Referendum - Interdependent with Europe

As we all know, opinions are two a penny but facts come at a cost. This referendum debate has so far produced nothing but opinion dressed up as fact. I am at a loss as to how anyone can vote when so few facts are provided.

Here is an attempt to give an assessment and would suggest others might help out with a view of their own.

So how do we get to the facts and what do they even look like?

My view is they consist of the current relationship with the EU and the rest of the world. We have unique problems, all nations do. So what are ours?

The UK’s problems stem from the 1960s. No apologies, they have to be understood to grasp the gravity of the position. Then, we were the ‘basket case’ in Europe, under IMF rules to get loans to deal with a chronic balance of payments deficit.

We had all the industrial ‘wherewithal’, steel, cars, chemicals, shipbuilding, electronics, aircraft and banks – the lot. British Steel could sum it all up. They had five-plus levels of canteens according to seniority. It was all show and no substance. Europe’s new Marshall Plan funded factories and Japan’s relentlessly efficient factories started to wash away the dated pre-war machinery in British companies.

Europe had different problems and sought solutions to match.

The war nurtured closer cooperation to rebuild a shattered industrial base. New factories with focused workforce and a potentially large internal market. They chose protective tariffs. At first it gave them beef and butter mountains and wine lakes. They also erected high tariffs on Far East electrical goods and cars and successfully parried attempts by foreign firms to manufacture in the EU. This applied equally to UK companies who found it very difficult to expand into Europe. Their market was for them to exploit and not outsiders.

Meanwhile, back in the UK there was a crumbling economy. Remember Heath’s three-day week, blackouts working by candle and gas light. That was us. Britain’s rather desperate solution was to encourage those Far Eastern and American firms that couldn’t break into Europe to establish themselves here. A last ditch attempt to stem poor exports and high unemployment.

A back up initiative was the political drive to join this now successful club.

After many humiliating rebuffs by De Gaulle, Edward Heath finally succeeded in 1973 and the Labour government under Harold Wilson conducted the first Referendum, in 1975.

British and foreign firms manufacturing in Britain were now free from the trade barriers formerly barring them. It seemed like a win win strategy.

That was then. Now this ‘laissez faire’ policy has allowed these life-saving companies to ‘wash away’ or buy out a very large number of UK companies and brands and also take over many excellent UK companies like Pilkington Glass, Cadbury and British Steel. And, why stop there – British Gypsum, British Oxygen, British Railways, British everything. We are now owned ‘lock stock and barrel’.

Dividends to foreign companies must be haemorrhaging our Balance of Payments and committing us to find even more inward investment.

The dilemma is that these very companies are currently shoring up our economy. Their retention is essential.

We have currently no plan ‘B’ until home-grown companies can fill the void.

We had a £94 billion trade deficit last year. The Euro area had a £250 billion trade surplus and China £210 billion surplus. All figures very approximate as in sterling.

A vote to leave would present all these companies with a 10 per cent tariff barrier and an incentive to look elsewhere for a future base.

Europe is looking increasingly attractive with lower labour costs in the East and large-scale immigration of often educated, if not skilled workers, from the Middle East. It’s not a certainty they will relocate, but highly likely they will consider options that immediately undermine the economic climate putting the pound and the Balance of Payments under more pressure. That is, just about where we started off in the 1960s. You know how quick industry is to respond. Made in China is on everything we touch.

Against this, we urgently desire a safer borders policy to address the socially destabilising effect of different cultures competing for limited resources. However, if we leave, put two fingers up to the trade barriers and suffer the potential downturn, are we any more likely to control immigration? The internet and ease of travel have put us all on the same world stage. UK’s integration policies have served us well and may hold. However, the strength of international law and the moral pressure of international charities weighing in against sovereignty rights will be a considerable challenge to changing immigration policies and implementing them. Also, we are at the heart of international law and the integrity of such is the very business that earns us foreign income and so will mitigate against us strengthening our barriers as Australia has.

Many of the objectives preferred by leave campaigners are laudable but illusory. We need time to build up our new science and tertiary industries. Laissez faire may be in our best interest yet, but there seems to be a legislative paralysis about curtailing foreign companies’ absolute freedoms here. Retention of our companies is a problem we must urgently tackle.

Just one other terrible truth is that the EU’s economy is on the edge of a precipice itself. Even though its exports are much more than Chinas, the experiment with the Euro and the consequent obligation to fuse Euro countries into a political union has no future and could yet destroy the European powerhouse.

The UK depends on the EU powerhouse for its survival and the EU will come to need the UK as an essential part of its inevitable reform process. We are mutually inter-dependent, like it or not.

Ken Griffin

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