As the Brexit campaign heats up, many of us are receiving leaflets urging us to vote either “in” or “out”. Whilst it is to be expected that each camp will attempt to frame the argument in a way that favours its cause, the Leave.EU leaflet makes claims that are clearly misleading. UCL academics Randoph Bruno, Filipa Fiquiera and Jan Kubik set the record straight.
Leave.EU Leaflet: “In 1975 we voted for a Free Trade Area known then as the Common Market”
The first sentence and already we have been misled. The European Economic Community (also known as the Common Market) which the UK joined back in 1973, was not a simple Free Trade Area and this was made clear to voters at the time of the 1975 referendum. The official UK government pamphlet, which was sent to all British homes prior to to the referendum, stated prominently the following:
The aims of the Common Market are: to bring together the peoples of Europe; to raise living standards and improve working conditions; to promote growth and boost world trade; to help the poorest regions of Europe and the rest of the world; to help maintain peace and freedom.
An ample majority of Brits (67% of the voters) voted in favour of staying in the EEC on 5 June 1975. In other words, the mothers and fathers of Brits voting today had the EEC presented to them as a whole (and not only its free trade rules). Most of them decided it was as a good deal for the UK.
Leave.EU Leaflet: “We pay…£20 billion every year” [to the EU]
This is either a lie or a mistake, as the UK does not pay this amount to the EU. The Institute for Fiscal Studies projects that the UK will pay approximately £8 billion per year over the next few years – less than half of what Leave.EU claims.
The contribution that each country pays to the EU budget is proportional to its GDP, but for the UK, following the 1984 rebate negotiated by Margaret Thatcher, it is relatively lower than for any other EU country. So, in 2015, the UK paid £13 billion gross to the EU budget, of which it got back £4.5 billion in subsidies for farmers, research and help for its poorest regions, bringing the net contribution to £8.5 billion for that year.
Leave.EU Leaflet: “That [not paying into the EU budget] would go a long way to reducing our national deficit”.
In 2015, the UK debt was about £1,500 billion and the yearly deficit stood at about £50 billion (3.3% GDP). So, saving £8 billion a year would indeed make a dent in the yearly deficit, although it would not make much of a difference in bringing down the overall debt. However, by engaging in a “purely” economic calculation, we do not consider all the real, though intangible, benefits of EU membership, the most important of which is the stability of the continent sustained by well-oiled commercial, political, and cultural networks. To put the figure of £8 further into perspective, the NHS budget is £135 billion per year and the UK’s annual spending on pensions is £91 billion. The yearly contribution to the EU budget is not the main issue when considering the UK budget, not even close. It is an open secret that the media attention devoted to the EU budget is disproportionate to its economic importance. And it is well known by EU insiders, that politicians (of all EU countries) use the EU budget as a “bargaining chip” to negotiate other issues which do significantly affect their economy, such as economic and financial legislation.
Moreover, this statement assumes that the economy could grow in exactly the same way outside the EU as within. That is something which we cannot technically verify, but there is a strong consensus among economists that the UK economy grew faster due to its EU membership (the Leave campaign does not deny this). So, reversing the argument, had the UK been outside the EU, it could have faced a larger budget deficit to start with.
Leave.EU Leaflet: “We pay twice”
This is a deliberately deceptive way of referring to the fact that projects are co-funded. With or without the EU, the UK would be spending money on public services such as infrastructure or the NHS. If the UK were no longer benefiting from EU funding, it would have to pay the full cost of its public services, rather than half.
Leave.EU Leaflet: “We buy more from the EU than they buy from us. It would be financial suicide for the EU to impose trade barriers.”
The fallacious nature of this claim becomes obvious once we realise that the EU is much bigger than the UK. Britain counts for less than a tenth of the EU’s exports, but depends on the EU for almost half of its exports, so it is clear who stands to lose out most.
In this David versus Goliath situation, the cards would be in the EU’s hands. The EU would need to be harsh with any leavers (to discourage others from doing the same), so it would impose difficult trade conditions on the UK – such as high tariffs on British imports, and deliberately protracted negotiations. This has been already clearly signalled by the German Chancellor, Angela Merkel.
Leave.EU Leaflet: “Laws and regulations passed by Eurocrats who have never visited the UK”
All EU laws and regulations have to be approved by the Council of the EU, which is made up of politicians and official representatives of all EU countries, including the UK. The so-called Eurocrats never, under any circumstances, have the power to pass an EU law unless it has been approved by national politicians and representatives.
Leave.EU Leaflet: “make a considered decision and vote on 23rd June“
…is one of our few points of agreement with Leave.EU. However, we hope to have shown that this leaflet does not offer the basis for such a considered decision.
Dr Randolph Bruno is a Lecturer in Economics at UCL.
Dr Filipa Figueira is a Teaching Fellow in Economics at the UCL School of Slavonic & East European Studies.
Professor Jan Kubik is Director of the School of Slavonic & East European Studies at UCL.
Note: The views expressed in this post are those of the authors, and not of the UCL European Institute, nor of UCL.