|Editorial commentary; Why don’t we extrapolate what the future spending plans of the EU might cost us?|
Much has been made of the latest Treasury Brexit scenario costings and how much worse off we ‘will’ be by 2030 & beyond.
However, as well as ignoring the offset of the probable benefits of increases in UK trade with the rest of the world over that time period, the costings made no mention of what increased contributions to the EU we would need to make by 2030.
Surely if the Treasury could ‘guestimate’ the likely impact on the UK’s GDP of the various probable scenarios reached with the EU, they could also estimate (with the same degree of (in)-accuracy) the impact of the EC’s proposed new policies on our net contribution to the EU over the same period?
While obviously the next EU budget period has not been agreed yet, we do know some of the proposals for new/increased areas expenditure and the fact that several Balkan countries could well have joined the EU by 2030 with all that implies in EU ‘grants that will be paid annually to them, as they will not be net contributors for many years.
So using similar ‘guesstimating’ methods as those used by the Treasury, what will our net contribution be to a more ‘federalised’ and enlarged EU by 2030 – £15bn, £20bn, £25bn per year? If you think those figures are on the high side, just consider whether we would still be ‘allowed’ to keep our rebate by 2030 (£4bn in 2016, which would take us to approx. £14bn on 2016’s figures).
Invitation letter by President Donald Tusk ahead of their informal meeting on 23 February ~ Future EU budget: Undermining Cohesion Policy risks undermining Europe's future ~ Defence procurement: EC opens infringement procedures against 5 Member States ~ Council recommendation on the economic policy of the euro area ~ 2018 EU budget: jobs, investments, migration challenge and security ~ The Future of EU Finances: the 7th report on economic, social and territorial cohesion ~ 2018 EU budget ~ Defence: MEPs urge member states to show political will and join forces ~ Future financing of the EU and draft budgetary opinions for Spain and Lithuania ~ EU enlargement: The next seven - BBC News
Returning to the recent Treasury forecasts, a very different view was put forward last year by PWC, which included the following extract:
•The UK could be the fastest growing economy in the G7 to 2050, with average annual growth of 1.9%
•Remaining open to talented workers and developing successful trade links with fast-growing emerging economies will be critical to realising the UK’s long-term growth potential
•The EU27’s share of world GDP could fall to below 10% by 2050, with France out of the top 10 and Italy out of the top 20
In addition the Adam Smith Institute said last week; "A comprehensive free trade deal with the USA could open up a market of 323m to our world-beating financial services, high-quality food, legal services and cars – while driving down costs for consumers here. Corbyn might be getting all in a flap about chlorine chicken in an FTA but EU institutions like the European Food Safety Authority he so lauded have said it was safe to eat time after time. Throwing away the chance for trade deals with the USA by hamstringing the UK to a customs union with the EU would be like buying a chicken burger, throwing out the meat, and eating the wrapping."
Finally, new research from the Centre for Business Research (CBR) at the University of Cambridge Judge Business School questions the accuracy of measurements of the impact of Brexit on the UK economy undertaken by the Treasury and by other official and academic bodies, during and after the Referendum.The new paper, “How the economics profession got it wrong on Brexit”, predicts that the decision to take the UK out of the European Union will only have a small negative impact on economic growth over the coming years, and is likely to have a minor impact on living standards. These conclusions contrast with the large negative impacts predicted by others and particularly by the Treasury.