Sunday, 19 May 2013

Life After Europe

This is certainly a topic I know more about than many others as I used to teach on European Integration and even got to grips with the complexities of farming subsidies.  I do not need to tell you that the key political development in the UK of recent months has been the success of UKIP, a right-wing party primarily aiming to have Britain leave the EU.  Receiving around a quarter of the vote and going from 8 to 147 councillors in the local election has unsurprisingly attracted attention.  Though it is important to note that there are 165 Independent councillors and that the Conservatives have 1116, i.e. more than Labour, the Liberal Democrats and UKIP put together.

Of course UKIP’s impact has been greater than simply the number of councillors it has.  It has again exposed the long-running fracture in the Conservative Party over the question of the extent to which even if the UK stays in the EU it actually participates in the political process.  This is because the Conservative Party has two main wings, one which is primarily business focused and welcomes being part of a vast free trade system and the other which is more nationalistic and simply baulks at the perception of giving any degree of sovereignty to any non-military organisation.  This fracture has not really troubled the Conservatives since the closing days of John Major’s administration in the mid-1990s, but is now back in force.

In recent days David Cameron has been compelled to accelerate the movement to a referendum and without anyone really noting this it has quickly mutated from being about redefining the relationship with the EU to the now trumpeted ‘in/out’ referendum.  Cameron has had to play some politics because he is coalition with the most pro-EU of the British political parties, the Liberal Democrats.  Labour has had an ambivalent attitude towards the EU through its history.  This is because back in the 1950s and 1960s it was seen as a project brought forward by conservative, largely Catholic, businessmen.  It was only in the 1980s when with the pressure that working people were facing in Britain and the EU’s introduction of labour and social policies that most, though not all, Labour members began to see a benefit in the EU, as it is now known.

One reason why Cameron is under so much pressure from UKIP is because, whilst it is primarily a single-issue party, it has also managed to adopt a populist stance that taps into a strong sentiment in British society personified by the presenter Jeremy Clarkson, who in fact has been the most successful ‘political’ author of the past decade.  Cameron has been weak on the populist side of Conservative support right from the start as I noted as far back as October 2010:  The nostalgia for a kind of edited golden days of the 1970s when people were apparently free to damage themselves through speeding, not wearing seatbelts and smoking, is very strong in Britain.  Cameron, unlike both Margaret Thatcher and John Major, has never even attempted to speak to those Conservatives in Britain who are not wealthy, but in fact, make up the majority of the people who vote for them.  This is why Nigel Farage is succeeding where Jimmy Goldsmith and his rather elitist Referendum Party which was also anti-EU did not thrive.  Farage may flirt with racism but he manages to do it on the ‘down the pub chat’ basis of ‘I’m not racist but …’ which less alarms the bulk of voters than the more explicit rhetoric of Nick Griffin and the BNP.  Cameron, though elitist has a modern outlook which is all about high-tech global business.  However, that is not the world that the bulk of Conservative supporters feel comfortable with even contemplating.  Britain is a country which lives in the past and any attempt to move away from that, especially when people feel insecure in terms of jobs and the economy, is to make yourself unpopular:  This is why it may benefit Ed Miliband to adopt the trappings of ‘Old’ Labour at least to appeal to a sector of working people who liked the certainties of the past but with a more labour-focused approach.

Anyway, there are loads of commentators with more time to explore these issues so I will move now from the current political turmoil to look longer-term.  It is clear that there will be an in/out referendum.  Even if Labour comes to power in 2015 they will find it difficult to resist the head of pressure for this.  It is something that the bulk of the population have wanted for decades and had to accept assurances that it was not possible.  Now Cameron has opened the door, it cannot be closed again.  All politicians have to face the fact that the vast majority of the British public loathe the EU.  Many of the reasons for this loathing are based on misinformation which has been provided by the media decade after decade.  However, the support for UK membership of the EU is limited to business people who like the free trade aspect and the ability to bring in cheap labour legally from Eastern Europe and middle class people living in South-East England who own property in France or lower middle class people from Essex and Liverpool whose parents retired to Spain.

One key myth about the EU is that it compels Britain to accept regulations that hamper the freedom of Britons to be exploited and to have their environment wrecked.  The EU only got into social and labour legislation in the 1980s but it has meant better conditions for maternity leave and eventually for limiting working hours.  These things are seen as hampering the potential success of British business which feels compelled to work on a cheap labour, long hours approach with workers accepting lower wages as they compete for jobs against cheaper workers from Eastern Europe.  The ironic thing is that in terms of health and safety legislation countries outside the EU have gone down the same route.  In issues such as farming and fishing quotas Britain has always enforced these far more rigorously than the more pro-EU states like France, Germany and Spain.  It is the British government that has made these rules apply.  Yet, the propaganda portrays that the assertion of regulation comes from Brussels.

As Tony Benn has long noted, the EU does not have a democratic structure.  The European Parliament which all UK electors can vote for, is seen as the ‘government’ of the EU, in fact does not create legislation and is little more than a talking shop.  EU business is carried out by the Council of Ministers, the prime ministers and in some cases foreign ministers, of each of the member states.  It is no more than a club of democratic leaders.  Thus democracy is not direct, it is filtered through whoever is in power in each state.  Yet, this is not the perception that has been peddled to the British over all these years.  Of course, to a large extent, this is irrelevant, because the British even now we have a coalition government which is sort of working, we dislike other countries negotiating with us, we just want them to do what we say and leave us alone.

All EU members have nationalism and bigotry, it is an element of the modern nation-state.  However, the lack of travel by young British people and the general inability to speak foreign languages:  exacerbates the situation in which the only view of the EU is the one that comes from the BBC and is heightened by ‘The Sun’ and ‘Daily Mail’ even when people bother to read them.  It is far easier to make a scare about immigrants taking jobs and school places than explain the opportunities of the EU.  The sustained rise in the cost of living in Britain is making British people more and more insular.  It is expensive even to travel within the UK let alone abroad.  As a result, increasingly it is only the children of those who own houses in France that are experiencing neighbouring cultures and they are generally pro-EU already.

In the next decade, perhaps as early as 2017, maybe even before that, there will be a referendum regarding the UK leaving the EU.  There will be an overwhelming vote in support of immediately leaving.  There is no question of this given the extensive hostility to the organisation.  What will life be like once Britain is out of ‘Europe’?

The first thing is that trade would be affected.  I know this from working part-time in an import/export business which brings in goods from the USA and China as well as EU countries.  With EU countries the company pays not import duties and customers in those countries similarly can get their goods at the price they see on the website.  The moment the UK is outside the EU, this will stop.  However, we are fortunate that there is a drive for international free trade so leading to a reduction of tariffs and so the impact on British trade would be less than if we had left the EU in the Thatcher years.  Overall 48% of the UK’s exports in goods and services is with the EU; of all the EU states the UK is least dependent on trade within the union, but currently there is a trade gap with Britain importing £6.1 billion more items from the EU than it exported to these countries.

According to the Confederation of British Industry, the USA with over 300 million people takes 17% of the UK’s exports, but Germany with 80 million takes 9%, France (65 million) takes 6.6%, the Netherlands (16 million) takes 6.9%, Eire (4.4 million) takes 6.1%.  Thus both per capita and as an overall figure, the EU is the largest consumer of UK exports which would now not have free trade with.  You could argue that we could replace this with exports elsewhere.  This is certainly the case, but we need to move quickly.  Between them India and China have 2.3 billion people but only 2.0% of UK exports go to China and 1.2% to India; 1.1% go to Russia and only 0.1% to Brazil, the other two burgeoning ‘BRIC’ countries.  The USA only provides 2.8% of Britain’s imports whereas Eire sends 9.4%.  We have a large trade imbalance with the BRIC states with China providing 9.4% of Britain’s imports, India 8.0%, Russia 4.0% and Brazil 4.1% despite how little we sell to them.

Yes, it is likely the EU would remain Britain’s prime trading partner, even after we had left but access to the EU marketplace would be harder.  In addition, US and Japanese investors are already concerned that their manufacturing in Britain would now be the wrong side of the free market ‘wall’ and it would be better to move to a country remaining within the EU.  This might be of benefit to an independent Scotland.

Leaving the EU would provide a set-back for British trade that is clear.  However, this would fit in well with the populist UKIP attitude and to attract business and produce competitive exports, the UK would rely on cheap labour costs and deregulation.  Former Chancellor of the Exchequer, Lord Lawson, has argued that EU regulation is hampering the financial companies of the City of London, always a strong element in Britain’s export of services, from making as much profit as they can.  The City of London while it may see itself as an autonomous element of the British economy is in fact currently integrated into it.  The separation is moving far too slowly.  This integration was why reckless activities by its bankers impacted so heavily on high street banks and the general public:  The cuts in welfare and other spending are a result of insufficient regulation of the UK banking sector and we need, not simply want, more regulation if ordinary people are going to be spared suffering once again from bankers pushing to make even more stupendous profits.  Regulation does not have to come from the EU.  However, this disengagement from the EU does seem to be increasingly linked by other extreme right-wing policies.

The one factor that probably wins greatest support from those seeking to leave the EU is the barring of the immigration of EU citizens, in particularly those from Eastern Europe.  This is where the populist view goes against that of the business community who love cheap labour that can be used to push down wages for British workers too and reduce overall costs.  The impact on the construction, catering and care industries as a result of the loss of these people would be great.  In 2011, there were 2.7 million people in England and Wales (not including Scotland and Northern Ireland) who came from other EU states, this included 579,000 from Poland and only 79,000 from Romania.  The peak for migration from Eastern Europe was in 2007 and the monthly figure is now a quarter of what it was that year.  The economic crash of 2008 naturally made the UK far less appealing.

The balance across the country is uneven; 27% of Polish immigrants live in London as do 56% of Romanians.  In the mid-2000s, 10% of the population of Southampton was Polish but this fell sharply after 2007.  The majority of citizens of other EU countries, 59% are from states which were in the EU before 2004, for example at any one time 300-400,000 French live in London making it the city with the sixth largest French population in the world.  There are around 270,000 Germans, 54,000 Spaniards and over 100,000 Italians.  This can be compared with the 761,000 Britons living in Spain permanently with a further 229,000 living there for part of the year; 150,000 live in France; 120,000 live in Germany and 29,000 live in Poland.  In total around 1 million British people live in other EU states though there are seasonal fluctuations; 660,000 Britons live in the USA.

With Britain leaving the EU, the rights of all these people to live in the UK would suddenly go.  This does not mean that there would be mass deportations because Britain does allow some immigrants even from outside the EU to settle here still.  What would make an impact is what laws restricting provision for immigrants would be introduced either before or after the exit from the EU.  Currently there are plans to limit the access of Bulgarians and Romanians to free health care and policies like this, it seems likely, would be quickly extended to other EU citizens with Poles being the top of the anti-immigration supporters’ list.  In such a climate many EU citizens would choose to leave anyway.  There was a fall in the Polish population in 2008 at the time of the economic crash, particularly noticeable in some towns.  The impact would be very varied across the country with London experiencing the greatest changes.  There are likely to be tensions especially for cases of the children of EU immigrants who have only lived in the UK or for people who have been living here for many years.  The large increase in immigrants from other EU states came in 1992 meaning that some will have been in the country for over two decades.  How would families in which one parent is British and the other an EU citizen be treated?  Expelling one, might mean the other going too.

Immigrants are always people with ‘get up and go’.  If you have worked in the civil service you will be familiar with working alongside multi-lingual French, Spanish and German workers.  The stereotype of the Polish and Lithuanian builder is based on a degree of fact as are Eastern European waiting and pub staff.  Thus, these sectors which employ a sizeable percentage of especially skilled or cheap foreign labour will suffer most.  There do not seem to be loads of UK people waiting to fill these posts and it seems that ahead of the exit a training campaign would have to be introduced to get young British people ready to fill the lower paid posts or see numerous shops and cafes close; certainly all the Polish grocery shops would disappear and again it is not as if there are Britons waiting to fill those slots.

A further challenge would come if there was a ‘tit-for-tat’ approach from EU states and Britons found they were no longer welcome living in Spain or France and either would be ordered to leave or face increasing restrictions of the kind these states’ populations would be encountering in Britain or that we already see for expatriates in Australia.  Spain would be foolish economically to expel Britons, but they may leave anyway in this new climate.  New locations, notably Turkey, still outside the EU, might become increasingly attractive in the post-EU era.  The difficulty for the UK is that whilst the bulk of immigrants coming into the UK are young and economically active, the bulk of emigrants are retired.  Thus, their return would not only not contribute much to the economy but add a new burden to health and social services.  It is actually of benefit to have so many old Britons looked after by Spain and Cyprus.  It would be interesting to see how the UK’s relationship with the Republic of Ireland would change.  There is a special relationship between the two countries which mean that Irish have more rights than other EU citizens.  This might shift once Britain left the EU and Eire remained in.  There are over 600,000 Irish living in Britain, again focused in specific areas including London; they are the only nationality group which has continued to see a fall in their numbers in the UK in the past decade before and after the economic crash.

Overall on leaving the EU in the following years around 2 million people might be compelled to leave the UK, primarily from London.  In general these would be economically active tax payers who up until the break had been living in the UK legally.  There is likely to be some influx of retired people coming back from EU states but also workers from Germany in particular.  Some would argue that this would solve unemployment in the UK in one go.  However, it ignores the number of businesses run by migrants that would close and the fact that many Britons are not skilled or willing to take the jobs that migrants fill.  Ahead of the exit British teenagers would have to be schooled in accepting posts as cleaners and waiters and be trained in construction and administration in order to fill the gaps left by the missing EU citizens.  Once the EU citizens had been removed, which group would the government turn on next: Commonwealth immigrants?

This represents the changes on a very clinical basis, and that is what people like UKIP want.  However, it would be far messier than that.  Anti-foreign attitudes would be crystalised and people suspected of being from another EU country even if this was not the case, would come under pressure.  Thousands of people in the UK are descendants of immigrants from Poland in the 1940s and from Italy, France and Germany going back decades; who would draw the line between them and more recent arrivals from these countries?  Some people would seek to buy false identities and hide from the authorities.  The policy would also dent the economies of certain districts especially in London, exacerbating the impact of the decline in EU trade on the UK economy as a whole.  Along with the people expelled, would go all the funds that these EU citizens have in the UK.  Of course, as in all these things, wealthy French or Germans or even Poles, could buy exemption, the government is always nationality blind when dealing with the rich.  It would represent the largest organised removal of people in Europe since the end of the Second World War which is unlikely to make Britain look good on the world stage.

Following the UK’s exit from the EU there would certainly be economic and social upheaval.  Britain’s exports and imports would fall and there would be gaps in towns from where EU citizens had been removed.  Attitudes would become insular and xenophobic, something that the UK does not need more of.

What would be the greatest impact for ordinary people?  Well, aside from the economy going downhill further, it would be the difficulty of going on holiday or even a ‘booze cruise’ day trip to France.  If you want to know the difficulties that would occur just ask an Australian or South African who has the right to permanent residency in the UK.  Just to go for a two-week holiday in France requires them to spend eight hours at the French Embassy in South Kensington.  They are interviewed; their children are interviewed separately and you have to battle with the officials to be allowed to have a parent present even with a five year old (this is based on my experiences in assisting a South African planning a trip to France).  They have to produce proof that they have a job in Britain and if they are self-employed, need a letter from their Chamber of Commerce.  Of course there are loads of forms to fill in.  The visa is only valid for six months so if you want to holiday in France again next summer you have to go through the whole process again.  From the Kent coast you can see France, but who is going to bother trying to go to visit it if you have to spend all of this time and expense even for a short visit.  As it is, the French and German embassies are going to be full of business people trying to get visas to visit to carry on at least a little trade with EU states.  No school trips to France or Germany any longer, it would just be too hard to organise.  I guess this severing of the UK (or perhaps by then England, Wales and Northern Ireland – ‘Ewani’ – we need a term for this grouping) from the EU, is the ultimate goal of UKIP.  We can then all speed around not seeing anything much beyond a Britain whose economy would be in further recession and prone to insularity and xenophobia.

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