As Britons prepare to vote in a June 23 referendum on whether to remain in the European Union, FRANCE 24 takes a brief look at the billions in financial links between Britain and the EU that could be at stake in the "Brexit" vote.
London Mayor Boris Johnson’s declaration in support of a "Brexit" on Monday created shock waves in Britain, with the high-profile politician publicly going against the official government position.
Prime Minister David Cameron maintains that being a member of the European Union is good for the British economy, but Brexit supporters argue that EU membership is expensive and imposes unnecessary regulations on British businesses.
As opponents and supporters of a Brexit gear up to vote, Britons will have to weigh the costs and benefits of the billions in investment, trade and regulatory expenditures that currently define the UK's relationship with Brussels.
The European Union is a major source of foreign investment for Britain. In 2014, the 27 other EU countries invested €620 billion (£496 billion) in Britain – 48 percent of all foreign investment in the country, according to figures from the British parliament.
But Britain is a net contributor to the European budget – meaning it pays the EU more than it receives – and its contributions are second only to Germany’s. In 2014, the country paid €12.3 billion more into EU coffers than it received. And although Britain’s EU budget is relatively small, at only about 1 percent of GDP, the fact that Britain is a net contributor to the EU angers many Brexit supporters.
Various studies have attempted to quantify the costs and benefits of the UK’s membership in the EU, but estimates vary greatly. “There is no definitive study of the economic impact of the UK’s EU membership or the costs and benefits of withdrawal,” the British parliament said in a research briefing.
Whereas Brexit supporters argue that the EU would allow “the £350 million (€438 million) we send to Brussels every week” to be spent on different priorities, the Britain Stronger in Europe campaign cites figures from the influential Confederation of British Industry (CBI) estimating that “all the trade, investment, jobs and lower prices that come from our economic partnership with Europe is worth £3000 per year to every household”.
Jobs and migration
Around 3.4 million British jobs depend directly or indirectly upon exports to the EU, according to data from the European Institute. A Brexit would not necessarily result in the disappearance of these positions, since many commercial links would remain between the UK and the EU, but a changing relationship would likely have some impact on employment within Britain.
Migrant labor is also a controversial issue in the Brexit debate, with EU citizens now enjoying unrestricted access to British jobs. An estimated 3 million EU nationals are resident in the UK and roughly two-thirds of them are employed. The UK government released figures in February that found European migrants in Britain receive 10 percent of spending on state benefits for working families despite only making up around 6 percent of the workforce.
At least 1.3 million Britons are also living elsewhere in the European Union, according to government data. At least 30,000 Britons claim unemployment benefits in EU countries, according to a January 2015 survey published in The Guardian.
Costs of regulation
The 100 most expensive European regulations cost Britain €46.7 billion a year, according to a March 2015 study by the Open Europe think tank.
Those arguing for a Brexit say the EU regulations are a burden for British businesses. A Brexit could cut down on some of those costs, but Open Europe says it would not eliminate British regulatory spending – the UK would still need to ensure that it came into line with European rules on trade for all commercial transactions with EU member countries.
A December 2015 survey of the UK’s top 350 publicly traded companies revealed that 70 percent believe leaving the EU would hurt their firms, with 61 percent saying that being in the EU actually benefits business. Only 2 percent of the UK firms surveyed said their businesses would benefit from leaving the EU. The survey was conducted by ICSA, an association of board members responsible for risk and compliance, and published in the Financial Times.
The UK exported €288 billion in goods to other EU countries in 2014, accounting for some 45 percent of all exports, the British parliament says. Opponents of a Brexit fear that an EU exit would risk British companies losing market share in the world's largest trading block.
Some 53 percent of imports into the UK – €394 billion in goods and services – came from the European Union that same year.
The CBI estimates that EU membership brings economic benefits to the UK worth as much as €97 billion a year. Former Marks & Spencer chairman Stuart Rose is leading the Britain Stronger in Europe campaign and has asked for British businesses to be vocal in their opposition to a possible Brexit.
Several major banks have also issued warnings about a Brexit, as many use Britain as their headquarters in their dealings with the rest of Europe and a British exit could jeopardize this position. US investment banking giant Goldman Sachs said in February that leaving the EU could cause the pound to crash by as much as 15-20 percent and has donated hundreds of thousands of pounds to the Stay in Europe campaign. Swiss global financial services company UBS has estimated that the British economy stands to lose between 0.6 percent and 2.8 percent of GDP if it leaves the EU.
Date created : 2016-02-27