Hey! I’m Shrey and I will be heading up the Economics section for Pertinent Problems, in addition to writing for my own, personal blog. I’m looking forward to hearing and engaging with your thoughts!
In the wake of David Cameron’s spectacular announcement regarding the 2017 EU referendum, the debate regarding the UK’s European Union membership has become far more fervent and widespread. It can be said that there are reasonable arguments on both side of the proverbial coin, however when the British voter comes to cast their vote in 2017, there will only be two possible responses to the title of this article, “Yes”, or “No”. Although opinion polls seem to suggest that most are leaning towards the “No” vote, I am a contrarian in this case and suggest that membership of the European Union provides substantial benefits to the country, which far outweigh the costs. In truth, many arguments against EU membership lie solely on the migration issue, but in actuality, this is a boon for the UK and not a curse.
The free movement of people between borders in the EU, that is so often cited as detrimental by Eurosceptics, actually has a factual basis for being beneficial to the country. In fact, immigration to the UK has made its economy far more flexible. Job shortages in the labour market such as cleaning jobs, for example, have been filled by many Eastern Europeans, such as Poles, coming into the UK. The commonly used stereotype, that all Eastern Europeans take advantage of the benefits system, has been definitively proven to be an absurd claim. This is shown by the fact that immigrants from Eastern Europe pay 12% (around £5 billion) more in taxes than they claim in benefits. Once we get beyond the xenophobia that a minority of the general populace have towards Eastern Europeans, for example, it is clear to see that they bolster the economy, rather than shrink it.
The European Union has also introduced regulation to the UK that makes it far easy for small businesses to start up. The regulation that has been put in place makes it far cheaper for small businesses to emerge from the ground, enabling them to employ more people, and grow the economy through the positive multiplier effect. Innovation within an economy is also stimulated, as more people with innovative and revolutionary ideas have the motivation to start a business. The low cost of exports that comes from being within the EU also is another factor that may persuade one to start up a small business as exports can constitute a large portion of the revenue of a business. In addition, membership of the EU makes it healthier for the consumer, with 52% of CBI members thinking that common product standards across the EU are positive, including 50% of SMEs (small and medium-sized enterprises).
After the migration argument, the most commonly used assertion propagated by Eurosceptics to back up their point is that the UK pays far too much to the EU. In fact, the UK’s net contribution to the EU budget is around €7.3 billion, or 0.4% of their GDP. According to the CBI, that is around a quarter of what the UK spends on the Department for Business, Innovation and Skills, and less than an eighth of the UK’s defence spending. The £116 per person net contribution is less than that from Sweden, Denmark, Finland, Germany and the Netherlands. Therefore, considering that the EU gives funds to the UK in conjunction, the fundamental economic cost of the EU to the UK is massively overstated and is, in fact minuscule. In addition, when we take into account the amount the EU helps the UK with migration, my answer to the question “Should the UK stay in the EU?” would be a resounding yes. In my humble opinion, the average Eurosceptic these days does not realise the massive global markets which the EU opens the UK up to, and without the EU, the UK may never be the same.
If you want more articles like this, please check out shreysfinanceblog.com – my blog on finance and economics.