As the UK general election gathers momentum, events in Europe – the euro crisis, the election of anti-austerity left-coalition Syriza in place of the pro-austerity New Democracy government – have converged to make the debate about British membership of the EU one of the battle grounds for this election. These events have given British Eurosceptic of every hue a voice.
The Euro crisis, the Euro bailout compact and Greek’s intransigence, has given steam to the Eurosceptic in British politics. From the so-called unabated immigration from Europe, to the economic crisis in the Euro Zone, the Eurosceptic feel that their point has been proven – ‘Europe does not work, time to get out’. With its successes and growing influence, UKIP’s Nigel Farrage has seized the momentum and has become the voice of not just the Eurosceptic, but also the disenfranchised, the marginalised, the unemployed, who see Europe as the architect of all their woes. And not to be left out, Cameron’s Conservative party has promised that with a Conservative majority, they will have an in-out referendum on UK membership of the EU in 2017.
But how clear-cut are the consequences of UK departure from the EU? Open Europe’s recent report on Britain & The EU – What If … – gives no comfort to either side of the Brexit debate. Leaving EU itself will bring neither gains nor losses according to the report. What are important, the report says, are the economic and political policies that follow Britain’s departure. According to the report, if Britain left the EU on 1 January 2018, the report estimates that by 2030, in a worst case scenario, where the UK fails to strike a trade deal with the rest of the EU and does not pursue a free trade agenda, Gross Domestic Product (GDP) would be 2.2% lower than if the UK had remained inside the EU. That represents a loss of about £55 billion every year. However, in a best case scenario, the report goes on to say, where the UK strikes a Free Trade Agreement (FTA) with the EU, pursues very ambitious deregulation of its economy and opens up almost fully to trade with the rest of the world, UK GDP would be 1.6% higher than if it had stayed within the EU.
If Britain wants to more than survive after its departure from Europe and use its new found freedom to prosper, it seems that it has to make clear choices about its future: between rampant protectionism and xenophobia on the one hand and trade liberalization and deregulation including liberal policies towards immigration, opening up UK economy to trade from the rest of the world on the other, options which contradict the sentiments of those who want Britain out of Europe. Those who advocate leaving Europe have their work cut out; they need to think far ahead and beyond the mere departure, because that is only a starting point.
This article was published in The European Financial Review on 1 April 2015