Today’s “FT poll of polls” shows 44% each for both the Remain and Leave campaigns. Sir Richard Branson, founder of Virgin Group, is so concerned regarding the outcome of this referendum that he started his own Remain campaign yesterday, only three days before the vote. In the meantime, Vote Leave broadcasts TV ads saying the EU contribution money is a waste and it is necessary to take it back for building a better NHS. The panic and scaremongering of the last few days is deja vu from the Scottish referendum in 2014.
David Cameron was pressured from his eurosceptic peers and had to make a political decision to have this referendum. However, I could not help thinking, “isn’t it the government’s job to analyse and make a decision?”. After the voting date was fixed, until recently, I heard people saying that they are not sure which way is good for the UK. Since then, some people may have learned about the EU and analysed themselves, some people may have decided their position based on how both campaigns were run, some people may have decided based on who supports which campaign (and some politicians have changed sides!), or some may have decided based on their instincts. How can the UK make sure that the result on 23 June will be really good for the UK?
As a Japanese passport holder, I don’t have a vote for this week’s EU referendum. I can apply for a British passport but the Japanese government does not allow dual nationality and I am not ready to stop being Japanese. However, the result will affect me having lived in the UK for 10 years and my husband is Irish (as an Irish UK resident he has a vote), I pretend I also have a vote and therefore decided to read a book called “Europe In or Out -Everything You Need To Know” by David Charter. He was The Time’s Europe Correspondent for five years. I did some research about European policies with my job in the past but I have to say, it was a very useful read to help decide my position. I would like to share some points that I have learned:
- Norway, Iceland and Liechtenstein are not in the EU but in the European Economic Area (EEA), meaning they have access to the Single Market and must follow the laws of free movement of capital, goods, services and people (they are a set). However, they have no input in setting the rules of the Single Market. This is bad news for the UK if it wants to leave but keeps the trade ties with the EU, especially for the financial services industry in the UK.
- Britain has 70% market share in financial market services in Europe equal to 7.9% of the UK’s GDP.
- Switzerland is outside the Single Market but has Free Trade Agreements for the movement of goods and people with the EU. It has voluntarily adopted many EU laws after being passed through its parliament.
- Norway, Iceland, Liechtenstein and Switzerland are all in the Schengen border control free zone (it is a short visiting visa and not a working visa). Only the UK and Ireland negotiated to opt out. However, if the UK leaves the EU, the UK may lose even the current border control since the EU may take all or nothing approach to the Schengen area.
- 3 million EU-born live in the UK and 2.2 million Britons live in other EU countries including one million in Spain (more sun!). If the UK leaves the EU, Britons in those countries may need visas.
- Corporation tax is 20% (18% by 2020) in the UK, 29.7% in Germany and 33.3% in France.
- The UK contribution to the EU of £350 million per week, which is the number the Vote Leave campaign often use, is before the rebate that Margaret Thatcher negotiated and won, and public sector funding the UK receives from the EU. Therefore, the net contribution is less than half of the number, £163 million per week. In addition, the private sector in the UK receives grants from the EU, especially for research, makes it £136 million per week without considering other benefits. Non-EU member countries such as Norway and Switzerland also pay contributions. The UK’s contribution will be estimated one-eighth of the current gross payment if the UK leaves the EU but retains an EEA or Switzerland type association.
- 6th Duke of Westminster received £749K as EU subsidies in 2011 for farms he owned, and so did the Royal family and other Dukes.
- One week a month, the European Parliament makes a costly move from Brussels to Strasbourg, German-speaking French city, for remembering the post war reconciliation.
- The EU spent €141 billion and the UK spent £736 billion in 2015.
- The EU is the largest trade partner for the UK and accounts 44.6% of exports and 53.2% of imports in 2014. Some people are concerned the UK trade account is too EU oriented.
- Japanese Nissan’s Sunderland plant is the biggest car manufacturer in the UK for the last 17 consecutive years, 57% of those cars are exported to Europe. However, Germany exports more cars into the UK.
- While EU recently concluded one FTA with South Korea, New Zealand concluded eight trade agreements including with China, Malaysia and Thailand.
If the UK is to leave the EU, I don’t think that joining the EEA is a viable alternative and that leaves the UK the option of the Swiss model negotiating each area and detail of the relationship with the EU and other countries in the world. It will be a very long process and long period of uncertainty, which is bad for business in the UK. Also, Scotland may decide to hold referendum again to leave the UK. My impression is that it will be more effective and reasonable to negotiate whatever the UK wants, within the EU. The UK have done so for years and hasn’t give up its sovereignty in my eyes.