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Ros Taylor

May 16th, 2016

We need not hitch ourselves to the EU’s failed political project in order to trade with Europe

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Estimated reading time: 5 minutes

Ros Taylor

May 16th, 2016

We need not hitch ourselves to the EU’s failed political project in order to trade with Europe

4 comments

Estimated reading time: 5 minutes

skedThe notion that Britain joined the EU to stave off economic and post-imperial decline is a myth, writes Alan Sked. It was supply-side reforms of the kind championed by Margaret Thatcher that spurred economic growth. Harold Macmillan and, later, Edward Heath captured the Conservative party and hitched the UK to the EU project – a project that is fundamentally political, and not economic.

Students and journalists often seem to believe that Britain had to join the EEC (later the EU) because geopolitical realities demanded this or economic decline forced it on us.

Nonsense. Ditching our victorious Commonwealth wartime allies to join a combination of Luxembourg, Belgium, the Netherlands, Italy, (Nato occupied) West Germany and a France that had just lost two vicious colonial wars in Vietnam and Algeria, and had only been saved from civil war by a constitutional coup by de Gaulle, made no sense at all geopolitically. These states were a bunch of losers who carried no weight internationally.

Likewise, although we certainly had economic problems, they were not of the kind that EEC membership could help. They concerned high overseas defence spending, militant trade unions and high taxation. All of these were later sorted out by UK government action alone.

passport euros
Photo: Christopher Elison via a CC-BY-2.0 licence

The EEC budget at this time was small and almost exclusively devoted to agriculture and fisheries. It had no means of helping the UK economy. Not that we were doing so badly in growth terms. When Harold Macmillan won his election in 1959 the annual British growth rate was almost 5 per cent. In 1960, the year before he submitted our first application to enter the EEC, it was almost 6 per cent. In 1973, when we joined the EEC, it was a record 7.4 per cent. (All figures are those of the Office for National Statistics.) Poor George Osborne would die for such figures.

Growth in Europe, meanwhile, was spurred not by the EEC/EU, according to the latest research, but by the supply-side reforms of individual statesmen in a variety of countries, reforms that were then copied across the continent. The relevant names are Ludwig Erhard in West Germany, Jacques Rueff in France, Margaret Thatcher in the UK and Gerhard Schroeder in Germany. EU policies, when they eventually expanded beyond the Common Agricultural Policy and the Common Fisheries Policy (both deleterious to the UK economy), included the currency snake, the ERM and the euro – all failures and detrimental to the European economy as a whole.

Since the 1980s, the growth rate of the EU has gone down by 1 per cent every decade. Share of world GDP is in free fall. Today, the Eurozone is again on the brink of a fatal implosion over the Greek bailout and the whole of the EU is in a migration crisis exacerbated by its now absolute dependence on neo-fascist Turkey. The UK outside the Eurozone has experienced twice the growth and half the unemployment there. So we have gained nothing economically by being in the EU.

We joined because the Tory party was captured by Macmillan, a long-standing European federalist. He worked hand in glove with Jean Monnet to get us in but was thwarted by de Gaulle, who could not see any rational reason why Britain should apply for membership save to please the USA.

As soon as Macmillan had made his bid, however, his cabinet’s Long Term Policies Committee was planning the establishment of a federal Europe and forecasting (in 1961!) that, by 2000, the UK would no longer exist as an independent state. Indeed, the British ambassador to France, Gladwyn Jebb, wrote elatedly to Downing Street that Britain would have less autonomy in a federal Europe than Texas had in the USA.

Once Edward Heath took over, he had Douglas Hurd arrange for the Tory Party to become a secret corporate member of Monnet’s Action Committee for the United States of Europe. The Labour and Liberal Parties followed suit. They believed, as Michael Heseltine later put it in the Spectator, that in future the name Britain should be no more meaningful than the name Mercia.

So, the EU is primarily a political project. Just think about it. The mantra of the Remain camp is “to trade with Europe you have to be part of it”. But this is bizarre. Nobody says “to trade with China you have to be part of it”. That would be very scary. They don’t even say “to trade with the USA, you have to be part of it”. Nobody suggests accepting the US constitution or the dollar as part of the price to trade with America.

Yet, to continue to trade with Europe, we are told we must accept EU laws, policies and institutions including its Parliament, Commission, Supreme Court, diplomatic service, flag, anthem and passport. This is the true price of EU membership and the Single Market – the loss of our political independence. So the referendum is not about a Single Market or trade. It is about Britain becoming a normal, self-governing democracy again with a British government alone in charge of formulating our policies and directly accountable to the British people in its execution of them, just as is the case in Canada, Australia, New Zealand, the USA, India and the vast majority of the world’s democracies.

This gives us the opportunity to redirect our trade to the rest of the globe where we have a trading surplus; to import cheaper food and goods from outside Europe where the EU external tariff will no longer apply; to spend our annual EU contribution of £8-10bn on the NHS, the poor and disabled, farmers and universities.

We are not some supine, failed state. We lead the world in soft power. In the past we regularly saved European democracy by our example. We can do so again – in fact, that is what the EU is really most worried about.

This post was originally published by City AM. It represents the views of the author and not those of the BrexitVote blog, nor the LSE.

Alan Sked is Professor Emeritus of International History at the LSE.

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Ros Taylor

Posted In: #LSEThinks | Economics of Brexit | Featured | UK politics

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