IF YOU want still to rejoin the EU, ask yourself after reading about nearly four decades of IMF economic data how in the name of good judgement anyone might want to do that.
The main Rejoin argument focuses on prosperity, claiming we were better off in than out. That is dramatically demonstrably not true, as you will see here.
For those four decades the EU has been a graveyard for GDP. The world has become comparatively wealthier as the UK has year-on-year with the rest of the EU become relatively substantially poorer. The EU and eurozone have over four decades consistently been rock bottom on average annual economic growth compared with similar advanced economies (with the temporary exception of the Commonwealth of Independent States following the dissolution of the Soviet Union). So the EU cannot even beat the old Soviet Union and its successors for economic growth.
The £350million-a-week figure on the side of a bus during the Leave campaign was a very stupid figure, not because it was false, but because it grossly underestimated the financial harm to every man, woman and child in the UK over nearly five decades of EEC/EU membership (which for ease I will simply call the ‘EU’). This is not millions but billions per annum.
The relative decline in economic performance recorded by the IMF data from 1980 is cumulative so it is billions per annum multiplied by five decades of membership. To compare 1973, when we joined, with 2023, you have to take into account what the UK’s economy would be worth today if it had not been dragged down by the EU every year for its nearly five decades of membership. These are eye-watering numbers. We are much poorer compared to other non-EU advanced economies than we would have been if we had stayed out.
If it were not for the dissolution of the Soviet Union in 1991, during 1980 to 2018 the IMF figures show the two worst performing regions in the world were the eurozone and the EU for average annual world economic growth:
- the eurozone was bottom at 1.49 per cent;
- the former Soviet Union aligned states (Commonwealth of Independent States) was next at 1.81 per cent;
- third worst was the EU at 1.89 per cent.
(Data for 2017 to 2018 were estimated by the IMF).
Perhaps no one believed Boris Johnson in 2016 when he wrote an article in the Telegraph headlined ‘The only continent with weaker economic growth than Europe is Antarctica’.
In a Global Finance magazine analysis (discussed below), the ten-year average 2008-2017 shows that the eurozone is worst of all at 0.4 per cent followed by all EU states at 0.7 per cent. That is far from the world benchmark of a 3.2 per cent ten-year average growth. It is eight times that of the eurozone and 4.5 times better than the EU.
Whatever one’s perspective and whatever counter-arguments might be deployed, the stark reality is that on these IMF-sourced figures the EU (including the eurozone) has the worst historic economic growth in the world. It is clear the UK avoided the GDP disaster of eurozone membership by not joining.
In 2019 when I wrote The European Project is Making People Poorer for the Bruges Group I made a serious error. I did not spell out the bottom line right at the start. In that 2019 article I also analysed articles and opinions arguing against Johnson’s EU/Antarctica alignment. These however turned out to be what I termed ‘Sunny Day Economics’. They cherry-picked short periods – one year and 2.5 years in some examples – to pretend the GDP reality was not as bleak as four decades of IMF data proves it is.
The false Rejoin prosperity argument ignores the dangerous destabilising aspects of the EU in undermining European democracy and social values. Ursula von der Leyen is its unelected poster girl who – as her own party recognised – single-handedly almost destroyed the German military, and who now, by some miracle of stupidity, is put forward to run Nato. Is that Joe Biden’s raised hand I see taking responsibility for that?
What we in the UK need is a vision of our place in the world, to repair the damage of the past 50 years of EU membership and of the kind of Europe we want and then to make it happen. The EU is damaging Europe and every EU citizen needs to come to understand the damage being done to them economically and in all other ways. For our own peace and prosperity we need a strong Europe, but it is weak.
It is likely to be misleading to compare developing economies with the EU. In my 2019 article I quoted from a 2017 Global Finance Magazine (GFM) which published comparative world economic growth figures. Two sets of figures covered a 12-year period – the more relevant figures covered ten years, 2008-2017, long enough not to be considered Sunny Day Economics data.
When we compare Advanced Economies (but excluding the G7 and eurozone), at 2.4 per cent average ten-year economic growth the performance of the EU and eurozone are substantially worse (as noted above at 0.7 per cent and 0.4 per cent respectively).
The better comparison with the EU and eurozone is probably with the ‘Advanced economies excluding the EU and eurozone’, which is still six times better growth than the eurozone and 3.5 times that of the EU. ‘Advanced economies’ at 1.10 per cent is still substantially better despite the inclusion in that figure of the average economic growth of the ailing EU and eurozone.
What can we say about the top-performing countries for growth in the world even if we cannot fairly compare their impressive growth figures with more mature developed nations? We can say this: those countries’ economies have been growing in many cases over decades with a cumulative growth record which tells us something. The people in those nations have more money to spend now than they had twenty or thirty years ago. A country like Bangladesh with annual growth in the region of 5-6 per cent over many years will be far wealthier now than 30 years ago. So we should be trading with them more now that we can.
We should also consider the IMF ‘other advanced economies’ which can be more easily be compared with the EU and eurozone and which have had substantially better historic economic growth. They will also have more money to spend: countries like Australia, New Zealand, Singapore, Israel and Korea. To those one must add the G7 powerhouse of the US and also Canada. We should also be trading with them more now we can.
There are 500million people in the EU, and many member states are not wealthy and are net recipients of the EU budget contributions, eg Bulgaria. The Rest of the World is estimated to comprise just over 7billion people and many more countries than the EU, including many developed economies. The opportunities for trade must logically be far greater than those presented by the vastly smaller EU trading bloc.
So we come to the real question about Brexit. It is not ‘Are we better off in than out?’ The real Brexit question is not being debated nor has it been, nor are the public being informed. What is wrong with the EU goes beyond economic growth and the destabilising effect the EU has had across Europe since its formation around thirty years ago.
And what looms large in any picture of peace in Europe is not how the EU has helped maintain peace. There has been an exponential rise in prosperity across the globe since the end of World War II. That rise in prosperity would have happened with or without the EEC and EU. Simply put, people in the developed EU economies have been too busy making money since 1945 to want to go to war with each other.
But once we see economic, political and social instability, especially if there is recession and economic decline, then there could be instability which might see a return to conflict between nations in Europe. The relatively recent Balkan wars are a demonstration of what can happen – that was war in Europe whether anyone likes to see it as that or not.
Now we have a war between Russia and Ukraine.
Never forget that some of the ordinary people walking down the street in your town are capable of doing what was done in the Balkan war and before. The message is not to blame people but to recognise the reality. The ultimate question is whether the ‘European Project’ is ever capable of ensuring peace in Europe. Frankly, it is creating instability socially, politically and economically.
It is all well and good speaking of our ‘friends and partners’, but historically Europe has been mired in conflicts over centuries. Are France and Germany and other EU states ‘friends’? Do not be misled by the mellowing of rhetoric since the Brexit Referendum and the Withdrawal Agreement. The EU has mellowed most likely because of what some might interpret as posturing and statements aimed at the UK were counterproductive, persuading former Remainers to want to support leaving. And they need the UK’s money.
And if the EU becomes the centre of the EU ‘Empire’, as some claim it has been described by its proponents, and if it has military forces under its control, what use might be made of them in dealing with dissent and conflicts internal to or between the EU states and the EU? How easy would it be to suspend the rule of law in the EU in the event of a widespread collapse of social order or dissent against the ruling class?
So economic growth is one small part of the picture – but it is an integrated picture. Growth and prosperity would have happened regardless of the EEC and EU and they are what have held the European project together despite the questionable competence of the EU institutions and politicians. A diminishing of growth and prosperity is today seeing a less stable cohesive union of European states. The gilets jaunes in France were reported temporarily, but what else is happening in the EU which is not?
A longer version of this article appeared in The Bruges Group on July 10, 2023, and is republished by kind permission.