#EURef | The Europe Union: The Facts

#EURef | The Europe Union: The Facts

One of the most common complaints from voters in the EU Referendum campaign is that actual solid facts have been in limited supply. So, here’s Robert Clark to lay them out for you. 

  1. What is the European Union?

Fact: Founded in 1951, and joined by the UK in 1973, the EU is now a political federation of 28 sovereign nation states that agree policies on economic and foreign affairs, security and justice. In the 1980s the UK pressed for the creation of a unified market where all abide by the same rules, thus maximising economic efficiency and reducing red-tape.

  1. Has it worked in the UK’s financial interest?

Fact: In 1993 the single market came into effect. Since then UK GDP has risen by 62%, compared with 42% for France, 35% for Germany, 15% for Italy.[1] Boris Johnson notoriously said that creating the EU had allowed Germany to achieve what Hitler wanted by other means. In fact, the UK has done much better out of the single market than Germany has. Germany is good at technology and precision manufacturing; the UK has been good at marketing and international services. Most relevant is that it is becoming the preferred base within the EU for multinational corporations. London benefits most directly, but the entire nation benefits from tax receipts, the spill-over demand for services, and the economic growth in satellite towns.

  1. Democracy

Fact: The EU is controlled by the European Council, comprising elected heads of state, the Council of Ministers (nominated by member states) and an elected parliament. The much demonised European Commission is the EU equivalent of our Civil Service. As in the UK, policy initiatives are decided and voted by the Council of Ministers (Cabinet), developed by the Commission, then debated by parliament, voted upon and passed into law. The process, much mystified in the British newspapers, is almost the same as the democratic process by which UK law reaches the statute book. The Commission is certainly not elected, but no civil service in the world is elected. It is also not huge: it employs 55,000 civil servants to serve 28 countries; the UK has 393,000 serving one (or four, depending on who is counting).

Question: Rather than leave, wouldn’t it be better to work with other European countries which are similarly concerned to improve administrative and democratic procedures?

  1. Sovereignty, Regulations, Justice

Fact: The UK has signed 14,000 treaties with other nations, which limit its sovereignty. The most important are with NATO, the United Nations and the World Trade Organisation.

Fact: the UK Parliament remains in all respects sovereign. The UK, like other EU members, can veto new initiatives (like the recently discussed European army), the admission of new members (e.g. Turkey), budget increases and any EU attempts to increase its powers. The claim that Turkey is about to enter, made central to the Vote Leave campaign, has been described by the Prime Minister, as a straightforward lie.[2] This has not prevented Vote Leave from continuing to publish it (Sunday Times, 19 June 2016).

Fact: The UK can leave at any time it wants in the future.

Fact: The UK has opt-outs from policies on migration, passport-free travel (Schengen), asylum, justice, “ever-closer Union”, and the Euro.

Fact: The UK is the second least regulated market in the developed world.[3] Most regulations passed by the European Parliament aim to facilitate the free movement of goods, services and labour. They relate to contracts, product and services standardisation and improvement, consumer protection (safety issues, food standards, animal welfare, cleaner beaches), lower mobile phone charges, cheaper airfares and ensuring employees’ and citizens’ rights. The EU is currently working to standardise EU-wide treatment of services, areas in which the UK excels. As more of this is achieved, the UK stands to benefit profoundly.

Fact: The Leave campaign paints a picture of the UK being forced to accept regulations it does not like. This is untrue. According to ITV, since 1999 “Official EU voting records show that the British government has voted ‘No’ to laws passed at EU level on 56 occasions, abstained 70 times, and voted ‘Yes’ 2,466 times. In other words, UK ministers were on the “winning side” 95% of the time, abstained 3% of the time, and were on the losing side 2%.”[4]

Fact: EU law has improved the lives of all EU citizens, expanding human rights, sexual equality, workers’ rights. One very important area of success has been in developing Europe-wide environmental, nature conservancy and agricultural standards, and especially in regards to acid rain, pesticides, herbicides and GM crops, an area of activity where success can only be achieved at a continental level.

Fact: To very wealthy people, “deregulation” generally means greater freedom to trade, to make profits, to move their money around, and to speculate in financial markets.

Fact: The EU has been active in regulating tax havens to prevent the very rich from concealing their wealth. [5] It seems a reasonable assumption that “deregulation” will include restoring this “freedom”.

Fact: The Labour Party, and the trades unions have pointed out, “deregulation” is likely to mean greater freedom for employers to hire and fire, therefore less security in employment, less protection in hard times, less safety in the work place, more zero hours contracts, and so on.[6]

Fact: In the economic sphere, the meaning of regulation and deregulation varies with the amount of capital possessed.

  1. How big are the EU and the UK compared to the rest of the world?

Facts: The European Union (GDP of $18.5 trillion) accounts for 25% of the world’s GDP, slightly more than the USA.[7] Whilst the UK is the world’s fifth largest economy, its GDP ($2.8tn.) is only 30% bigger than California’s ($2tn.). In this perspective, leaving the EU looks unwise.

  1. How important is the EU market to the UK?

Fact: 45% of UK exports go to the EU; the USA is our next biggest market with 18%. The remaining 37% goes in small amounts around the world.[8] Brexit will raise trade barriers and tariffs for almost half of the UK’s exports.[9]

  1. What will post-Brexit renegotiation with the EU involve and produce?

Fact: The UK will lose its considerable EU rebate. It will lose its special opt outs and privileges. The UK voice will no longer be heard in EU debates: the EU will simply impose its terms on the UK, take it or leave it. This is what Norway gets. In this model, we would pay more money to the EU than we do today, accept the free movement of EU labour, and all EU product regulations, and give EU residents the right to live in the UK, and give up our ability to influence regulations and decisions.

Fact: The Vote Leave campaign has no idea what kind of agreement it will seek with the EU, or be able to achieve: the Norway model? The Swiss model?

  1. How does the UK produce the wealth that funds our daily lives?

Fact: The UK earns 79% of its money in the services sector; 20% through industry (only half of which is from manufacturing); 1% from agriculture. [10] The service sector includes transport and distribution, wholesaling and retailing, information technology and communications, healthcare, financial and legal (insurance, banking, accounting, advising, contracting) and entertainment (cinemas, television, hospitality, tourism, restaurants, pubs, clubs, fast-food). The service sector generates $2.2 trillion per year and is set to grow (see above).

Fact: UK financial services employ over 1 million people, 3.4% of workforce. It is the UK’s most productive and profitable sector.[11] The UK is the world’s largest exporter of financial services, which amount to 15% of our GDP, 12% of our tax receipts.[12] London alone contributes £10bn more to the UK economy than it receives in public spending. Brexit is causing international banks to plan relocating activity to Ireland or the Continent.[13]

Fact: Each year the UK spends 4.5% more than it earns. It exports 480bn, imports 650bn, so has a negative trade balance of 170bn each year. The deficit is covered by a) capital inflows of $100bn and b) by government borrowing of $80bn.

Fact: Capital inflows come from people prepared to keep money in the UK, and by companies investing in the UK because we are part of the European Union and are therefore thought to have a robust, secure economy.

Fact: Brexit is already radically undermining this confidence. £65bn has been withdrawn from London in April and May of this year. According to Peter Spence, writing in the pro-Brexit Daily Telegraph, “Experts said that the pullback confirmed that money managers were taking the June 23 referendum seriously, and were prepared to take funds out of the UK entirely.”[14]

  1. How does the UK spend our money?

Fact: UK government spends £798 billion each year, £15 billion per week.[15] 20% goes on the NHS, 15% on welfare, 20% on pensions, 12% on education, 6% on defence.

  1. How much do we give to the EU?

Fact: The UK’s contribution to the EU each year, after deduction of rebates and EU investments in the UK, is not £350m per week. Vote Leave is lying. We contribute £120m per week, £6.3bn a year. This is about two to three days’ worth, less than half of one percent of annual government expenditure (some say 0.37%, other 0.6%).[16] The aid we give to development around the world costs twice as much: £12bn a year.

Fact: 45% of the EU’s money is spent developing poorer parts of Europe (Cornwall for example). 42% is spend on ensuring sustainable growth and natural resources. This expenditure improves the overall economic potential of all the member states of the EU.

Question: Is it worth investing about 0.5% of UK government spending to increase the economic potential of all Europeans?

  1. What do those who study economic affairs expect from Brexit?

Fact: Nearly 90% of economists responding to an Ipsos Mori survey said the UK economy would be negatively affected over the next five years if we left the EU and the single market. 72% thought the effect would be negative over 10 to 20 years.[17]

Fact: Vote Leave regularly puts Professor Patrick Minford forward to provide expert comment in defense of Brexit. Patrick Minford is 73 years old. A radical believer in free markets, his ideas were influential in the Thatcherite reformation – some might call it destruction – of the British industrial base in the 1980s.

Fact: Not one single national or international financial organisation believes Brexit will be good for British citizens. All predict a dip in GDP for at least two years, and very likely longer. The loss of earnings and productive capacity during such a recession takes many more years to make good. Brexit will reduce living standards for at least a decade, probably forever.

Fact: Post-Brexit, crucial high-tech manufacturers such as Airbus expect a gradual transfer of manufacturing, research and skilled personnel to the Continent, depriving the UK of significant participation in an industry the UK helped to pioneer.[18] Senior bankers say they are making plans to relocate at least some of their activities to the Continent. The French government in particular has gone public about “rolling out the red carpet” to attract them to Paris.[19]

Fact: National and international agencies charged with understanding the global financial system — the IMF (International Monetary Fund), World Bank, OECD, IFS (Institute for Fiscal Studies) and Bank of England — predict recession if the UK leaves the European Union. In its annual report on the British economy (18 June 2016) the IMF has warned of a probable 5.5% reduction in UK GDP by 2019 following a Brexit vote.[20] The Leave campaigners deride these “experts”, and then quote their own experts as if they were better authorities, even though they are individuals of no distinction.

  1. Migration and Immigration

Fact: Since the 1620s, UK citizens have been enthusiastic migrants (to the Americas, Australia and New Zealand, India, Africa, and more recently France and Spain).

Fact: There are nearly 1.2 million Brits living elsewhere in the EU.[21] There are about 3 million citizens from other EU countries living in the UK (5% of the population); 2 million EU citizens are working in the UK (about 7% of working population). [22]

Fact: Migration is an inescapable part of the modern world where capital is highly mobile, multinational and globally diverse. As the money flows, so do people. Young people in the UK particularly value the right to work in other countries. Older people value the right to free movement, the right to live in other EU countries, to retire to sunnier climes such as Spain, and to receive EU-wide health care, rights that depend on EU membership.

Fact: Immigration is a major social problem of our age, but it is not going away. It creates local pressures on health services, housing and labour markets which governments have failed to sufficiently address. These problems need radical solutions which will cost money, but the money will not be more abundant if the economy tanks post-Brexit.

Fact: Immigrants are making a huge contribution to UK wealth.[23] They pay more in taxes than they take in benefits; they add to our productive capacity, creating a richer society. Research by University College London shows that they do not take work from other workers; rather they increase the amount of work that can be done.[24]

Fact: Immigrants cost the UK nothing to raise, train and educate. It takes 16-25 years of investment to produce someone able to work effectively in an advanced economy.[25]

Fact: UK unemployment is currently around 5%, which means technically full employment.[26] Immigration/ migration occurs because the UK economy is booming. We need to increase the workforce because we have an ageing population that needs expensive health care, and a shrinking number of British-born workers. We need more young producers of wealth. [27]

Fact: In 2015, net immigration from the EU was around 185,000, but another 188,000 came from non-European countries.[28] Vote Leave has said it wants to control European immigration, but they know the economy needs more workers so will increase immigration from the Commonwealth, Asia and Africa.

Fact: The NHS already depends upon immigrants: 11% of its staff and a staggering 26% of doctors are non-British born.[29] Vote Leave often talk about training Brits to take their place, conveniently forgetting it takes 7-12 years’ post-secondary education to train a health professional and we do not have a surplus of 18-year olds smart enough to train. [30]

  1. What will people get from leaving the EU

Facts: The inflow of capital to the UK will certainly fall. Hitachi has said as much. [31] Standard & Poor’s have said they will immediately reduce the UKs AAA credit rating. This will make our massive foreign borrowings more expensive, and probably push up interest rates.[32] The pound will fall against other currencies; interest rates may then have to rise to protect the exchange rate and curb the increasing cost of food, energy and raw materials. House prices will almost certainly fall. Many owners will find themselves in negative equity and unable to sell or move house. There is no way of knowing how deep the recession will be and how long it will last.

Fact: Despite Vote Leave’s talk of an “amicable divorce”, the UK will be cold-shouldered by the EU after leaving. For one thing, the EU will need Brexit to prove a disaster in order to discourage any other countries or regions inclined to secession.[33] Hostility to a post-Brexit UK has already been clearly expressed.[34] Discussing a new trade deal will be difficult, and is likely to drag on, further undermining investment in the UK.

  1. Who are Brexit’s major backers?

Fact: Vote Leave gets most of its money from millionaires who have made fortunes through intelligent management and speculation in the financial markets, and through investment management. The biggest donor (donation of £3.2m), the billionaire Peter Hargreaves,[35] built up Hargreaves Lansdowne which advises private investors on their private investments. Arron Banks (loan of £6m) made his fortune from insurance and is a major backer of UKIP. [36]Peter Cruddas and Stuart Wheeler made their fortunes from spread-betting (making two-way bets on currencies, commodities and equities). Other prominent supporters include Crispin Odey and Paul Marshall, hedge-fund managers.

Fact: Vote Leave also has influential support from most British newspapers, many of which are owned by high net-worth men who are non-resident. The Sun is owned by the well-known Australian philanthropist and media mogul, Rupert Murdoch, once owner of the now defunct News of the World which had to close after the Milly Dowler phone-hacking affair.[37]. The Daily Express, which has run numerous front pages shrieking about immigration, is owned by Richard Desmond, the major UKIP donor who made his £2bn fortune from a stable of ‘adult magazines’, Penthouse and OK![38] The Daily Telegraph, which pays Boris Johnson £250,000 a year for his weekly columns (which in 2009 Johnson called “chickenfeed”),[39] is owned by the Barclay brothers who have been described by The Guardian as tax exiles.[40]

Fact: the generous funding of Vote Leave and UKIP has allowed the campaign to place expensive advertisements in the national press, at least one of which has been reported to the police as breaching UK race discrimination laws.[41]

Fact: Vote Leave derides anyone who disputes their rosy view of post-Brexit, deregulated, free, Greater Britain as a member of an elitist club. Voters have not been encouraged to examine which club the major financial supporters of Brexit belong to, or the values they hold.

Fact: Brexit will almost certainly result in a new government led by Johnson and Gove, with a ministerial role for Farage. [42] At that juncture, the values of those who paid for the Vote Leave campaign will have yet greater significance, but it will be too late to change the course of history.

  1. Geopolitics

Fact: UK: Vote Leave conjure an image of a return to British greatness. They hide the fact that from 1968 to 1993 the UK lurched from one economic crisis to another.[43] It was saved by North Sea Oil and by promoting the idea of the EU as a single market, achieved 1993.

Fact: Returning to the past is never possible. Any attempt to return to the past must involve removing what has happened since and must therefore use violence.

Fact: UK: The idea that the UK will be able to control its own destiny is not supported by past or future history. Power today and in the future is invested in the EU, US and China with GDP above $10,000 trillion. It is no longer invested in small nation states.[44] The EU has been instrumental in keeping global multinationals in check, getting rid of bank secrecy and tax havens, protecting the ecosystem and climate.

Fact: UK: Outside the EU, the UK will have to do what others tell it to do. It will have less political and economic power. It will be a boat in a storm.

Fact: Central, Eastern and Southern Europe: Until the fall of the Iron Curtain in 1989-90, Eastern Europe was run by totalitarian states who threatened us with nuclear annihilation; until the 1970s Greece, Portugal and Spain were ruled by military dictatorships. Northern Ireland was almost in a state of civil war. Today, the entire European space is democratic, progressive, buoyant. Brexiters cheerfully say they want to pull this house down. They may succeed; they will certainly encourage neo-fascists in the UK, France, Germany and Austria.

Fact: Ireland: The fate of Ireland is particularly problematic.[45] The UK does £1bn per week of trade with the Republic, and the Good Friday accord in Northern Ireland was achieved in part because the whole island is now part of the EU. Post-Brexit, Sinn Fein will want to unify Ulster with Eire. Ulstermen will resist this to the death. There will have to be border controls between north and south to prevent the smuggling of goods and people. It can only be a nightmare.

Fact: Scotland: whilst the price of oil is low, Scotland will not be able to afford to leave the UK. But Brexit will certainly increase the risk of an eventual break-up of the UK. England might then be all on its own, a much smaller economy, unable to fund itself. The Leave campaign has largely avoided the issues involved.

Fact: We live in a complex, inter-dependent nexus of neighbouring people and neighbouring states. The Vote Leave campaign conjures and cleaves to the idea of the UK as a single, sovereign, self-governing entity. To return to this idea of ourselves is to return to an ideology cultivated in the imperial phase of British history. It risks tearing the UK apart, leaving England very much alone.

  1. Conclusions

Leaving the EU solves none of the UK’s problems with immigration, housing and the provision of services (NHS). These are national political problems which need to be solved by our national government. Brexit will produce recession, and make the UK permanently poorer. It will lead to less money for social services and pensions. It will please the oligarchical and corrupt President Putin, who wants to break up the EU and take back control in the East.[46] It will please proponents of unregulated capitalism such as Donald Trump. It will benefit buccaneering billionaires. It will empower right-wing Conservatives. It will damage the lives of ordinary working people augmenting rather than alleviating the widespread alienation that is already being expressed. It is not the solution to our ills.


Robert Clark (v7. 19 June 2016)


[1] OECD report, referenced by David Smith in The Sunday Times, 12 June 2016, Business p. 4. http://www.thetimes.co.uk/article/britain-succeeds-in-the-eu-wed-be-daft-to-leave-it-q292ql3vt. See also Philip Smith in the FT: https://next.ft.com/content/844fabac-3304-11e6-bda0-04585c31b153

[2] http://www.theguardian.com/politics/2016/may/22/david-cameron-defence-minister-penny-mordaunt-lying-turkey-joining-eu

[3] http://www.economist.com/news/special-report/21673507-better-or-out-common-market-economics

[4] http://www.itv.com/news/update/2016-06-09/fact-check-britain-outvoted-more-than-other-countries-in-eu/

[5] http://ec.europa.eu/taxation_customs/taxation/gen_info/good_governance_matters/lists_of_countries/index_en.htm

[6] http://www.unitetheunion.org/uploaded/documents/Decisions%20of%20the%20Policy%20Conference%20201411-21375.pdf ; http://labourlist.org/2016/06/to-the-hard-right-tories-backing-leave-you-are-just-a-unit-of-labour-tom-watsons-message-to-british-workers/

[7] http://uk.businessinsider.com/charts-eu-economy-is-bigger-than-the-us-2015-6?r=US&IR=T

[8] Professor Nicholas Barr (LSE): http://blogs.lse.ac.uk/brexitvote/2016/05/27/dear-friends-this-is-why-i-will-vote-remain-in-the-referendum/

[9] http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/rel/international-transactions/outward-foreign-affiliates-statistics/how-important-is-the-european-union-to-uk-trade-and-investment-/sty-eu.html.

[10] The Economist: Pocket World in Figures. London: The Economist, 2016, p. 234.

[11] http://www.statista.com/statistics/298370/uk-financial-sector-total-financial-services-employment/ ;

http:// www.parliament.uk/briefing-papers/sn06193.pdf.

[12] http://www.cityoflondon.gov.uk/business/economic-research-and-information/statistics/Documents/an-indispensable-idustry.pdf

[13] Sunday Times, 12 June 2016. Business Section, p. 2. http://www.thetimes.co.uk/article/banks-prepare-for-city-exodus-in-wake-of-vote-q3ql0wq0b

[14] http://www.telegraph.co.uk/business/2016/06/07/investors-pull-cash-out-of-uk-assets-at-fastest-pace-since-finan/

[15] http://visual.ons.gov.uk/uk-perspectives-2016-the-uk-contribution-to-the-eu-budget/

[16] https://fullfact.org/europe/our-eu-membership-fee-55-million/; http://infacts.org/mythbusts/uk-doesnt-send-brussels-55m-day/

[17] https://www.ipsos-mori.com/researchpublications/researcharchive/3739/economists-Views-on-Brexit.aspx

[18] http://www.bbc.co.uk/news/uk-politics-eu-referendum-35958693

[19] https://next.ft.com/content/730bc5f6-2d82-11e6-a18d-a96ab29e3c95

[20] https://www.theguardian.com/business/2016/jun/18/imf-says-brexit-would-trigger-uk-recession-eu-referendum

[21] http://www.bbc.co.uk/news/uk-politics-eu-referendum-36046900

[22] https://fullfact.org/europe/how-many-uk-citizens-live-other-eu-countries/ and https://fullfact.org/immigration/eu-migration-and-uk/ ; https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/internationalmigration/bulletins/migrationstatisticsquarterlyreport/may2016

[23] http://www.economist.com/news/britain/21631076-rather-lot-according-new-piece-research-what-have-immigrants-ever-done-us

[24] http://www.independent.co.uk/news/uk/home-news/european-immigrants-contribute-5bn-to-uk-economy-but-non-eu-migrants-cost-118bn-9840170.html

[25] The Sunday Times, 12 June 2016. Business, p. 7. http://www.thetimes.co.uk/article/immigration-is-working-8w6pn7qh2

[26] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/may2016#unemployment

[27] https://www.parliament.uk/business/publications/research/key-issues-parliament-2015/social-change/ageing-population/

[28] `http://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/internationalmigration/bulletins/migrationstatisticsquarterlyreport/may2016

[29] http://www.theguardian.com/society/2014/jan/26/nhs-foreign-nationals-immigration-health-service

[30] https://www.parliament.uk/business/publications/research/key-issues-parliament-2015/social-change/ageing-population/.

[31] http://www.chroniclelive.co.uk/business/business-news/hitachi-chairman-warns-brexit-lead-11436613

[32] http://www.telegraph.co.uk/business/2016/06/09/brexit-might-trigger-run-on-britains-record-financial-debts-sp-w/

[33] http://www.telegraph.co.uk/business/2016/06/15/eu-referendum-eurozone-will-make-city-pay-dearly-for-brexit-warn/

[34] http://www.theguardian.com/politics/2016/jun/10/no-single-market-access-for-uk-after-brexit-wolfgang-schauble-says; http://infacts.org/uk-punished-leaving-suggests-survey/

[35] http://citywire.co.uk/money/peter-hargreaves-gives-3-2m-to-leave-campaign/a907486

[36] https://en.wikipedia.org/wiki/Arron_Banks

[37] https://en.wikipedia.org/wiki/Rupert_Murdoch#News_International_phone_hacking_scandal

[38] https://en.wikipedia.org/wiki/Richard_Desmond

[39] http://www.theguardian.com/politics/2009/jul/14/boris-johnson-telegraph-chicken-feed

[40] https://en.wikipedia.org/wiki/David_and_Frederick_Barclay

[41] http://www.theguardian.com/politics/2016/jun/16/nigel-farage-defends-ukip-breaking-point-poster-queue-of-migrants

[42] http://www.mirror.co.uk/news/uk-news/boris-johnson-offers-nigel-farage-8199899

[43] https://en.wikipedia.org/wiki/Black_Wednesday

[44] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29

[45] https://next.ft.com/content/7b821f42-df9d-11e5-b072-006d8d362ba3

[46] See Gary Casparov. Guardian, 13 May 2016. http://www.theguardian.com/commentisfree/2016/may/13/brexit-perfect-gift-vladimir-putin-eu