Wednesday, June 22, 2016

Britain, the EU and referendums: 1975 & 2016 (Part 1 note)

*  One word I remember from that 1975 Sunday Times article is "post-prandial". This more recent article is very interesting.

Forecasts can be wrong, and those from "experts"(at the IFS & IMF etc.) are reflexively rubbished by the Leave campaign, but hard historic facts are harder to argue with.

Economic Outlook: Britain whistled a happier tune after joining the EU - David Smith, 28 February 2016

While Europe was busy integrating, the world was Britain’s oyster. Where there had once been the Empire, on which the sun never set, now there was the Commonwealth. There was the special relationship with America. There were opportunities well beyond the narrow confines of the EEC.
The world, however, was not enough. Commonwealth countries such as Australia and South Africa, far from being happy to be easy markets for British exports, wanted to develop their own industries and imposed tariff barriers against the mother country. India was heavily protectionist from the time of independence in 1947. As a result of this and other factors, Europe’s grass started to look a lot greener. Britain’s economic performance in the 1950s and 1960s was poor in relation to the EEC pioneers. Germany and France had a lot more catching up to do after the devastation of the Second World War but, even allowing for this, they achieved growth well in excess of Britain’s.

In the years from 1950 to 1973, sometimes known as the golden age of growth, gross domestic product per head rose by an average of 2.4% a year in Britain, 4% in France and 5% in Germany. By 1960, Germany was once again producing more cars than Britain and had secured a bigger share of world trade.

Having sampled life outside the EEC, successive British governments wanted in, and desperately so. After trying a smaller alternative, the European Free Trade Association (EFTA), established in 1960, Britain was rejected for EEC membership in 1963 and 1967 before being finally admitted at the start of 1973. Envy of Europe ran deep. [ .. ]

 The politicians of the 1960s and early 1970s were not daft. Having lagged behind growth in the EEC prior to membership, Britain caught up and then outgrew the original six. Their growth became no longer a cause for envy. Growth rates slowed everywhere after the golden age, but Britain’s relative performance improved. Plainly not all of this was due to being in the EEC. Clearly, some of it was.

Joining the EEC was a considerable economic success, according to a new paper, The Growth Effects of EU Membership for the UK: A Review of the Evidence, by the noted economic historian Professor Nick Crafts of Warwick University. “Membership has raised UK income levels appreciably and by much more than 1970s proponents of EU entry predicted,” he writes. “Joining the EU raised the level of real GDP per person in the UK compared with the alternative of staying in EFTA. The deeper economic integration EU membership entailed increased trade substantially and this had positive effects on income.” His calculations suggest that the positive economic effects of membership have outweighed the cost of Britain’s EU contributions and red tape by a factor of about seven to one.

The world was different in 1973, when Britain joined the EEC, and 1975, when we had a referendum on whether to stay in. Many people who did have a vote in 1975, and some who did not, claim that the country was conned; that we voted to join a common market and ended up with ever closer union, migration and a single currency on our doorstep. It is true that at the time of the 1975 referendum the government chose to emphasise the trade aspects of membership to the exclusion of almost everything else. Freedom of movement and equal treatment of people were part of the Treaty of Rome, though in the 1970s most people expected the flows to be from Britain to the rest of Europe, not the other way around. The TV series Auf Wiedersehn, Pet, first shown in 1983, was about British migrant workers in Germany.

As for the single currency, when Ted Heath began his successful entry negotiations, the EEC was still officially on course for monetary union, the Werner Report of October 1970 having set the target of achieving it by 1980. It took a further two decades for the euro to arrive, but Europe’s intentions were pretty clear.

A stronger point is that Europe has changed in 40 years. No longer do we envy our European partners their growth, although many people I talk to still have a lot of envy for Germany and even France. The world has changed, too, with the rise of China and other emerging economies. Trade is freer, for goods if not yet enough for services. Britain is making great strides in the latter, though: service-sector exports doubled between 2006 and 2014. 

 The question I will address in coming weeks is whether things have changed enough for life to be better outside the EU. Does membership prevent us taking full advantage of the wider world, or is that an escapist fantasy? Germany has been a big success, from within the EU, in selling to the world. Only China and America, with much larger populations, export more.

Wednesday, June 01, 2016

Britain, the EU and referendums: 1975 & 2016 (Part 1)

With Britain in full swing of debate ahead of the  referendum, 2 memories from the earlier debate stick in my mind.

In 1975,  the anti-Europe argument was largely the preserve of Left-Labour: people now in favour of continuing EU membership, were then opposed, from Jeremy Corbyn to shadow Foreign Secretary Hilary Benn, then campaigning with his father Tony to leave. Of course, there were some figures n the Right, such as Enoch Powell and Nicholas Ridley, who opposed EEC  membership, but these were largely seen as mavericks. Nonetheless, small though it was, the anti-Europe element in the Tory party forced the Heath government in 1972 to rely on pro-European Labour MPs (some of whom later defected to form the Social Democrats Party) to get the legislation through that paved the way for the UK's accession to the EEC

Now the anti-EU sentiment seems more embedded in the Conservative mainstream: those supporting Leave include cabinet ministers such as Michael Gove, former leader Ian Duncan-Smith & former London mayor Boris Johnson; they have joined the campaign alongside UKIP leader, Nigel Farage.

So, this is the 1st memory, of 2 articles in the Sunday Times, 1 for, 1 against. It was the against argument that made the most impression on me: with free movement of capital, workers would be pissed upon. They certainly were in the years that followed, mainly as a result of the Thatcher reforms. But it would take more than leaving the EU for them to be unpissed upon (*) .

Back then, there were many people who had memories of the Second World War, had even fought in it. For some of them, what was then the European Economic Community (subsequently the  European Community, then the  European Union) represented peace: France and Germany had relatively recently been at war (their 3rd clash in 70 years); now war between these rivals was unthinkable.

Another idea, viewed through the Cold War prism, was that the EEC strengthened the Western bloc. In one discussion in the early 1970's, when the question of "rule from Brussels" was brought up, Peter Ustinov said (this is the 2nd memory), "better that than rule from Moscow".

The counter-argument to this, then as now, was that it was NATO, not the EEC, that guaranteed the security of Western Europe. And, of course, this was somewhat in contradiction to the idea of the EEC as agent of peace.

Now, when David Cameron talks about the 70 years of peace in Europe that have been achieved, he is accused by Boris Johnson of saying that if the UK left, World War 3 would break out, although he himself was prepared to leave (if negotiations had not been concluded satisfactorily). And it is this caricature of his remarks that seems to be remembered.

What has changed since 1975, is that the EU has been a huge engine for democracy. Portugal had just emerged in 1974 from 45 years of right-wing dictatorship; Franco was still in power in Spain; Greece was just emerging from the rule of the colonels. Allan Little, in his series for the BBC WS, rightly emphasises the events of 23 Feb 1981, when for a few hours it seemed that Spain might plunge back into military dictatorship. After that, for the Spanish Left, including (the / former) Communists, membership of the EEC was a foreign policy priority. 

These 3 countries formed the next wave of EEC expansion in 1981 & 1986, following the accession of Britain, Ireland and Denmark in 1973.

* (reference to follow) 

1 Jun 2016 (to be continued)

Published 22 Jun 2016: with campaigning about to close, I am publishing what I have written so far, incomplete as it is and lacking some links and  references.
Update 24 Jun 2016: corrected link to Allan Little's series (Europe's Challenges: Expanding the Union, Episode 2 of 3).