by Emma Reynolds MP / 17 Jan 2013
This article is from the February 2013 issue of Total Politics
It is undeniable that the eurozone crisis has contributed to growing levels of Euro-scepticism in the UK. For too long, European leaders ignored structural economic imbalances in the eurozone and many european citizens are now paying a heavy price.
Over the last 12 months, the eurozone crisis continued to ebb and flow with no discernible end in sight and public confidence in the EU waned. Towards the end of last year, however, there were signs of real progress. It is in the UK’s interest that the euro is put on a long-term sustainable footing.
Even against this backdrop, Britain’s membership of the EU continues to be vital to our economic interests.
The EU remains our biggest single trading partner and over three million jobs in the UK rely on our trade with other European partners. In effect, our membership means that our domestic market is of 500 million people rather than 60 million.
Foreign direct investment has also poured into the UK from multinational companies such as Honda, Nissan and Tata, which base themselves here because Britain is regarded as a launch pad to the largest single market in the world.
European and global financial services base themselves in Britain because London is the financial centre of the EU. Twice as many euros are traded in our capital on a daily basis than in the rest of the EU combined.
Recent proposals to harmonise Europe’s digital economy will provide further opportunities for business. Extending the single market to services should also be a priority.
In these areas, our membership of the EU fundamentally continues to work in our economic interest.
Our membership is also vital to our international trade beyond the EU. In a global economy dominated by economic giants, the UK has more leverage to prise markets open in the emerging economies of Brazil, India and China as part of the largest single market than as a single country.
Eurosceptics offer a false choice – leave the EU or don’t trade with the new markets. In fact, our EU membership is crucial to striking trade deals with these countries, which will in turn create major opportunities for our exporters.
British business is already benefitting from the EU free trade agreements with South Korea and Singapore and stands to benefit further from future agreements being discussed with Canada, Japan, India and the US. The US free trade agreement alone will add an estimated 0.5 per cent of GDP growth to the EU economy.
As the president of the CBI, Roger Carr, recently underlined, “Europe is the bedrock of our international trade. It should be viewed as the launch pad from which our global trade can expand – not the landmass from which we retreat.”
Today, the size of a country’s population and economy determine its power and success in the world. Increased regionalisation is now a defining force. Countries are seeking to co-operate more closely with their neighbours and the European single market is often regarded as a model from which to draw inspiration.
There would be real risks to our economic interests if the UK were to leave the EU. Access to the single market would have to be negotiated and a price for that access would be exacted. Norway, for example, benefits from the single market but has to abide by the rules without having any influence in shaping them. Surely British business would not appreciate what has been referred to as “democracy by fax”.
Foreign direct investment would be under threat because the UK would no longer be a gateway to the largest single market in the world.
We would also cease to have at our disposal the collective bargaining power of the EU when negotiating trade deals with the world’s economic giants.
The biggest economic danger for the UK therefore comes not from our continued membership of the EU, but from our government playing politics with the national interest and putting us ever closer to the departure lounge.
The UK has been remarkably successful in shaping the EU’s agenda. From the creation of the single market to enlargement, our influence has been keenly felt. We should now focus on reforming the EU, extending the single market and ensuring that the EU is outward-looking, in order to maximise the economic benefits of our membership.