It’s the break-up to end all break-ups. Since voting to leave the European Union (EU) with an underwhelming majority, the British public has been treated by Brussels and many economists as a recalcitrant spouse who has naively ended an indispensable union. Yet, Donald Tusk and other spurned bureaucrats should get out the ice cream and move on while May and Johnson should stand atop Parliament blaring Taylor Swift’s “We are never getting back together.” Exiting the union stands to afford Britain the flexibility to create trade relationships that better serve both her own growth and the proven preference her citizens have for non-European nations when pursuing international trade and employment. Moreover, the EU is no longer the viable servant of free trade and economic prosperity that it once was. Indeed, Britain should have the confidence to look its one-time lover in the eye and unequivocally declare that “it’s not me… it’s you.”
“You need me, but I don’t need you”
The notion that Britain’s financial and economic success being inextricably tied to the European project are false. In fact, Britain’s Office of National Statistics reports that just over 56% of Britain’s exports are directed to non-European nations. Britain’s single largest export destination is the United States, accounting for 17% of British exports. However, losing a little over two fifths of one’s trade is still undesirable. Nonetheless, the EU is not (as much as some may desire it) one single country and should not be treated as such. When we examine the volume of exports that the UK sends to each EU nation, Germany, France, the Netherlands and Ireland account for slightly over 50% of the consumption of UK products exported to the EU. As the UK has a trade deficit with all of these countries (bar Ireland), it is highly unlikely that in solidarity with their European besties, these countries will insist on a nasty economic divorce when Britain’s exit from the single market occurs sometime next year. It is in their interests to ensure the passage of an EU-wide free trade agreement (FTA) with the UK in order to ensure that they themselves do not lose 17% of their own export market.
The other argument often raised, mostly by younger Britons, is that Brexit will unfairly hinder their ability to work and travel on Continental Europe. However only 1.2 million Britons live in EU nations. Of these, most are retirees and individuals not actively seeking employment. In contrast, there are more than 3 million Britons living and working in the US. The people vote with their feet… and British professionals appear to have voted for the land of apple pie, not the land of pizza pie.
“You’re a mess baby… all you do is take”
So Britain is moving out. There have been tears. There have been tantrums. There have been barbed words. Baby Scotland wants to stick with Daddy Europe, but Mother Britannia has won custody. Arguably, it’s Britain that will emerge with its integrity and purse strings intact. Presently, Britain contributes approximately £13 Billion to the EU’s annual budget and only receives £3.5 Billion in return. Even when considering the often touted benefits of migrants who contribute approximately £3 billion to the British treasury per annum, the UK is still £5 billion worse off. Ultimately, it seems that Westminster was paying child-support long before the divorce with Brussels materialised.
Perhaps this is the wake-up call that the recently-divorced EU needs as it charges toward an existential mid-life crisis. In its’ original form, the EU was a community of steel and coal producers (only Italy, Belgium, France, Luxembourg, West Germany and the Netherlands) and it depended upon an economic focus. In this context, initiatives such as a single currency would have made sense. The problem nowadays is that the price of the Euro does not accurately reflect the differing strengths of countries within the union. Relatively constant demand for Germany’s luxury goods and industrial base components such as steel inflates the Euro, making it too costly to invest in countries like Greece. Must the desire for “ever closer union” come at the cost of Europe’s own economies? It seems that many on the continent have forgotten that economics and politics are different disciplines for a reason.
Breakups are tough, and this one looks to be no different. As desirable as an ever-closer union may be from the point of view of diplomacy and global security, the economic facts speak for themselves. In leaving the EU, Britain will not lose. Its trade with non-European countries is trending upward. Moreover, if Britain’s trade with EU countries is examined on an individual basis, there are only five nations of material importance to British exporters and importers. In running a trade deficit with these countries, Britain has made future bilateral free trade agreements (in lieu of an EU-wide FTA) an indispensable policy decision. Perhaps most importantly, the UK is divorcing itself from a relationship where it is a net contributor, not benefactor. Coupled with the questionable viability of the Eurozone, this makes the break-up a wise call.
So Merkel and Macron, go talk to your friends, talk to the IMF, talk to the ECB. But in the UK’s eyes, there can be no greater truth than the fact that “we-e are never ever ever getting back together.”
