Cost Too Far
An Analysis of the Net Economic Costs
& Benefits for the UK of EU Membership
By Ian Milne
July 2004
CIVITAS
ISBN: 1903386373
98 pages, Illustrated, 5 ¼" x 8 ½"
$23.50 Paper Original
Prime Minister Blair often claims that 60 percent of the UK's trade and three million job 'depend on' EU membership. In fact, 48 percent of UK exports of goods and services go to the EU. Moreover, nearly 80 percent of our economy is the result of domestic activity, involving buying from and selling to each other. The export of goods and services to the rest of the world account for another 11 percent, and only ten percent is the result of exporting to the EU.
In any event, the jobs currently resulting from trade with the EU would not be lost if we left. A number of authoritative studies have found that leaving the EU would have little impact on employment. The balance of the costs and benefits of UK membership of the EU is unequivocally negative. The net costs are substantial. The current recurring annual direct net cost to the UK of EU membership is estimated to range between approximately three and five percent of the GDP, with a 'most likely' figure of four percent of the GDP, equivalent to £40 billion per year.
Within the 'most likely' £40 billion, £20 billion is the direct net cost of EU regulation to the UK economy - annually. A further £15 billion is the direct net cost to the UK economy of the Common Agricultural Policy. Another £5 billion is the annual cash subsidy that the UK pays to 'Brussels' through the EU budget. The current heavy burden of direct net economic cost - four percent of GDP - will not get lighter in the future. At best it will get no worse.
The gloomy prognosis for the future is due partly to measures already in the EU pipeline, starting with the EU Constitution and enlargement, and partly to the UK being locked into a regional bloc in marked long-term decline. On a global view, the EU model of conducting trade, via a tightly-regulated customs union, is outmoded. The world outside the EU, with a superior trading and economic performance, tends to choose interlocking networks of user-friendly free trade agreements. These deliver the same benefits that EU members derive from the single market, but with very few of the costs.
Economics
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