EU in-depth on the economy: What could we do with £8.5bn, will we be able to trade?
- Credit: PA
As the prime minister and chancellor set out a Treasury analysis suggesting a vote for a Brexit could prompt huge job losses and a recession, political editor Annabelle Dickson looks at the issue of the European Union and the economy in the first of the EDP in-depth European Union series.
How much is our membership of the European Union really costing us?
Last year the UK's net contribution to Brussels was £8.5bn - that is the equivalent of 28 improvement projects to the A47 like the £300m one announced before the election.
We sent over £12.9bn (it would have been about £18bn without the rebate) and got back £4.4bn in public sector spending.
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The £350m a week figure used by the Vote Leave campaign does not take into account the rebate or anything we get back such as CAP payments and university research funding.
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So how much is coming to our region and what is it being spent on?
That £4.4bn including regional funding. The New Anglia LEP area - Norfolk and Suffolk - will get about 94.1m euros (or £73.4m in the current exchange rate) in structural funds between 2014 and 2020. The Greater Cambridgeshire, Greater Peterborough local enterprise partnership area will get about 72m euros - or £60.6m. The funds are designed to improve economic growth, business competitiveness and employment opportunities and social well-being across member states.
The Hethel Engineering Centre has recently received funding for its 'Innovation New Anglia project' and Suffolk County Council has been given money for its MyGo project in Ipswich – an employment centre for young people.
Past projects include the enterprise centre at the University of East Anglia.
According to the Department for Food, Environment and Rural Affairs farmers in the East of England have received £2.4bn in common agricultural policy payments between 2007 and 2013.
What would we get back if we vote for a 'brexit'?
Again, we don't know. Norway and Switzerland, which are not part of the European Union but have access to the single market, still have to make contributions to the EU budget. The neutral House of Commons library says Norway's contribution to the EU in 2011 was £106 per capita, compared with the UK's net contribution of £128 per capita in the same year. Its paper said that Switzerland's contribution as a member of the European Free Trade Areas (Efta) has been about £53 per head in recent years.
What are the rules of the single market we are currently part of?
EU member states do not have to pay tariffs on goods moving between them and there is a common tariff applied to goods entering from outside the EU.
What about rules around trading with the rest of the world?
Members cannot strike up their own free trade agreements with non-EU countries. An EU trade commissioner acts as the negotiator in multilateral and bilateral trade talks. The EU recently concluded a trade agreement with Canada and is currently negotiating the Transatlantic Trade and Investment Partnership (TTIP) with the US.
Vote Leave says we will be able to negotiate our own agreements with other countries outside the EU if we leave. But a significant intervention in the debate came from President Barack Obama who claimed during a recent visit to the UK that Britain would be at the 'back of the queue' in any trade deal with the US if the country chose to leave the EU.
But surely people want to trade with us?
Vote Leave says that it is in the EU's interest to strike a free trade deal as soon as possible because we have a substantial trade surplus.
But again, this is not a certainty and nobody really knows what will happen. President of the European Commission Jean-Claude Juncker said the UK would 'not be welcomed with open arms' if leave wins the day on June 23.
What are the facts and figures for exports?
In 2015 the UK exported £223bn of goods and services to other EU member states. This is equivalent to 43.7pc of total UK exports.
In the East of England this figure was £11.4bn - or 54pc of goods exported from the region.
Members of the EU sent £291bn-worth of goods and services to the UK - or 53.1pc of our total imports in 2015 meaning the UK had a trade deficit of £68bn with the EU in 2015.
We had a trade surplus of £31bn with non-EU countries.
According to the HMRC the East of England imported £29.5bn-worth of goods from the EU in 2015.
Has this changed over the years?
Nationally the share of UK exports accounted for by the EU fell from 55pc in 2002 to 44pc in 2015 and the EU accounted for 58pc of UK imports in 2002. This fell to 51pc in 2011 but increased again to 53pc in 2015.
So will jobs be under threat if we leave the EU?
Again, we simply don't know. In its analysis yesterday the Treasury claimed 50,000 jobs in the East of England could go if the UK left the EU and there was a severe shock to the economy - and 6,000 of those would be the jobs of young people (aged 16 to 24 years old). But a former chancellor Lord Lawson, who is part of the Vote Leave campaign, said that a lot of the forecast depended on business confidence which was being undermined by the government. 'We have nothing to fear but fear itself – which the Government is doing its best to stir up,' he said.
And what about the general economic impact?
Again, this is unknown. The same Treasury report suggested the impact of the shock of leaving the EU by 2018 could be equivalent to a £5.1bn reduction in the size of the East of England economy. But Patrick Minford, a leading member of the Economists for Britain group, said the Treasury was ignoring the potential upside from saving Britain's EU budget contribution, scrapping EU red tape and unilaterally abolishing all tariff barriers.
And what about house prices?
Again the Treasury analysis published yesterday estimates could push house prices down by £37,000 if the house prices in the region grow in line with estimates by the independent Office for Budget Responsibility. But some senior figures suggest this might not be a bad thing. Former business secretary Sir Vince Cable said a price fall could be good for affordability and economic balance.
What do business leaders say?
Many organisations such as the British Chambers of Commerce are staying neutral.
The boss of Suffolk brewer Adnams Andy Wood, who backs a vote to remain in the European Union is in favour of Britain remaining in the EU claiming it is about the ease of doing business.
At an event at Downing Street earlier this month he said: 'As we develop that business it is apparent that it is more complicated exporting our type of product to countries that are not in the EU.
'One of the things that business really needs is continuity, and the risk associated with Brexit and what might happen to relationships with European partners and currency – these are things that concern us.'
But Grant Hardy, managing director of digital business Liquid 11, said leaving the EU would be better for small businesses because there would be fewer things to focus on. He said they are disadvantaged by rules and regulation which make their products too expensive.
Luke Morris, a partner at Larking Gowen who is also backing a brexit in a personal capacity, also said regulation was damaging for jobs.
'Small and medium-sized businesses such as mine account for 99pc of all employers in Britain so our economy depends on them being able to grow and take on more staff.
'But the signs from Brussels are not promising. In just four years the EU introduced over 4,700 regulations affecting British businesses. Whilst many of these regulations are easy to ridicule – from the quality of our washing up gloves to the shape of our bananas –all of them serve little or no practical purpose other than to make it harder for our industries to compete with the rest of the world.'
<t> This is the first of a fortnight of in-depth features planned in the EDP. Tomorrow Sabah Meddings will be looking at the impact the EU has on us as consumers.