 had four categories of EU costs which altogether came to 28% of Britain’s GDP. Eliminating any possibility of any overlap between the Treasury’s categories, the think tank Global Britain conservatively estimated that the likely EU cost was around 7% of UK GDP or £98 billion at 2009 prices. In 2009, Matthew Elliot of the TaxPayers’ Alliance estimated that EU membership is actually costing Britain £118 billion a year. Whilst red tape savings are not direct cash savings, deregulation would result in a true “bonfire of regulations” that could fund either sizeable tax cuts or additional public spending, or a combination of the two.

Myth 5: “If we do leave, Britain will still have to pay billions to the EU and implement all its regulations but without any say in them.”

The Reality:

The UK has very little ‘say’ within the EU, and would have far more leverage outside the EU as an independent sovereign nation and the world’s 6th largest economy. The UK currently has only 8.4% of voting power ‘say’ in the EU, and the Lisbon Treaty ensured the loss of Britain’s veto in many more policy areas. Britain’s 72 MEPs are a minority within the 736 in the European Parliament (worsening to 73 out of 751 owing to Lisbon changes). The UK is increasingly losing influence within the EU and further EU enlargement, as with Turkey’s 79 million citizens, would water it down further. As for continuing EU contributions by an independent Britain, the Swiss and Norwegian examples show the UK would achieve substantial net savings. Official Swiss Government figures conclude that through their trade agreements with the EU, the Swiss pay the EU just under 600 million Swiss Francs a year but enjoy virtually free access to the EU market. The Swiss have estimated that full EU membership would cost Switzerland net payments of 3.4 billion Swiss francs a year. Norway only had to make a few changes to its laws in order to make its products eligible for the European Union marketplace. In 2009, the Norwegian Mission to the EU estimated that Norway’s total financial contribution linked to their EEA (European Economic Area) agreement is some 340 million Euros per year of which some 110 million Euros are contributions related to the participation in various EU programmes. However, this is a fraction of the gross annual cost that Britain must pay for EU membership which is now £18.5 billion, or £50 million a day.

Myth 6: “The EU has a positive impact on the British economy.”

The Reality:

British industries such as fishing, farming, postal services and manufacturing have already been devastated by Britain’s membership of the EU. EU membership costs the UK billions of pounds and large numbers of lost jobs thanks to unnecessary and excessive red tape, substantial membership and aid contributions, inflated consumer prices and other associated costs. Britain will lose more jobs when such Directives as the EU’s Alternative Investment Fund Managers Directive come into effect. This is already causing hedge fund and private equity markets to migrate elsewhere, doing substantial harm to financial services, responsible for 12% of the British economy and 15% of income tax receipts.

Myth 7: “The EU has brought Peace to the European Continent”

The Reality:

Even now, the EU is only 27 nations out of the 47 European nations listed as national members of the Council of Europe. The forerunner of the EU, the Common Market, didn’t even come into existence until 1958, and then only with 6 nations, and yet there was no war between European countries from 1945 to 1956 (Hungarian Revolution). Whilst peaceful international cooperation is welcomed at all levels, to say the EU is the sole guarantor of peace is an extreme exaggeration that is dishonest in its application. It is NATO, founded in 1949 and dominated by the USA, and not the EU, that has actually kept the peace in Europe, together with parliamentary democracy. Both of these are being undermined by the EU. The former German President Herzog wrote a few years ago that “the question has to be raised of whether Germany can still unreservedly be called a parliamentary democracy.” This was owing to the number of German laws emanating from the EU – which he assessed at some 84%. One of the major tests of the EU’s ability to keep the peace in Europe was the break up of Yugoslavia. It was the EU’s interference that helped trigger a major civil war and its dithering that contributed to the deaths of some 100,000 people. It was only decisive action by US/NATO forces that stopped the violence, and peace was established by the US-brokered Dayton Agreement.

Myth 8: “Britain will lose vital Foreign Direct Investment (FDI) as a Consequence of Leaving the EU.”

The Reality:

In their 2010 survey on the UK’s attractiveness to foreign investors, Ernst and Young found Britain remained the number one FDI destination in Europe owing largely to the City of London and the UK’s close corporate relationship with the US. EU membership was not mentioned at all in their table of key investment factors, which were (in order of importance): UK culture and values and the English language; telecommunications infrastructure; quality of life; stable social environment, and transport and logistics infrastructure. In any case, open access to the EU market would continue through a Free Trade Agreement in the manner of Switzerland and Norway whilst the UK would gain from higher growth, less regulation, more public spending and/or lower taxes and more suitable trade deals.

Myth 9: “Britain will lose all influence in the World by being outside the EU.”

The Reality:

Britain has a substantial ‘portfolio of power’ in its own right, which includes membership of the G20 and G8 Nations, a permanent seat on the UN Security Council (one of only five members) and seats on the International Monetary Fund (IMF) Board of Governors and World Trade Organisation (WTO). The UK also lies at the heart of the Commonwealth of 54 nations. Moreover, London is the financial capital of the world and Britain has the sixth largest economy. Last but not least, the UK is in the top ten manufacturing nations of the world. Far from increasing British influence in the world, the EU is undermining UK influence. The EU is demanding there is a single voice for the EU in the United Nations and in the IMF, has made the British economy and City of London less competitive through overregulation, and negotiates more protectionist and less effective trade deals on behalf of the UK. The new European External Action Service (EEAS) and its EU ‘Foreign Minister’ Baroness Ashton are undermining national diplomatic representation and the furtherance of British political and commercial interests through British embassies, which are being closed or downsized around the world. Foreign Office support for the BBC’s World Service is being eliminated also. EU diplomats owe their allegiance to common EU interests and not British ones. Indeed EU diplomats are now claiming to have the right to speak for Britain on key issues such as security and defence – the EU Ambassador to the US Joao Vale de Almedia made such a claim in 2010. The Commonwealth is increasingly being discriminated against by the EU policy on visas, so that non-EU Commonwealth citizens face having to obtain visas whilst citizens of even new EU entrants have automatic entry, and bonds with Britain are being lost.

Myth 10: “Legally, Britain cannot leave the EU.”

The Reality:

Technically, Britain could leave the EU in a single day. Legislatively, this would be achieved simply by repealing the European Communities Act 1972 and its attendant Amendment Acts through a single clause Bill passing through Westminster. If the British people voted to leave in an In/Out Referendum or by voting in a party with EU withdrawal in its manifesto, Parliament would have to respect the will of the British people and there would be no justification for delay or obstruction in either House. However, the process of setting up a replacement UK/EU Free Trade Agreement will take longer, though there would be no need for time-consuming negotiation of tariff reductions if the UK/EU Free Trade Agreement merely replicated existing EU trade arrangements. In addition, even the Lisbon Treaty’s Article 50 enshrines the right of Member States to leave the Union, albeit in an unattractive manner. The same article requires the EU to seek a trade agreement with a member which leaves. Greenland established a precedent for a sovereign nation by leaving the EEC in 1985, and is prospering well outside of it. With Westminster still sovereign (for the moment), it is the British Parliament who will decide how and when Britain leaves the EU. As the European Commission Treaties Office Database shows, an independent Britain will then be able to negotiate around many different types of EU association. Whilst France is a full EU member and Denmark is a full member with opt outs, Norway has an EU internal market association. On the other hand, Turkey has an EU Customs Union arrangement, while Switzerland has signed a free trade agreement. In contrast, Georgia has concluded a partnership and co-operation agreement, and Japan enjoys a ‘Most Favoured Nation’ status.