RexN Euroblog

RexN Euroblog

RexN's euroblog

This has been set up with a view to the EU referendum.

My own interest derives from teaching Economics, making lessons relevant by using the various treaties to add relevance to theory.

Views expressed are my own and hopefully contribute to debate.

EU debate lies and statistics

EuroblogPosted by RexN Tue, June 21, 2016 15:46:43

Following a variety of debate, this piece was originally inspired by the claim from Angela Eagle that the Leave campaign produce questionable statistics. Ironically, the ‘In’ side produced more.

Eagle can be a fantastic Commons performer, frequently running rings around Osborne at Prime Minister’s Questions (PMQs) when Cameron is absent. During the debate, she did not stand up to the scrutiny as when she has 6 pre-prepared questions to ask rather than an audience to answer.

Neither did Cameron’s own figures stand up to scrutiny during his Question Time performance. Being pedantic, I should point out that Cameron’s was a performance rather than a debate. The Prime Minister has shunned any opportunity to go head to head.

£350m per week

This is allegedly the figure that the UK hands over to Brussels. The source is the Office for National Statistics.

Yes, that is the figure notionally handed over. Not all of that leaves the country. Some of that £350m does not leave the UK, it is diverted into EU projects by British civil servants. Most Leave politicians are able to stress the difference between funds allocated to and funds transferred to Brussels.

Of course, there is the famed “rebate”. This takes the figure down to £276m per week that is allocated by the EU. This has to be offset by extra calls for cash, the UK having the most buoyant economy within the EU. This amounted to £1.7bn last year with estimates of £2-2.4bn this year.

Caution has to be used when making arguments. Instead of representing the EU parliament as spending less than a week’s gross contribution on shifting from Brussels to Strasburg and back for 4 days per month, the real cost is more than two weeks of net contribution – subject to later review.

EU is the biggest single market
This is a fun one which depends on how you define a single market and what measure is chosen.

When looking at value there are a number of possible sources. The IMF, amongst other things, rates countries by GDP. By this measure, USA is $1.275 trillion, or around 8% bigger than the EU. There is obviously a single market within a country’s own borders.

Taking the North American model, NAFTA includes both Canada and Mexico. Should NAFTA be expanded to become the North ALTLANTIC Free Trade Area, including the United Kingdom, the EU would be dwarfed.

The EU, however is marginally more populous than NAFTA. When it comes to population, both China and India have populations over 16% bigger than the EU. Both are linked to ASEAN, an Asian free trade area through ACFTA and AIFTA, making each of those bigger.

To qualify the statistic, Remain would have to redefine and say that Fortress Europe is the biggest protectionist customs union, by some criteria at least.

Independent Economic experts
A favourite claim of David Cameron is that all “independent” economic experts predict doom and gloom for Britain in the event of Brexit. The experts he refers to may not be quite as independent as he suggests.

Arguably, the key pieces of propaganda emanate from the Treasury. Notably, when becoming Chancellor, George Osborne set up the Office of Budget Responsibility to avoid temptations by the Treasury to “fiddle the figures”.

The Institute of Fiscal Studies (IFS) are presented as independent. The IFS is headed by Gus O’Donnell, former Treasury Permanent Secretary, later Cabinet Secretary, made a Lord by Cameron. He has also been executive director of the World Bank and IMF. Notably, he can expect to be referred to in the forthcoming Chilcot report.

There is a free flow of staff between the Treasury and IFS. Indeed, on taking up his seat in the Lords, O’Donnell spoke up about Treasury pay scales.

The IMF are headed by Christine Lagarde, supported by George Osborne to gain her position. Lagarde faces charges in France over her part in a €400m pay out to Bernard Tapie. These are some of those experts that Cameron refers to, those who repeat the Treasury dossiers.

Truly independent economists, such as Patrick Minford are ignored. It is clear that Cameron and his team have had time to prepare their case. As the campaign has moved on, other organisations, such as Deutsche Bank have come out to say that Britain would thrive following Brexit

We pool a small amount of sovereignty
How small is small?

The EU’s responsibilities are divided into competences. In some areas, such as fish stocks, trade deals and more, they have “exclusive” competence. Sticking with those 2 examples, Britain can not strike up trade deals independently.

Fishing becomes more interesting. Although Britain has 60% of the EU’s fishing waters, we have an 8.4% say in decisions made on fishing. One Dutch ship has 23% of the fish quotas for our waters. The French have quotas 5 times higher than ours for the Celtic Sea.

In return for pooling sovereignty, or put another way yielding 93.6% control, we do have an 8.4% say in the fishing industries of Luxembourg, Austria, Slovakia, and the Czech Republic, all of which are landlocked.

As Cameron rightly points out, we do have sovereignty in not having to increase VAT rates. However, should a British government wish to cut VAT rates below 15%, for example to stimulate output or reduce inflation, we can not do so.

Where Britain has exclusive competence is a challenge for others. What is obvious, however, is that ceding of sovereignty is smaller in some areas than others.

Rules from the EU 13-60%?
This is another of those fun topics, exactly how much of our own law comes from the EU?

The Remain camp insists that only 13% of our laws come from the EU, Leave say up to 80%. Where do you begin?

The 13% comes from the House of Commons Library, usually an authoritative source. In this instance, the analysis was shown as a percentage of Acts and Statutory Instruments.

The EU can also impose regulations that do not pass through Parliament. Business for Britain took a different approach, including EU regulations. This takes the figure up to 64.7% between 1993 and 2014, including a total of 49,699 EU regulations and 4,532 measures implementing EU directives.

Unfortunately, there is no standard to identify the relative influence of each, so depending on your perspective, you can argue whichever figure you choose.

% of trade
A common argument as to why Britain will suffer doom and gloom is that we do more trade with the EU than the EU does with us. The figure that Cameron and others would have us focus on is that 44% of our exports go to the EU, less than 10% of the EU’s trade is with us.

At first sight, this could be convincing. It is however quite natural that some countries will trade more closely with certain partners. Of the 29 nations, on the East, links still exist with Russia, including gas supplies.

A look at our roads and in our supermarkets tells a different story. We import high value cars, in fact 83% of new cars sold in the UK in 2015 were built in the EU, the vast majority in Western Europe from Germany to Spain.

We can also look at high volume products, such as wine, cheese, pasta and cured meats.

A different way to look at the figures is not by percentage but value. On balance, we currently import £8bn more from the EU per month than we export. The impact on French, German, Spanish manufacturing and farming would be considerable. Their governments have an interest in dealing with us. They have far more to lose.

More can be seen on euroblog.rexn.uk




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