Open Europe

Britain’s EU bill explained without the anti-European hype

Labour Party

Mark Reckless, Bill Cash, Douglas Carswell and the other feral Tory Eurosceptics are quite simply wrong on the EU budget. At best they have either not bothered to do their homework or quite simply and naively believe the plethora of misinformation that surrounds us in Britain. At worst they are so utterly opposed to the European Union that they will always twist the truth to suit their own purposes.

I was particularly disappointed by an article in the Sunday Times full of prejudice taking little account of the facts. Britain actually received a £5 billion rebate back from the EU last year and will continue to get this sum adjusted for inflation for every subsequent year. The reason the UK is one of the highest contributors to the EU is that we are one of the largest member states.

What is more, the EU budget is nothing like as huge as current folk lore would have us believe. In 2011 it was € 140 billion. The average EU citizen pays only about 50p on average per day to finance the annual budget which represents only around 1% of EU-27 Gross Domestic Product

The budget is, in addition, always balanced, meaning nothing is spent on debt. Moreover 94% of what is paid into the EU budget is spent in Member States on EU funded programmes, many of which are about economic development creating jobs and generating wealth. Those who complain about EU payments to Kosovo being lost to corruption as outlined in the Sunday Times would do well to understand that this is proportionately a very small sum of money. Of course, corruption is always wrong, but the Tony Blair and Gordon Brown decision to support Kosovo was made in good faith with the aim of rebuilding the war torn country.

I get very annoyed when we are told that the EU budget and almost everything else is imposed by Brussels. The budget and, indeed all European legislation, is decided by elected politicians, in the European Parliament and in the Council of Ministers comprising member states’ elected governments. The EU never “imposes” anything on member states; it is all agreed by elected governments and elected MEPs.

The Sunday Times article sadly relied on briefing from the Open Europe think tank. They are by their own admission anti-EU as this quote from their website demonstrates: “While we [Open Europe] are committed to European co-operation, we believe that the EU has reached a critical moment in its development. Globalisation, enlargement, successive No votes in EU referenda and the Eurozone crisis have discredited the notion of ‘ever closer union’ espoused by successive generations of political and bureaucratic elites.”

While this is an opinion, it is not the only one and the Sunday Times would have done well to take on board other arguments. They tell us that 53% of those in David Cameron’s Witney constituency favour withdrawal from the EU. That means that 47% do not, enough I would have thought for their views to be taken on board.

The cost of the Euro breaking up is too high to contemplate

Labour Party

If Greece, Ireland, Italy, Portugal and Spain were to leave the Euro it would have a massive effect on the UK. Credit Suisse has recently estimated that were the peripheral countries to exit, Barclays would face losses of €37 billion and Royal Bank of Scotland €26 billion.

And that’s just what will happen here. If the Euro crisis results in the single currency breaking apart few large Eurozone banks would be left standing and the banking sector could face a €370 billion loss. Reported in the Guardian yesterday, Credit Suisse has conducted one of the first in-depth analyses if the Eurozone disintegrates.

The Credit Suisse report makes grim reading indeed, more so in the light of Spain’s debt rising to seven per cent and the election in Greece over the weekend.

Just to add a further layer of gloom, Credit Suisse also considered what would happen if three of the worst case scenarios – Greek exit, exit of the peripheral countries and a situation where banks retrench domestically – all happen at once. The upshot would be that the banking sector would need capital injections of up to €470 billion.

As has been said many times on this blog, the UK is deeply involved in these dire predictions. We are an island only geographically, not in any other sense. The only thing on which I have ever agreed with David Cameron is that what happens in the Eurozone will deeply affect us in Britain.

The Credit Suisse analysis of the consequences of the Eurozone breaking up follows closely on the heels of a report from the right-wing think tank Open Europe warning of the consequences of Britain leaving the European Union. The Open Europe paper says: “While acknowledging that the cost of EU membership remains far too high, the EU continues, on a purely trade basis, to be the most beneficial arrangement for Britain. The alternatives often suggested – the Norwegian, Swiss and Turkish models – would all come with major economic drawbacks, not least for key UK industries such as car manufacturing and financial services, with the Norwegian model being particularly ill-suited for Britain.”

There is, of course, only one overarching conclusion to be drawn from the Credit Suisse and the Open Europe research, neither of which can be charged with being either left-wing or Euro-fanatic. It is that Britain is profoundly affected by what happens in the Eurozone and is so completely tied up with the European Union that coming out is not a realistic option.

Meanwhile, back to the banks. It was banks rather than sovereign countries which precipitated the current economic crisis. Fanny May and Freddie Mac started it all with toxic mortgages to people who could not repay their debts. This was, however, just the tip of the iceberg. Banks were deemed too big to fail. Tragically, though, people were thought fair game, hence the austerity measures which are causing so much suffering across Europe.

The Conservative Party remains deeply divided on Europe

Labour Party

The Conservatives are all over the place on Europe. Yesterday’s Guardian was a veritable treasure trove of Tory tangle.

Writing about the views expressed over the weekend by Prime Minister David Cameron and Chancellor George Osborne, the excellent Jackie Ashley saw through their carefully crafted comments. Cameron has said on a number of occasions that the Eurozone needs a deeper structure with further political integration. Meanwhile Osborne pointed out in the Sunday Telegraph that Britain is heavily dependent on what goes on in the Eurozone.

This much is true. However, every time David Cameron has demanded, in his very own imperious style, that the Eurozone sorts itself out, he has also made it abundantly clear that the UK could not be part of the arrangements he espouses for others. Jackie Ashley is absolutely right when she says that David Cameron is effectively advocating a super-state which leaves Britain in grave danger of being overshadowed with little control over our political, as well as our economic, affairs.

Meanwhile the über-Eurosceptic think tank Open Europe has just come out saying that Britain’s exit from the European Union would pose “unpredictable political and economic risks”. This is certainly a turn up for the books and will, I hope, be taken seriously by those who support Open Europe’s general point of view.

So we have the Prime Minister and the Chancellor advocating a European super-state without Britain which, by virtue of its size and clout, will inevitably overshadow its much smaller neighbour, the UK. At the same time an influential strand of anti-EU thought is warning that Britain would be better not leaving the Union.

As if this weren’t enough, in the same edition of the Guardian George Eustice, Conservative MP for Camborne, Redruth and Hayle and former press secretary to David Cameron, is still fighting the repatriation of powers corner. He maintains. “We can do better that just leave the EU. With the right approach, we could change it.”

Although superficially appealing, I find the Eustice line deeply hypocritical. As I have said many times on this blog, changing the EU, in other words repatriating powers from Brussels to London, is not a runner. Such a change would need the agreement of all 26 other member states – a huge task. The scale of what Eustice thinks possible can be seen if the question is put the other way; why indeed should the rest of the EU allow Britain to cherry pick?

Eustice’s plan is quite simply not feasible. If it were tried in any serious fashion, it would surely lead to Britain leaving the EU, probably slowly and probably without a referendum. The Eustice idea that powers can be repatriated is really the worst of all worlds presented as reasonable and desirable.

Cameron, Osborne, Open Europe and George Eustice do not, of course, represent the views hard-line Tories who want nothing less that immediate withdrawal from the EU. Daniel Hannan MEP has recently repeated his mad idea that Britain should transform itself into Norway or Switzerland, while Douglas Carswell and Bill Cash rarely let up on their hatred of all things EU.

All in all, there are at least four Conservative positions on the EU represented in this short blog post. The Tories are well and truly divided on what is fast becoming one of the current defining issues. It is becoming ever clearer that the Conservative Party has not resolved its internal divisions, and there has always been general agreement that a split party is not good for the health of the government.