Gerald Holtham, the leading expert on Welsh government funding, attacks the Vote Leave camp for their promise to replace all EU funding.
Whatever the situation of the U.K. as a whole, I cannot believe that Wales would be better off outside the EU. Cardiff University research has demonstrated that Wales is a net beneficiary of EU funds, getting £245m each year more than we contribute via our share of UK payments. The claim that the UK government would maintain this net transfer to Wales is incredible.
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The whole thrust of UK government policy over the past decades, particularly under Conservative governments, has been to reduce industrial intervention, abolish regional development bodies and reduce regional assistance. Regional policy has been left to the EU.
Regional assistance in the EU, from which Wales benefits, is part of the range of European social programmes encompassing work conditions and workers rights. These are all based on the principle of social solidarity – looking after each other – but are routinely described by the Leave campaign and Tory ministers as red tape. Their deathbed conversion to the principles of solidarity which underlie regional assistance programmes is as believable as an alcoholic’s promise that the next drink would be his last.
In fact a recent press release from the Leave camp gives the game away. It says money for Wales would be spent “more efficiently” freeing funds to be spent on other things. Translation: you are going to get less money because some of it will be diverted elsewhere. That bit you can believe. Because the Leavers have used the figure for the UK’s gross payments to Brussels, ignoring what we get back.
If they were really going to maintain all the EU’s regional and farming spending in the UK, they would not be able to fulfil all their promises to spend more money on the NHS, defence and other things.
If there are savings in government spending from leaving the EU, ask yourself the following question: how high up the government’s priorities do you think Wales comes? If you think the answer is near the top, I have got bad news for you about Father Christmas.
But anyway, this whole argument is proceeding as if UK government revenues would be unaffected by leaving the EU so there would be a “saving” to spend somewhere.
A relatively small hiccup in economic growth would reduce tax revenues by more than the hypothesized saving. Net spending on the EU is £8.5 billion a year of total government revenues around £700 billion, i.e.. just 1.2 per cent of the total. If GDP is only 1 per cent lower after Brexit than it would otherwise have been, government revenue will fall more than the “saving”. If we had a recession there would be a net loss running into billions.
The uncertainty and reductions in business investment in the event of Brexit will surely be more than enough to eliminate all savings and leave the UK as a whole in a worse budgetary position for a number of years at least. That is more than supposition because we are already seeing anemia in business investment at the mere risk of Brexit. And if the UK sneezes, Wales will get pneumonia.
Time for a reality check:
Article 50 provides that the EU will negotiate a new agreement with the withdrawing country over two years. That can be extended, but only by unanimous agreement of all the EU countries.
Article 50 also specifies that, when agreeing a new deal, the EU acts without the involvement of the country that is leaving. So not only must all the countries of the EU have to agree to extend the negotiations, the UK will not be party to the negotiations. The chance of all EU countries agreeing to extend the 2 year deadline – absolutely nil. It will be like a divorce, with the wife saying she wants a divorce and the husband dictating the terms of the divorce with all his family having a veto.
The claim that because Britain runs a trade deficit with other EU countries, they need the British market more than Britain needs theirs! Britain accounts for only 10% of EU exports, while the EU takes almost half of Britain’s and most of Britain’s trade deficit with the EU is with two countries, Germany and Spain—so a trade agreement must be endorsed by the other 25 members too, who really couldn’t give a flying **** what happens to the UK. So in summary – Goodbye and Goodnight Britain
Having read G..Holtham’s comments about the leave prognosis, in which he fails to consider the fact that unfettered by E.U. rules Britain can increase our turnover trade & profit with the rest of the world outside Europe I will be one of many falling over to voting Leave on Independence Day!
@ Peter HC Davies
If you’re falling over to vote Leave regardless of the facts then all I can say is enjoy your trip.
Let’s get back to some basics. All markets in the world are regulated so compliance with regulation will not end with a Leave vote on Thursday. Mr Davies also implies that in not trading with the EU and its regulations, we can make up for this by trading with other countries around the globe. Currently our exports to the EU amount to about 44.2% of our total export trade. Why Mr Davies argues that we do not need this trade is beyond me but that appears to be his position. So what of the other trading partners that make up the rest of our export trade? Next up is the USA which accounts for 11%. Is Mr Davies suggesting that the USA will increase its imports from the UK by 400% to make up the shortfall from not trading with the EU? One other thing about the US, it is a heavily regulated market which imposes high tariffs on imports when it thinks it’s in the best interests of the US economy, something over which we have no control.
So next on the list is Switzerland to which 7.1% of our exports go. Switzerland is not of course an EU country but is subject to EU regulations in its trade with EU countries so if Mr Davies believes Switzerland is the answer, he would run into the need to comply with EU regulations.
Or perhaps he has China in mind, which accounts for 5.7% of our exports, a country that would need to increase its UK imports by 800% to compensate for our loss of trade with the EU. One other thing about China, it is a heavily regulated market over which we have no control.
Your belief that freedom for Britain means trading with unregulated markets is unsupported by the facts. Britain could sign as many trade deals as it wishes but it could not compensate for the loss of trade with our biggest economic partner, the EU. And if we trade with the EU, we will have to conform to EU regulations, though without the ability to shape or influence them. Mr Davies’ view of freedom is one in which we are powerless to influence anything. So what is the point of having freedom if you cannot exercise it because of your lack of power and influence?
The referendum is still too close to call and it may be that the UK is heading for the EU exit door. In which case, Mr Davies will be able to enjoy his one day of freedom on Friday only to wake up on Saturday to find that he lives in a world, as he did before the vote, of regulated markets, none of which will roll over because Britain once used to have an empire which everyone except the British detested.