“Better off out”, the UK would be better off outside the EU: this is the promise of the Proposed referendum on United Kingdom membership of the European Union advocates. But would that really so?
It is difficult to quantify the Proposed referendum on United Kingdom membership of the European Union-consequences. A withdrawal from the EU, it has never been. And nobody knows what status the United Kingdom would continue. If there were a free trade agreement with the EU? “Are more dramatic the divorce fails, the greater the disadvantages for the UK and the EU” Should the country continue to pay into the EU budget?
says Gabriel Felbermayr, trade economist at the Munich-based Ifo Institute. “In all areas we have an interval of ways.”
Researchers have developed different scenarios – from very pessimistic to optimistic.
What does the Proposed referendum on United Kingdom membership of the European Union? Questions and answers at a glance.
What would be the economic disadvantages of the Proposed referendum on United Kingdom membership of the European Union?
In agreement provides for the majority of economists medium four disadvantages:
- Less trade in goods: Great Britain would lose its access to the EU internal market. Depending on the scenario, there would again tariffs, definitely the bureaucracy would cause on the border extra cost. Of course, there would continue to trade, but it is less. For example, BMW produced in England the small car Mini. The EU imposed on car imports but a duty of ten per cent. Negotiates the UK is not a new free trade agreement, which would make the Mini probably more expensive. Conversely, would become more expensive for British imports of food and textiles.
- Less trade in services: The City of London, also believes that local financial products are automatically authorized in the EU and can be traded live. This trade also would be hindered by the Proposed referendum on United Kingdom membership of the European Union. Some banks even consider the case of a Proposed referendum on United Kingdom membership of the European Union to reduce their business on the island.
- workers from the EU are missing: With the end of membership could citizens of the EU is no longer as easy to work in the UK – the free movement of workers would be lost. These workers would the British economy is missing.
- Less FDI: Great Britain, according to the organization of industrialized countries OECD in the EU the most attractive destination for FDI. That stems from the particularly flexible labor market, but also on access to the EU internal market. After Proposed referendum on United Kingdom membership of the European Union, the investment would probably go back.
These disadvantages would unfold over a period of about ten years and reduce the economic power of Britain sustainably.
The short-term after the Proposed referendum on United Kingdom membership of the European Union also uncertainty about how to proceed – at least for the next two-year negotiations with the EU. Therefore, investors hold back, the British pound would depreciate against the euro. Even before the referendum, the currency is in free fall. “The psychology of the markets may be much more expensive than the other factors,” says Felbermayr.
Are there any advantages?
Yes. “At first there were economic costs, but the country would gain freedom,” said Stephen Booth of think tank Open Europe
- No more money to Brussels. The British would not transfer more money to Brussels – at least when they really stay out. Will they yet again access to the EU internal market, they would probably, like Norway and Switzerland, are charged again, although less than at present.
- Deregulation: The British could make their own laws to better suit British needs. Open Europe proposes to abolish a number of provisions, including specific energy saving objectives, workers’ rights, capital requirements for insurance companies, transparency guidelines for fund managers and – in the “optimistic scenario” – also climate protection targets. This would allow the negative effects of the Proposed referendum on United Kingdom membership of the European Union can be compensated and the country economically even benefit. However, presents Open Europe even questioned whether the could be implemented politically. “Every ambitious attempt would deregulate significant opposition in Parliament, trade unions and a number of lobby groups push”, writes the think tank.
- social: The British could determine who comes into the country, thereby limiting immigration itself. The state could save social benefits to unemployed EU migrants, which also in the EU would, however, possible. That had negotiated with the Proposed referendum on United Kingdom membership of the European Union negotiations in February Prime Minister David Cameron. What’s more: the British want access to the EU market, they would have the free movement of workers but probably again accept – just as Norway and Switzerland also do it.
- Trade Agreements: UK alone could quickly reduce trade barriers with non-EU countries and free trade agreements. This is a main argument of the Proposed referendum on United Kingdom membership of the European Union advocates. This is also possible in principle, says trade economist Felbermayr. “But the British would probably not get alone the same conditions that we can negotiate as EU together.” In free trade negotiations usually the larger partner dictate the terms.
What does it cost now?
If you add the advantages and disadvantages together, we get the economic balance for the Proposed referendum on United Kingdom membership of the European Union – and that is bad in almost all studies. In almost all scenarios, gross domestic product (GDP) drop, to varying degrees depending on the assumptions and scenario. Only Open Europe can calculate a positive effect by the optimistic assumptions for deregulation. GDP change is between -3000 euros per head and +600 euros per head, as the chart shows:
As a percentage of economic power that are between +1.6 per cent of GDP at Open Europe and -7 , 7 percent in the OECD.
What social layers would be affected?
All income groups have for the Proposed referendum on United Kingdom membership of the European Union a lower standard of living, has the prestigious London School of Economics calculated. On one hand, the real income of households is declining, because the economy is growing less. On the other hand increase the price of imported products such as food and textiles. Comparing then that class is buying what products, shows: Contrary to the notion that the “ordinary citizen” of the EU have nothing to lose without EU all layers in percentage about the same amount
Are all economists agree?
Almost. At least in the direction of the large institutions are unanimous. Whether the International Monetary Fund, OECD, Ifo Institute, London School of Economics or British Treasury: They all look the Proposed referendum on United Kingdom membership of the European Union overall negative
Eight economists in the UK on the other hand argue for the withdrawal from the EU.. The “Economists for Proposed referendum on United Kingdom membership of the European Union” throw the other economists prefer to use unsuitable economic models for the Proposed referendum on United Kingdom membership of the European Union, and also to comprehensive deregulation. Britain could grow faster outside the EU than inside.
The opposition is however significantly quieter than for example in the question of whether Greece should remain in the euro. When Grexit there was much more controversial opinions.
Could the Germans appreciate a Proposed referendum on United Kingdom membership of the European Union?
“Let them go but if they absolutely want,” you always hear. However, Germany would feel a Proposed referendum on United Kingdom membership of the European Union. Most automotive sector would, according to the Ifo analysis suffer. Benefit could be the chemical industry and the financial industry.
Overall, Germany takes the medium expect a lower economic power. The losses are Ifo Institute from -0.1 to -0.3 percent of GDP -. With growth of currently around 1.5 percent
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