"Fog
in Channel; Continent Cut Off"
A few months ago, the Mrs and I made a weekend trip to the London city,
which we enjoyed to the fullest. Our respective acquaintance (she) and reunion
with London reminded us that - until today - we neglected the United Kingdom as
a beautiful and inspiring place to spend our summer holidays.
We really couldn’t think of a good reason – except for
the climate, the landscape, the sea and the delicious food and drinks – why we
always visited the Southern European countries and not our western neighbour,
with its many monuments, its traditions and its rugged and beautiful landscape.
Nevertheless, I couldn’t help but rediscover that time
seemed to have stood still since 1992 – the year of the deployment of the Schengen
agreement – when we stood in line for the British customs service in Calais,
France.
Where the 340 km drive from Utrecht (The Netherlands)
to Calais happened without any interference from governmental bodies, in spite
of passing two borders, we discovered that things went a little different,
while we entered England.
Of course, one can argue that a country must always
have an undisputed choice of its own,
between keeping its customs and its own currency or abolishing it.
Nevertheless, it is hard to overlook that the rest of continental Europe has moved
far beyond this choice, since 1992 and especially 2002, when the beloved /
hated euro was introduced.
These and many other small, but unmistakable
differences between the United Kingdom and the large majority of continental
Europe, Ireland and Malta, emphasize this: the (tiny amount of) enthusiasm in
the United Kingdom for the European project, is merely based on a
corporate-driven ‘marriage of convencience’, instead of a passionate ‘love at
first sight’.
The British people generally think:
- Yes, the UK profits from the EU’s open markets and open borders, for its imports and exports and for its employment – from Brittons in continental Europe, as well as from continental workers in the UK itself;
- Yes,
the EU offers access to over 500 million potential customers for British goods
and especially (commercial / financial ) services;
- But no, please don’t ask us to love Europe and the European project, because we – the common Britton in the street – simply don’t do that.
And the continental Europeans? They usually respect the
British ‘desire-to-be-different’ and even envy the British for their style,
humour and creativity.
Still, they cannot help to laugh or curse sometimes at
those stubborn Brittons with their radical different world views and
(occasionally) their bloated self-confidence, emerging from times when
‘Brittania ruled the waves’. Jeremy Clarkson, the utterly British presenter of
Top Gear, must be the epitomy of everything that we adore AND hate about the
British.
It is an understatement, when I state that PM David
Cameron – although personally a moderate endorser of the institute EU – did not
do much to rejuvenate the love and understanding between the United Kingdom and
the rest of the EU during the past years – at least from a continental European
point-of-view.
First, he started in 2011 – apparently on behalf of the
London City – with his alleviation (you could also call it obstruction)
of the process to rescue the Eurozone from falling apart and in 2013, Cameron hit the spotlights with
his doomed plan for a referendum on
the future of (the British participation in) the European Union.
The latest source for mounting animosity, between the
United Kingdom and the other members of the European Union, has been the
election of Jean Claude Juncker as Chairman of the European Commission.
The vast majority of the EU member states wanted to
honour the selection of the European Parliament’s leading candidate Jean Claude
Juncker, in spite of the fact that he was perhaps not the most charismatic
candidate and (worse for some parties) an avid sponsor of further European
integration. However, this was clearly one bridge too far for David Cameron,
who went to great lenghts to avoid Juncker from being chosen as the successor
of José Manual Barroso.
Where in earlier years such an outright ‘veto’ of
Juncker would have made his candidacy impossible, this time the European
Council stood tall for their main candidate and pushed it through anyway;
undoubtedly under pressure from the European Parliament, which would not like
to see its main candidate being shipwrecked by ‘them from the European Council’.
The reactions in the Dutch media – after this event -
ranged from ‘my God, what have we done’
to ‘That
will teach the UK, with their past blockades of necessary legislation
and rescue arrangements on behalf of the Euro and their general anti-European
stance’.
There is perhaps a good reason for these mixed feelings
in The Netherlands and – without a doubt – in the other European countries.
The United Kingdom is definitely a European country
with a centuries-long, shared European history AND a future that will be just
as interconnected with the European continent, as it has always been.
The whole problem is, however, that the country feels itself
more connected with especially the United States and the countries of its
commonwealth, than with its direct neighbours France, The Netherlands, Germany
and the Scandinavian countries; except for Ireland, of course.
Even more than for instance The Netherlands, the United
Kingdom cherishes its special relation and close friendship with the White
House and the United States as a whole and their cooperation – in war and
peacetime – is much more intense than with any other country in Europe.
The European Union, however, is more or less seen as a mother-in-law;
an annoying ‘busybody’, with too much ‘hustle-and-bustle’, that constantly interferes
with the British economic, political and legislative processes itself. In the
eyes of the British, the EU should accomodate the laws and political/economic ambitions
and desires of the United Kingdom, instead of confining those. A European
Union, which cannot achieve these desires and ambitions, is worse than useless
for the British.
On top of that, the country is so dependent on the
London City for its national prosperity, that every new European financial ruling
poses a direct threat to the financial wellbeing of the United Kingdom as a
whole.
In other words: the European Union has an enormous image-problem
in the eyes of the British, as ‘London’ only wants the free trade zone, the
whole free trade zone and nothing but the free trade zone.
British expatriate knowledge workers – of which there are
thousands and thousands – should be welcomed with open arms all over the European
Union, for their knowledge and skills. Foreign
knowledge workers, however, and especially suppliers of cheap, hands-on labour must
be allowed to the United Kingdom at the government’s discretion alone.
For the United Kingdom, the EU is seemingly only
functional at British terms and conditions. Consequently, as the EU more and more refuses
to listen to these very conditions, it is becoming increasingly useless. This
is perhaps a quite hyperbolical statement from me, but it undoubtedly contains some
truth.
Still, the million dollar question remains: ‘Would it
be a big loss for the European Union, when the United Kingdom would indeed do
its Brexit?’ I am almost ashamed to admit that I really don’t think so!
Also the savvy journalist and macro-economist from Dutch
newspaper Het Financieele Dagblad, Marcel de Boer, was not too worried that the events concerning Jean-Claude
Juncker could lead to the UK leaving the European Union:
The
question is of course, whether a Brexit from the European Union means, that the
UK would also leave the European Economic Zone. Probably not. The country would
get a similar status as Norway or Switzerland. However? The country will not
have any influence anymore on the common regulation of the internal market, and
it is not too obvious that the country would play such a marginal role.
Holger
Schmieding of Bergenberg Bank thinks this about it: ‘Nobody knows the extent to
which the common market would unravel for the UK. But the mere risk that the UK
would no longer be a base for free access to more than 500 million European
consumers could divert investment and trade away from the UK. History does hold
lessons worth heeding.’
In order to answer the question about the economic
importance of the United Kingdom for the European Union, I took the statistical
data regarding imports and exports of goods and services from the British
statistical bureau ONS. The following charts contain the summarized data for
2013:
 |
| British exports and imports of goods and services Chart created by: Ernst's Economy for You Data courtesy of: British statistical bureau ONS Click to enlarge |
What immediately struck me is the considerable imbalance
between imports and exports of goods and services. The United Kingdom is a
massive net importer of goods, with a negative balance of almost £65 billion
pounds.
At the other hand, Britain is a enormous net exporter
of (financial and commercial) services with a staggering positive balance of £81
billion pounds.
This emphasizes not only the enormous importance of the
financial and commercial services industry for the UK, but also the
importance of especially the London City for the whole country: when
London sneezes, the UK has definitely caught a fever.
The fact that the UK can almost be considered as a ‘post-industrial’
country, becomes even more clear when the imports and exports of goods are
revealed in relation with the other EU countries:
 |
| British exports and imports of goods per EU country Chart created by: Ernst's Economy for You Data courtesy of: British statistical bureau ONS Click to enlarge |
From the 26 mentioned countries of the EU (Belgium and
Luxembourg are treated as one country in in the ONS stat, which they obviously
aren’t), 20 countries export more goods to the United Kingdom, than they import
from the UK.
Bluntly speaking, the UK is the country where many other
European countries can send their ‘excess’ goods and produce. Especially for Germany,
France, Italy, Spain, The Netherlands and Belgium/Luxembourg, the United
Kingdom is one of their most important trading partners, to which they all export
goods well in excess of £10 billion pounds. Germany is (of course) the European
champion of the exporters, with The Netherlands as an honourable second.
For Ireland – on the other hand – the UK is a very
important partner for the import of goods; probably because Ireland lacks an
automobile industry of its own and the UK builds cars with steering wheels at
the right side, which the Irish need.
Do these data identify the United Kingdom as an indispensable
EU partner for the other European countries? Hard to say, but I guess not.
In its current form as ‘post-industrial’ country, the
UK would still need the imports from the other EU countries, even after it would
leave the EU. The country itself cannot become self-supporting overnight and –
in my humble opinion - neither the US nor the Far Eastern countries could fill in
the void that abolished imports from the other EU countries would leave;
especially when it comes to agricultural produce.
Except for Ireland, the role of the UK as a net
exporting country of goods seems almost irrelevant in Europe. Although the
country itself still exports a substantial amount of goods to the
aforementioned seven countries (Germany, France etc.), this amount pales in
comparison with the amount of imports from these same countries. I wonder
whether these imports from the UK are really indispensable, or being done out
of courtesy and import balancing?!
It is a whole different story when it comes to the
export of (financial and commercial) services. London is one of the two most
important financial centres in the world and plays a pivotal role in the
European financial industry. However, it is my guess that leaving the European
Union could strike an enormous blow to London’s ambitions as financial centre,
as Frankfurt, Paris and even Amsterdam are ready and willing to replace their
part.
In my humble opinion, there is no other conclusion
possible: leaving the EU would hurt the United Kingdom much more, than it would
hurt the countries of the EU itself. Without the UK, the political processes
within the EU would be settled easier and with less delay, caused by the
hampering influence of PM David Cameron. In other words: the handbrake would be
turned off!
The UK, however, would feel itself being even more ‘on
an island’ than it already is, as it would lose an underestimated, yet very
important ally in the EU. Besides that, I would not be surprised when a Brexit
would leave the UK begging for the same favorable conditions for imports and
exports, that it now takes for granted.
These are things that David Cameron, Nigel Farage and
the whole British population should consider very well, before they stride on
their path to a Brexit.
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