The truth is that trading within the European Union is like trading with a bankrupt company.
We are told – despite the obvious disarray of the EU economy – that trade with the EU is vital. Desirable, yes – vital, no. It is said that almost 50% of our exports go to the single market and 40% to the eurozone. The real question is, or should be, is this working to our advantage?
The European Commission claims that the single market is the ‘crown jewel’ of the EU. But the dismal trade within the EU is a fundamental reason for our own economic problems and lack of growth. Banking and fiscal union in the eurozone will make this worse and, judging from the failures of the interminable economic summits, will only make the EU black hole blacker and deeper as the Euro elite calls for ever more integration. It is not only a eurozone, but a European crisis.
So how did the recent UK balance of trade figures throw light on our economic performance with the other 26 member states? Frankly, they were disastrous. Between 1977 and 2011, the UK balance of trade in goods and services was in surplus up to 1985, just before the Single European Act went through in 1986. Since then, except for four years, our balance of trade has been in deficit. In 2011, our balance of trade was in deficit to the tune of £27.6bn with the rest of the EU, but with a surplus of nearly £4bn with the rest of the world. Our balance of payments deficit in 2011 was £46bn with the EU, but with a surplus of £17bn with the rest of the world. Crucially, our balance of payments deficit with Germany alone was £22bn of this – in other words, almost half our total deficit with the EU.
However, and remarkably, our 2011 surplus on current account with the US and the rest of the Americas was as much as £38.5bn, and that with Australasia and Africa was £10bn and £2bn respectively. Tellingly, our deficit with China – where Germany makes enormous inroads – was £19.7bn. In goods and services, the figures are almost the same.
The message is clear and urgent we must refocus our trade away from the EU to the rest of the world.
We were told the single market would increase competitiveness but let’s face it, except for Germany, there is no growth in the EU at all. It is time we recognised that we will never reduce the deficit unless we renegotiate our entire relationship with the EU, which the Prime Minister conceded last month is now “untenable”. This means profitable trading internationally and domestically so that we can regenerate our economic performance and, by reasonable taxation on private enterprise (particularly small and medium-sized businesses) and by EU deregulation, generate the revenue to pay for public expenditure such as hospitals and schools. The EU is not just an obscure exercise in institutional navel gazing, it has very direct and damaging consequences for our economy.