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Student ID No: 1439528Programme of study: International Relations with EconomicsModule title: British PoliticsModule banner code: 08 20898 Word Count* 2,975Module leader: Colin Thain Seminar Teacher Ken SearleSubmission date: 20th March 2016Assignment title: Assignment 1Extension: No date approved: N/AExtension approved by: N/A new date: N/AI do wish my assignment to be considered for including as an exemplar in the School Bank of Assessed Work

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Should the United Kingdom ‘Remain in the European Union’?

Introduction

The European Union (EU) has its foundations in the aftermath of the Second World War within the European Coal and Steel Community (ECSC). In 1957, the ECSC gave rise to the European Economic Community (EEC); a change which encouraged increased economic integration between member states. British attempts “to join the EEC were refused in 1963 and 1967” (BBC, 1973) by French president Charles de Gaulle, due to fear of the Anglo-American relationship entering Europe; the Heath conservative premiership successfully joined the EEC after the resignation of the French president. The EEC expanded and developed into the modern EU by moving from a purely economic union towards a political union, of which the UK has become the “most semi-detached member” (Al Jazeera, 2016). The UK’s relationship with the EU can be considered semi-detached as it has “opted out of joining the euro single currency, the Schengen zone of passport-free travel and many areas of police and judicial cooperation” (Al Jazeera, 2016). Furthermore, the UK has gained further special status after David Cameron’s EU renegotiations. International political sociologist McCourt identifies “Britain’s future is deemed to lie with America and out of Europe; without America and out of Europe; or without America and committed to Europe” (McCourt, 2011, p. 161).

The main argument used by Eurosceptics to leave the EU stems from a British interpretation that views “Europe as a threat to national identity” (Copsey & Haughton, 2014, p.81); The threat to British identity allows for a nationalistic discourse to be used by politicians over topics of migration and sovereignty. Advocates arguing to remain in the union draw on economic stability secured by the EU; the economics of persisting with the union are measurable and predictable as the status quo has a track record. Moreover, leaving the EU would be what David Cameron describes as a “leap in the dark” (BBC, 2016). This essay will argue that economic stability, through business and consumer

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confidence, generated by remaining in the union is a more convincing argument than using the issue of British identity to leave the EU, thereby demonstrating that the UK should remain in the EU. This essay will not discuss the EU directly within the frame of security and peace in Europe.

Literature review

British diplomat Robert Cooper identifies that most countries in the EU “share the UK’s wish to preserve their national identities and traditions” (Cooper, 2012, p. 1203); wishing to preserve national identity, the UK has rejected ideas of EU federalism. Taylor, a political geographer, describes the UK as suffering from “post-hegemonic trauma” (Taylor, 1990, p. 45) after losing its empire. Oliver, a specialist in transatlantic relations, admits that after the UK lost its hegemonic status it has suffered “a feeling that joining the EU was an abdication of a wider global role” (Oliver, 2014, p.425). As an authority on Euroscepticism, Goodwin notes that Eurosceptics in general and the UK Independence Party (UKIP) gain support from the electorate by “campaigningto mobilise identity-related anxieties” (Goodwin, 2015, p. 15). Identity-related anxieties are reproduced in the form of a nationalistic discourse over migration and sovereignty.

Politicians in Westminster lack consensus over the UK’s membership of the EU as “the Conservatives are seriously divided on Europe” (Curtice, 2015, p. 197), even at the cabinet level, while publically Labour insists remaining inside Europe is the best option. There is general agreement among academics that remaining in the EU is worthwhile based on economic stability. According to Vojtíšková, most academic “studies expect economic losses” (Vojtíšková, 2014, p. 314) for the UK if a Brexit (British exit) materialised. Oliver uses liberal intergovernmentalism to indicate that UK-EU economic interdependence makes “it too costly even for a state such as the UK to withdraw” (Oliver, 2014, p. 425) from the union. Cooper (2012) advocates the UK remaining in the EU to promote British political and economic interests. Mansfield (2014) provides an alternative economic analysis that suggests Brexit would benefit the UK

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economically; however, Mansfield’s (2014) analysis is riddled with assumptions of what the UK will be able to negotiate with other trading partners post-Brexit. Moreover, Mansfield’s (2014) analysis can be questioned as it relies on assumptions that cannot be proven, whereas economic arguments for remaining in the union are more certain – they draw upon previous data.

EU migration benefits the UK

Goodwin recognises in the 2015 general election “almost nine in ten voters who said that they had voted for Nigel Farage felt that controlling immigration was among the most pressing issues for the country” (Goodwin, 2015, p. 14). A high percentage of the electoral base that support UKIP have “intense concerns over immigration” (Goodwin, 2015, p.14) and its effect on national identity. More widely, according to UK research company Ipsos MORI (2016), using a representative quota sample in January 2016, 46% of the public viewed immigration as one of the top issues and 25% viewed immigration the most important issue facing the UK. Immigration in the UK is a clear concern for the electorate as it raises issues of identity. However, EU immigration to the UK does not present a strong case for Brexit as it is not clear what impact leaving would have on immigration; Shaw, BBC home affairs correspondent, notes that “No-one knows for sure what impact a British exit from the EU would have on immigration” (Shaw, 2016). The electorate’s concern over record immigration numbers into the UK cannot be ignored. However, Euroscepticism should not be allowed feed off the concern of the electorate because it is not clear what effect a Brexit would have on immigration numbers.

Aside from concerns over identity, there is empirical evidence that demonstrates how EU and wider EEA (European Economic Area) immigration benefits the UK. “The EEA includes EU countries and also Iceland, Liechtenstein and Norway” (GOV.UK, 2015). The net fiscal impact of

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immigration is an estimate of “the difference between the taxes and other contributions migrants make to public finances and the costs of the public benefits and services they receive” (Vargas-Silva, 2015, p. 2). Dustmann and Frattini (2014), specialists in migration, note the average age of EEA immigrants has “been consistently younger than the native population” (Dustmann & Frattini, 2014, p. F611). Also, EEA immigrants have attained a “consistently higher [educational achievement] than that of the native population since 1995” (Dustmann & Frattini, 2014, p. F611). Furthermore, EEA immigrants “also provide savings to the taxpayer by bringing educational qualifications paid for by their country of origin” (Dustmann & Frattini, 2014, p. F595). Hence, Dustmann and Frattini conclude immigrants entering the UK since 2000 have had a positive net fiscal contribution and benefit the UK, “especially those from EEA countries” (Dustmann & Frattini, 2014, p. F596) and the EU. Critics of Dustmann and Frattini’s findings, argue that assumptions made over EEA immigrants’ use of public services are inaccurate; Moreover, critics argue “migrants have different characteristics from UK-born individuals and as such may use public services differently” (Vargas-Silva, 2015, p. 8). Criticism of Dustmann and Frattini (2014) can largely be rejected in the medium to long run as over time immigrants adapt and reduce their need for immigrant specific public services, such as translation services.

The UK does not just accept a ‘one-way flow’ of EU immigration, as sometimes portrayed by Eurosceptics, emigration from the UK to the rest of the EU is commonplace. The UK benefits from EU migration as its citizens have the opportunity to work, live and retire abroad in the other EU member states – often sending remittances back to the UK. The ONS (2015) reports that three out of five of the most popular countries UK emigrants move to are within the EU. Moreover, Figure 1 shows in 2014 France, Poland and Spain together accepted 59,000 migrants from the UK; the emigration numbers to those three countries in 2014 are similar (shown in Figure 1) for the years 2010-14, with an average of 48,600 emigrants per year leaving the UK. Using the ONS (2015) data and the visual in Figure 1 it is clear the UK does not just accept a one-way ‘flow’ of immigration. Critics of this view may argue that net migration is inwards as EU immigration exceeds emigration levels; while net migration is

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inwards, this does not invalidate the UK’s benefit from the EU as its citizens have and do take advantage their freedom to work, live and retire within the EU. Other Eurosceptics and critics could argue, using Figure 2 that draws data from an ONS (2016) report, EU citizens living in the UK make up a significant proportion of inhabitants emigrating from the UK to the EU. This second criticism only means around a quarter of emigrants from the UK are EU citizens (non-British) and does not invalidate the point made earlier that British citizens still have the opportunity to work, live and retire within the EU.

The EU ‘erodes’ British sovereignty

Eurosceptics often argue that the EU ‘erodes’ British sovereignty and therefore limits British identity. While it is true, “EU law now takes precedence” (Foster, 2016) over British law, perhaps a trade-off of sovereignty to ensure economic stability and accept wider EU benefits (such as British citizens’ freedom to emigrate anywhere within the EU) is worthwhile. The EU as an institution is not unique in its ‘erosion’ of British sovereignty. Similarly, the UK’s sovereignty trade-off with the EU is comparable to the UK’s membership of NATO; Foster (2016) notes Article 5 obligates the UK to provide mutual defence to fellow members, in doing so, British sovereignty over its military is eroded. In the case of NATO the sovereignty trade-off between sovereignty and security is widely deemed worthwhile. Using the example of NATO shows that the loss of sovereignty from joining a large institution does involve a trade-off of sovereignty. Ultimately, the UK loses some autonomy over its sovereignty by being a member of the EU, however the extent to which this is acceptable depends upon individual citizen’s viewpoints on the issue of sovereignty versus economic stability and wider EU benefits. This essay takes the viewpoint that the sovereignty trade-off the EU presents the UK with is worthwhile to promote the economic stability discussed later in this essay and the wider benefits of the EU; this view is taken as there is empirical data showing the benefits of remaining in the EU, whereas the sovereignty argument is less measurable and

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relies on a socially constructed feeling of ‘Britishness’ perpetuated by Eurosceptics.

Ed Balls (2016), ex-shadow chancellor, believes in the UK remaining in the EU to promote influence and prosperity. Ball’s argues a Brexit “would both weaken Britain’s voice on the big global issues and damage the nation’s economy” (Balls, 2016). As discussed previously, the UK remaining in the EU will reduce sovereignty compared to leaving; however, if a Brexit happened, the UK would be “marginalized politically” (Balls, 2016). Political influence in the EU is important as it enables the UK to present its concerns with the Union internally and its disputes over EU external quotas and tariffs. Balls (2016) does not discus the effect on British sovereignty resulting from remaining in the EU. Eurosceptics could argue that Balls’ (2016) failure to discuss British sovereignty undermines his influence and prosperity argument. However, again a trade-off involving sovereignty will be made – sovereignty is not given up spontaneously to the EU. One can argue in favour of Balls (2016) against Eurosceptic criticism as in return for trading some British sovereignty with the EU, the UK is invited to influence decision making in Brussels to ultimately prosper the British people. Finally, Foster finds that EU can be trumped in the UK if “British courts believe that the EU has exceeded its powers” (Foster, 2016). Ultimately, even if Britain remains in the EU to prosper politically, economically and transfers sovereignty to Brussels, the extent to which EU law takes precedence in the UK can come under question.

EU membership provides economic stability

The lobby group CBI (Confederation of British Industry) produces a message from businesses in the UK that the overwhelming majority wish to remain within the EU on economic grounds. CBI reported in 2013, even before David

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Cameron’s renegotiations, “78% of firms favour staying in the EU, including 77% of small and medium-sized enterprises (SMEs)” (CBI, 2013). According to CBI (2013), just 10% of firms thought it was within their interest to leave the EU. According to the telegraph newspaper journalist Hope, the leave.EU campaign coordinated “more than 200 bosses of small firms” (Hope, 2016) to sign an open letter urging Britain to leave the EU. In the letter signed by the firms’ bosses it “urges Britons not to listen to a minority of managers from Britain's largest companies” (Hope, 2016). However, the letter makes a fictitious claim that SMEs’ mind-set towards the EU is significantly different to large business’s view. The data CBI (2013) produces contradicts the view presented in the Leave.EU inspired letter as it shows SMEs are only 1% less in favour of remaining in the EU than large businesses. The CBI’s (2013) data can be viewed as a more reliable source than the open letter because the letter has a political agenda behind it – inspired by the Leave.EU campaign. Furthermore, the letter also fails to provide any empirical data to substantiate its claims. Therefore, firms operating in the UK, in general, support remaining in the EU to protect their business interests.

A key reason CBI (2013) have recorded such high levels of support from businesses wishing to remain in the EU is due to Brexit fears generating lowered business and consumer confidence. The Economist newspaper reports that “the EU takes almost half Britain’s exports” (The Economist, 2016). Export firms fear a Brexit because they will become uncertain about how much to invest in their capital stock and workforce if they cannot accurately predict the size of the market they can sell to. Moreover, even firms that are not directly related to exports will often be reliant on EU imports to sell in the UK or to implement into a stage of production of their own finished goods. Consequently, if firms that rely on exports or imports from the EU, a Brexit will create uncertainty about their future, uncertainty will reduce firms’ investment. Reduced investment from UK firms could harm the UK economy as investment is a function of GDP, but perhaps more importantly, lower investment might dampen long-term economic growth as capital stock in the UK would degrade. Even Eurosceptics, such as Mansfield, agree that “years immediately surrounding the exit are likely to feature some degree of market

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uncertainty” (Mansfield, 2014, p. 4). However, Mansfield (2014) predicts that the uncertainty in the short-run will be met with long-run economic growth. Mansfield’s (2014) analysis of the long-run is questionable (like any long-run economic prediction) as it relies on political negotiations generating trading relations with other non-EU nation states. Whereas, business confidence is more likely to remain high after remaining in the EU as it reduces unaccountable risks to business that would alter their investment plans.

There is a positive relationship between consumer confidence and consumer spending. Cadman & Giles writing in the financial times note “consumer confidence would be lower” (Cadman & Giles, 2015) if a Brexit materialised. Bronwyn Curtis, a chief economic advisor for the Monetary & Financial Institutions Forum, confirms that “uncertainty will hit consumer and institutional confidence, which means a drop in consumer spending” (Cadman & Giles, 2015). Like investment, consumer expenditure is a function of GDP, so if a Brexit materialised, it would result in a lowering of GDP and affect economic growth prospects, at least in the short to mid-run. Arguably, Eurosceptics may comment that consumer expenditure could recover in the long-run; it is not credible to argue that a recovery in consumer expenditure would occur in the long-run. Moreover, speculating in this way is based upon assumptions around how the economy would perform post-Brexit as a result of trade deals and negotiations which have yet to happen. Therefore, if a Brexit transpires it will harm the consumption side of the economy in the short to mid-run.

Conclusion

Eurosceptics use a nationalistic discourse to advise the UK to leave the EU; the nationalistic discourse over immigration and sovereignty exists in the wake of the UK’s suffering from Taylor’s “post-hegemonic trauma” (Taylor, 1990, p. 45). From the analysis in this essay, EU migration benefits the UK as immigrants from the EU have a positive net fiscal impact to the UK economy

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and often bring qualifications paid for by their countries of origin. Furthermore, EU migration is not a ‘one-way flow’ of inward migration; British citizens benefit from EU membership as they are free to live, work and retire in any EU nation state. Goodwin (2015) identifies some of the British electorate have concerns over immigration into the UK and its effect on national identity – although these concerns seem to be outweighed by the wider benefits of EU migration. Eurosceptics argue successfully that UK’s EU membership can be observed to ‘erode’ British sovereignty – though it is a limited erosion as British courts can overrule aspects of EU legislation if they believe the EU exceeds its powers. While EU membership erodes British sovereignty, it can be viewed as a worthwhile trade-off to ensure economic stability, promote British influence in the EU and allow the UK to benefit from EU migration. Finally, there is a strong case to be made economically to remain in the UK by businesses, both SMEs and large scale, to protect firms’ confidence and ensure continued investment. Furthermore, the UK remaining in the EU serves to protect consumer confidence and therefore ensure continued consumer expenditure to further sure up firms’ investment and maintain economic growth. Overall, the UK should remain in the UK as the economic arguments outweigh the identity related anxieties that Eurosceptics play on, especially as EU migration benefits the UK and British sovereignty is a required trade-off.

References

Al Jazeera. (2016) Cameron secures special status for UK in EU. [Online] Available from: http://www.aljazeera.com/news/2016/02/cameron-secures-special-status-uk-eu-160219223309449.html [Accessed: 8th March 2016]

Balls, E. (2016) British Influence and Prosperity Depend on Staying in the EU. The Wall Street Journal. [Online] Available from: http://www.wsj.com/articles/british-influence-and-prosperity-depend-on-staying-in-the-eu-1455229830 [Accessed: 14th March 2016]

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BBC. (1973) Britain joins the EEC. [Online] Available from: http://news.bbc.co.uk/onthisday/hi/dates/stories/january/1/newsid_2459000/2459167.stm [Accessed: 8th March 2016]

BBC. (2016) EU referendum: Leaving EU a 'leap in the dark' says Cameron. [Online] Available from: http://www.bbc.co.uk/news/uk-politics-eu-referendum-35634239 [Accessed: 8th March 2016]

CBI. (2013) 8 out of 10 firms say UK must stay in EU - CBI/YouGov survey. [Online] Available from: http://www.cbi.org.uk/media-centre/press-releases/2013/09/8-out-of-10-firms-say-uk-must-stay-in-eu-cbi-yougov-survey/ [Accessed: 9th March 2016]

Copsey, N. & Haughton, T. (2014) Farewell Britannia? ‘Issue Capture’ and the Politics of David Cameron’s 2013 EU Referendum Pledge. Journal of Common Market Studies, Vol. 52, pp. 74-89.

Cooper, R. (2012) Britain and Europe. International Affairs, Vol. 88, No. 6, pp 1192-1203.

Curtice, J. (2015) Playing with political fire: Cameron, the Conservatives and the EU referendum. Juncture, Vol. 22, No. 3, pp. 196-200.

Dustmann, C. & Frattini, T. (2014) The fiscal effects of immigration to the UK. The Economic Journal, Vol. 124, No. 580, pp. F593-F643.

Foster, P. (2016) EU Referendum: British sovereignty and Europe - the full facts. The telegraph. [Online] Available from: http://www.telegraph.co.uk/news/newstopics/eureferendum/12175398/EU-Referendum-everything-you-need-to-know-about-British-sovereignty.html [Accessed: 14th March 2016]

Giles, C. & Cadman, E. (2015) Economists’ forecasts: Brexit would damage growth. Financial Times. [Online] Available from:

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http://www.ft.com/cms/s/0/1a86ab36-afbe-11e5-b955-1a1d298b6250.html#axzz42z2qJdj9 [Accessed: 15th March 2016]

Goodwin, M. (2015) UKIP, the 2015 General Election and Britain’s EU Referendum. Political Insight, Vol. 6, No. 3, pp. 12-15GOV.UK. (2015) Countries in the EU and EEA. [Online] Available from: https://www.gov.uk/eu-eea [Accessed: 12th March 2016]

Ipsos MORI. (2016) Concern about immigration returns to prominence. [Online] Available from: https://www.ipsos-mori.com/researchpublications/researcharchive/3691/Economist-Ipsos-MORI-January-2016-Issues-index.aspx [Accessed: 12th March 2016]

Hope, C. (2016) EU referendum: 200 small firm bosses and entrepreneurs tell Britons to vote for Brexit. The Telegraph. [Online] Available from: http://www.telegraph.co.uk/news/newstopics/eureferendum/12181306/EU-referendum-200-small-firm-bosses-and-entrepreneurs-tell-Britons-to-vote-for-Brexit.html [Accessed: 9th March 2016]

Mansfield, I (2014) A Blueprint for Britain - Openness not Isolation. Institute of Economic Affairs. [Online] Available from: http://www.iea.org.uk/publications/research/the-iea-brexit-prize-a-blueprint-for-britain-openness-not-isolation [Accessed: 9th March 2016]

McCourt, D. M. (2011) Rethinking Britain’s Role in the World for a New Decade: The Limits of Discursive Therapy and the Promise of Field Theory. The British Journal of Politics and International Relations, Vol. 13, pp. 145-164.

Oliver, T. (2015) Europe's British Question: The UK–EU Relationship in a Changing Europe and Multipolar World. Global Society, Vol. 29, No. 3, pp. 409-426

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ONS (2015) Migration Statistics Quarterly Report: November 2015. Office for National Statistics. [Online] Available from: http://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/internationalmigration/bulletins/migrationstatisticsquarterlyreport/november2015#toc [Accessed: 13th March 2016]

ONS (2016) Migration Statistics Quarterly Report: February 2016. Office for National Statistics. [Online] Available from:http://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/internationalmigration/bulletins/migrationstatisticsquarterlyreport/february2016[Accessed: 13th March 2016]

Taylor, P. J. (1990) Britain's Changing Role in the World-Economy. Fernand Braudel Center for the Study of Economies, Historical Systems, and Civilizations, Vol. 13, No. 1, pp. 33-48.

The Economist. (2016) Leaving the EU would hurt Britain—and would also deal a terrible blow to the West. The economist. [Online] Available from: http://www.economist.com/news/leaders/21693584-leaving-eu-would-hurt-britainand-would-also-deal-terrible-blow-west-real-danger?frsc=dg%7Cc [Accessed: 15th March 2016]

Shaw, D. (2016) BBC home affairs correspondent Danny Shaw. BBC. [Online] Available from: http://www.bbc.co.uk/news/uk-politics-35414310 [Accessed: 12th March 2016]

Vargas-Silva, C. (2015) The Fiscal impact of immigration in the UK. The Migration Observatory at the university of Oxford. [Online] Available from: http://www.migrationobservatory.ox.ac.uk/sites/files/migobs/briefing%20-%20Fiscal%20Impacts_0.pdf [Accessed: 12th March 2016]

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Appendix

Figure 1: Emigration to the 5 countries of next residence with the largest number of emigrants from the UK in 2014, 2010 to 2014

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Source: ONS (2015)

Figure 2: Emigration from the UK by citizenship

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Source: ONS (2016)

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