Thursday, March 31, 2016

Should the UK leave or stay in the EU? Some crucial questions.

Well, it is up to British voters/citizens to decide.

My analysis.

Many Britons feel that Britain has lost sovereignty to Brussels. Policies and laws in many areas are decided by the EU institutions and this takes power away from Westminster. This includes standardisation issues for products and services produced and sold inside the EU.

Many argue that Britain needs to be part of the EU Single Market so that it can sell more easily to its most significant trade partner, the rest of the EU. That is true, but more and more minor as the cause of WTO world trade advances. Plus a non-EU UK can be a member of the European Economic Area as Norway and others do.

Has non EU and non EEA membership hurt Swiss exports? That is a crucial question proponents of the Yes and No to the EU must answer.

My 2 cents is that a globally strong and competitive UK does not need to be a member of the EU and its single market.

How will an exit from the EU affect the revenues of The City? That is a question for the City to answer. Will there be another financial hub in the EU that will compete with a non EU City if the UK leaves? To what extent?

The EU, via its policy on EU enlargement, has managed to hinder the process to a United States of Europe by the EU. Why does then the UK have to leave? Are EU laws enough reason for the UK to leave the EU?

Now, let's be reminded that the UK is neither a member of the Euro area nor the Schenger area. Will thus EU exit allow the UK to better determine its immigration policy?

The EU does not have an industrial policy. Will a non EU UK be able to have an industrial policy and help develop more manufacturing? Maybe yes. But is any political party arguing this factor? Cameron should have been arguing for an EU industrial policy for years now. He has not. Why? Has Labour?

A non EU UK will be able to depart from the EU working time legislation and have the type of social, industrial affairs and employment policy it wants to. Be reminded that Blair incorporated the EU social protocol other UK governments had vetoed (most notably, the Maastricht Treaty opt-out).

A non EU UK will be able to also develop its own environment, transport, VAT and other policies and laws. Will they be much different than the existing EU ones though? That is a question UK policy makers must answer.

There is no question that some non EU companies with manufacturing activities in the UK may be tempted to leave the UK and settle inside the EU if the UK leaves the EU. It will depend on what they perceive the problems of selling in the EU if the UK leaves to be. Who has asked them, in the debate so far?

A non EU UK will not have to contribute to the EU budget. But is the UK contribution to the EU budget (much inferior to the US one) so important (see UK Rebate) after all?

Now, what will happen to UK citizens living and working "freely" in other member states and citizens of other EU member states living and working in the UK? That is a matter that may be settled via UK-EU negotiations as part of an exit agreement, should the UK decide to leave the EU.

Of course, it is most likely these questions will remain unanswered and the decision in the referendum will depend on more top of the mind issues.

In any case, there will be no Doomsday though. Why? Because the UK has the policy makers and think tanks to address policy issues, whether the decision is Yes or No.

Enlargement vs Deepening. What future for the EU? The EU needs an IGC. Badly. To decide on its future.

Enlargement vs Deepening. That was the big strategic dilemma in the EU years ago. The main proponents of enlargement were the UK and Germany. The UK hoped enlargement would hinder the deepening of the EU. It has worked. 19 members may be in the Eurozone but Eurozone and the EU as a whole are facing considerable problems.

How can a single market work properly without a single language, a single tax system, a single bureaucracy? With a single currency for merely 19 out of it 28 members?

The current migration crisis shows the lack on union within the European Union.

The decision of the ECB to lower interest rates to 0% shows its despair in trying to make the Eurozone more competitive. Triche interest rate policies some ten years ago hurt the cohesion of the Eurozone significantly and it has not recovered.

A de-industrialising EU cannot create enough jobs to curb the joblessness issues.

If the UK decides to leave the EU in a few weeks, an earthquake will shake the EU. It better. The EU needs a wake up call.

Is the EU a failure, so far? Yes. It has taken 60 years and failed to become a United States of Europe.

Can the EU change its course and succeed?
Yes, it can.

How likely is that? Not very likely.

Will the EU dissolve? Not likely.

What should member states do?
Well, they are focusing on national affairs increasingly, taking care of their national needs.

What is the future for European business? Well, 2.5 decades after 1992, there is no European business, merely, companies doing business across the EU. 28 tax regimes, 23 languages, what kind of a single market is that?

The existence of world trade and the EU puts pressure on the cohesion of the EU. Why should members stay members when world trade is now more free than ever and one (eg the UK) can sell to Europe without needing to be part of the EU.

The EU needs an IGC. Badly. To decide on its future. I argued that 2 years ago. The need is more urgent today. Even after the UK referendum.

An IGC should decide whether to move the EU into a United States of Europe (as some want and it makes economic sense) or take back the EU to the Common Market it was decades ago (that would please the UK). More or less union make sense, both, as strategic option. The current status of the  union does not.

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