The UK Would be Better Off Economically Outside the European Union
PRO (4 arguments)
BACKGROUND: Brexit is an abbreviation for "British exit," which refers to the June 23, 2016, referendum whereby British citizens voted to exit the European Union. The referendum roiled global markets, including currencies, causing the British pound to fall to its lowest level in decades.
Non-EU countries, such as Norway, Iceland, and Switzerland have all had their own trade agreements and markets that are flourishing outside of the EU. The vast majority of small and medium sized firms do not trade with the EU but are restricted by a huge regulatory burden imposed from abroad. By getting rid of EU regulatory restrictions, the UK can have freer trade. Overall, the UK would be able to renegotiate better trading terms with the EU and non-EU countries if they were to leave the European Union. London would save billions of pounds in annual EU contributions. Patrick Minford, Professor of Applied Economics at Cardiff Business School, states, “In the long term, Brexit will herald a major growth-boosting period, as the UK breaks free of the over-mighty EU with its protectionist mindset and establishes free trade and intelligent regulation aimed at UK economic interests.” In addition, the think-tank Open Europe found that the UK’s GDP could rise by 1.6 percent if the UK had the ability to negotiate a free trade deal with Europe. This freedom to negotiate is only possible if the UK leaves the EU. Last year, the UK paid 13 billion pounds to the EU and received 4.5 billion pounds in spending, so its net contribution to the EU was 8.5 billion pounds.
Without a doubt, the UK not having to pay 8.5 billion pounds to the EU would boost its own economy. This additional money could be used towards social services, like the National Health Service.
Cardiff Business School
The vote for the UK to leave the EU occurred back in June, and this referendum caused a drop in the British pound from being worth $1.48 to $1.32. Some opponents of Brexit believed that this drop in value would be very harmful to the economy, but the positive trend of the UK’s economy over the summer suggests that huge economic benefits will come from formal withdrawal. According to the New York Post, the drop in currency value led to a record number of visitors to the UK this past summer along with tourists spending record amounts of money, leading to an overall boost in the economy. In the month before Brexit, airline reservations to Britain were down compared to the previous year. However, after the Brexit vote, they jumped 4.3 percent, and wealthier tourists bought more jewelry and watches. In addition, consumer confidence and domestic spending are both up, as demonstrated by retail sales exceeding all expectations in August. Not only are these industries flourishing as a result of the vote, but manufacturing and home sales are also doing well. According to the UK’s Daily Express Newspaper, the Financial Times Stock Exchange 100, a share index of the top 100 UK companies, reached 6,990 after the Brexit vote, which was the highest point reached by the share index since June 2015 and marked an increase of more than 1% on the day’s trading. According to the UK purchasing managers’ index, output in the manufacturing sector reached the highest level in two years, hitting 55.4 last month. This was a full 2 points higher than the score in August, and it exceeded economist expectations of 52.1. Rob Dobson, senior economist at IHS Markit, said: "The rebound over the past two months has been encouragingly strong, and puts the sector on course to provide a further positive contribution to GDP in the third quarter." Output rose at its quickest in one-and-a-half years in the consumer goods sector, while manufacturing production saw its fastest expansion since May 2014.
We have clearly already seen the huge economic impacts of Brexit. Undoubtedly, this evidence is the most important evidence in the debate because we are talking about the real impacts of Brexit that have already been documented.
New York Post
Under EU law, Britain cannot prevent anyone from another member state coming to live in the country. The result has been a huge increase in immigration into Britain, particularly from eastern and southern Europe. According to the Office for National Statistics, there are 942,000 eastern Europeans, Romanians and Bulgarians working in the UK, along with 791,000 western Europeans – and 2.93 million workers from outside the EU. China and India are the biggest source of foreign workers in the UK. This recent pace of immigration has led to some difficulties with providing housing and health services, which are paid for by taxing British citizens. These British taxpayers resent paying for social services for newly-arrived immigrants, who often come with no English language skills so they can’t get jobs. They must survive on government hand-outs. Pro-Brexit politicians like Nigel Farage insisted immigration should be cut dramatically, and that leaving the EU was the only way to "regain control of our borders".
It is clear that immigrants from other EU member states have recently flooded to the UK, forcing British people out of their jobs. The only way to reemploy these British people is by finding jobs for them, which is achieved by blocking out other immigrants. Decreasing the UK’s unemployment rate would definitely be a positive impact on the economy.
Office for National Statistics
The UK’s total contribution is more than €20 billion - the UK currently loses control to the EU about the way the full amount is spent. The UK will be able to decide how the full amount is spent. Even accounting for the money that the EU spends in the UK, the UK is worse off by €10 billion each year as part of the EU.
One of the UK’s most reputed and widely read newspapers, The Telegraph, analyzed the UK’s contribution to the EU and the EU’s spending in the UK. It found that in 2013 the UK contributed the second most amount of money to the EU, seconded only by Germany. Every year, the UK gives €10 billion more to the EU than it gets back.
CON (4 arguments)
The pound is close to a thirty year low and the UK lost it’s perfect triple A credit score. Economists predict job losses and decline of the UK’s Gross Domestic Product, which is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. If the UK had not left the EU the pound would most likely be back up at $1.50 per dollar. The pound was about $1.50 before the UK left the EU but today, in early October, the pound is worth just above $1.27 per dollar. The last time we saw these kinds of numbers it was 1985 according to CNN.com. Additionally, businesses that trade with the EU will have uncertainty over that trading relationship and the UK will be a less favourable investment prospect because it is no longer a bridge to 500 million EU consumers. The UK Treasury has estimated that the UK’s GDP will be lower by 6.2% by 2030. As a result, so many British people will be considerably worse off. In addition, some big employers, such as many car makers, are located in the UK in large part so they can have access to the EU market. Without access to that market, they will leave the UK. Also, it is estimated that three million UK jobs are linked to trade with the EU. The fact that businesses will leave the UK will then lead to significant job loss - the UK Treasury estimates 500,000 jobs will be lost.
The impact of this weakening of the British currency is that the government has less money to spend on imports because the pound has been significantly devalued. This means everything from fuel to food costs the British citizens more, while at the same time, over half a million British people will lose their jobs as a result of business pulling out of the UK. This historic currency devaluation and job loss would not have happened if the UK had voted to stay in the EU. Thus, the UK would be better off economically had it voted to stay in the EU.
Economic integration with neighbours is the best way to economic growth. The UK really needed to be a member of the EU because they have to pay much more money when they are trading with other nations because of tariffs and taxes. The UK will also be left out of larger trade deals between the UK and other countries. By staying in the EU, the UK benefits greatly from having no tariffs on imports and exports when trading with other member states of the EU. In the UK’s case, the EU accounts for 44.6% of exports and 53.2% of imports, so trade with neighboring EU countries is the foundation of the UK economy. Also, if it leaves the EU, the UK will be left out of larger trading deals between the EU and other parts of the world, like the US. "The EU is currently negotiating with the US to create the world's biggest free trade area," says the BBC, "something that would be highly beneficial to British business."
Throughout the world the trend is towards regional integration rather than away from it. The EU is the best example of this single market in which no tariffs are imposed on imports and exports between member states. Membership in the EU meant that the UK always had a say over how trading rules are drawn up between the member states. Also, Britain benefitted from trade deals between the EU and other world powers. For these reasons, it is in the best interest of the UK economy to stay in the EU.
The UK needs to remain in the EU to ensure the organisation flourishes. The UK has a track record of having a strong positive influence on the EU. For example, the UK influenced the EU to expand its membership to create a bigger market for trade in the past. Another example is that UK’s former Prime Minister, David Cameron, had a deal with Europe prior to the Brexit referendum to get the EU to engage in “lowering administrative burdens and compliance costs on economic operators, especially small and medium enterprises, and repealing unnecessary legislation.”
The impact of the UK staying in the EU is that the UK’s influence would towards revising the EU rules would have benefitted not just the UK but the EU as a whole.
Passporting is the right for banks within the European Economic Area to freely trade with other companies in the EEA without individual country licenses, and it provides many cross-border services to banks within the EEA. When Britain leaves the EU, it will also be leaving the EEA, which would make cross-border trading and services harder for companies within Britain.
“Clearly some size of our businesses will have to be moved out of London into European headquarters with the absence of any passporting agreement,” says Colm Kelleher, president of Morgan Stanley. Without passporting rights that so many British banks and companies have relied on, it will make it a lot harder for British counties, and cause some of them to move their headquarters to a different country that is a part of the EEA. Rob Kapito, head of Blackrock, an investment company, feels the same way. “I don't think there is any good [financial services] firm that has not already started to look at real estate in different areas outside the UK in case they have to move larger operations," he says. These businessmen are not the only ones who are worried about this. The loss of passporting rights will make it harder for British companies, either causing them to establish new trading rights, which would cost them money, or move their headquarters, both of which would damage the British economy.