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The EU is good for Britain’s economy

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Introduction
The EU’s supporters argue that membership of the union is good for Britain’s economy. They think that the EU’s single market means British businesses sell more to the other 27 EU members, and that the absence of tariffs and non-tariff measures means that these exports are more profitable. They say that being part of the EU attracts more foreign investment into Britain, which helps businesses create jobs. Supporters argue that as part of the EU, Britain benefits from the trade deals the Commission negotiates with non-EU countries like South Korea and Mexico.

Conversely, they argue that leaving the EU would be bad for Britain’s economy and for people’s jobs. They do not believe the options for trading with the EU after leaving would be as good as the present situation, although most do want some EU reforms. Their reasoning is that all the options for exit would create more barriers to trade with the EU than currently exist, because the EU single market is less restrictive than traditional free trade agreements, like Switzerland has, or trading within of the European Economic Area, like Norway.

Trade benefits
There are many different pro-EU estimates on the importance of full EU membership. Some claim that up to 4.2 million British jobs are associated with exports to the EU, although this does not mean all those jobs would be in danger after an exit, since some trade with the EU would continue and exports might be diverted to non-EU countries if EU trade presented barriers.

An estimate from the Confederation of British Industry claimed that each British household was up to £3,000 richer each year overall, thanks to EU membership. However this number should not be taken too precisely as it is a mid-point of 13 studies which indicate that the net benefit of EU membership, the benefits minus the costs, is between 1.0-9.5% of the British economy.

The Labour In For Britain campaign also emphasises how the EU protects workers’ rights such as holiday pay, overtime pay, sick leave, maternity pay and agency workers’ rights.

The Centre for European Reform argues that staying in the EU does not divert trade away from non-EU countries, and estimates that EU membership boosts Britain’s goods trade overall by about 30%.

Harmonised rules
Remain supporters accept that there are many EU rules but argue they are overall good for trade because they remove barriers to selling abroad. Some say that EU laws are actually made well compared to those of other developing countries. They suggest that if we left the EU, Britain would recreate most of the most expensive rules at a national level anyway. They say it would be politically difficult to remove many consumer protections, environmental or worker rules.

Business investment
EU supporters argue that Britain attracts more foreign investment thanks to its EU membership. This is partly because European rules on the free movement of capital (money) make it easier for investors to set up or buy businesses in other EU countries. They also suggest that non-European investors see Britain as a gateway to exporting across the continent. Britain Stronger In Europe claims ‘we get an average of £24 billion of investment into Britain per year from Europe’.

There are also arguments that Britain’s EU membership makes it a more attractive place to invest for non-EU countries, since they can build a factory in Britain and sell free to 27 other states with the same product laws. This ethos has been attributed to UK-based car manufacturers such as Nissan.

Free trade agreements
The European Union has negotiated a number of free trade agreements with non-EU countries such as South Korea, Mexico, South Africa and Algeria. Supporters of the EU argue that these bring substantial economic benefits to Britain. For example, Britain Stronger In Europe claims that UK exports to South Korea have grown by 104% since the agreement came into force in 2011. In particular, the EU’s supporters look forward to the completion of trade deals with Canada, the United States and Japan, which could bring a considerable trade boost.

The EU’s supporters do not think that Britain would be able to win such good trade deals on its own. They think that if Britain voted to leave, the EU deals with Korea and Mexico would be lost; Britain could struggle to get good terms with large economies as it would lack negotiating clout. In particular they argue it would be hard to make deals including good access for financial services, a key UK interest.

Benefits to free movement of workers
Many Remain campaigners argue that the free movement of people is, overall, positive for Britain. They think that EU workers in Britain contribute more to the tax system overall than they take out, and that British businesses need access to the whole continent’s talent pool because there are some jobs that Britons do not have the skills or motivation to do. Others argue that immigration has had little or no impact on British unemployment or low wages so is not as great a problem as some Leave campaigners argue. Some accept that immigration has been higher than expected and that local services are under extra pressure, but argue that better government spending patterns and proper migrant integration could solve the problems.

Selling services
The EU’s supporters argue that the services single market has made it much easier for British service providers to sell across the EU. They think that if we left the EU, these would be particularly hard hit by regulation, including rules on legal services and banking, since there are fewer global rules stopping the EU punishing Britain.