Is There an Economic Case for Leaving the EU?

jjlandlord

HAMISH_MCTAVISH wrote: »

There isn't a fixed number of jobs, immigrants create demand as well as supply, so they don't steal jobs from the native born.

To imagine how that works in practice, just imagine the UK decades ago with 10 million fewer people. Why aren't there 10 million more people unemployed today than there are? If the supply of jobs was fixed then there would be. But it isn't, so there aren't....

Exactly.

And that's the same with paying for services like schools, NHS, etc.

For example, if the population is 1000 then on the one hand you only need to pay for a small school but on the other hand there are only a few people and companies paying tax.
If the population is 400 million (e.g. USA) you need many, many schools, but you also have many, many people and companies paying tax.

It's not about absolute numbers, it's about proportions and ratios.
Hence why metrics per head are very (most?) important.

Linton

Thrugelmir wrote: »

August 2014

Exports to EU £10.7 billion

Imports from EU £15.9 billion.

Trade deficit for the month - £5.2 billion

Who needs the trade the most?

The UK - surely you need to think in terms of %s. On the day after the UK left the EU, UK exports to the EU would be a much higher % of its total exports than EU exports to the UK would be of its total. So the potential loss of some or all of both export markets would affect the UK far more than the EU.

On the import side we are far more likely to need the imports that we get from the EU (the EU being a large % of world exporting countries) than the EU needs us since it would have a greater choice of where else it could source its imports.

CLAPTON

Linton wrote: »

The UK - surely you need to think in terms of %s. On the day after the UK left the EU, UK exports to the EU would be a much higher % of its total exports than EU exports to the UK would be of its total. So the potential loss of some or all of both export markets would affect the UK far more than the EU.

On the import side we are far more likely to need the imports that we get from the EU (the EU being a large % of world exporting countries) than the EU needs us since it would have a greater choice of where else it could source its imports.

in percentage terms that is clearly true


however, why would the EU deliberately damage its own economy ?
is it doing so well that creating internal unemployment would be seen as a good thing by the affected exporters?


as far as our imports are concerned it would seem we have the whole world to choose from : no more BMWs, well buy a Jag : would Germany be pleased?


If we assume the EU would act in its own selfish interest then it would want minimum disruption
if we assume it will act vindictively even if against its own self interest then both parties would be losers.

Linton

CLAPTON wrote: »

in percentage terms that is clearly true


however, why would the EU deliberately damage its own economy ?
is it doing so well that creating internal unemployment would be seen as a good thing by the affected exporters?


as far as our imports are concerned it would seem we have the whole world to choose from : no more BMWs, well buy a Jag : would Germany be pleased?

More UK people would rather buy a BMW than a Jag! So they wouldnt be pleased either.

I dont know the numbers but I would guess that BMW would be less concerned at the loss of the UK market than Jaguar/LandRover would be at the loss of the EU market. Wouldnt it tend to push Jaguar/LandRover to increase its manufacturing in China since it would lose the EU advantages of manufacturing in the UK? After all Jaguar isnt a UK owned company and hasnt been for the past 25 years.

If we assume the EU would act in its own selfish interest then it would want minimum disruption
if we assume it will act vindictively even if against its own self interest then both parties would be losers.

Yes, if you are talking about the extreme case of both sides imposing high import tariffs on each other. However it is surely very unlikely that the other extreme of zero impact would be the case either.

michaels

Linton wrote: »

The UK - surely you need to think in terms of %s. On the day after the UK left the EU, UK exports to the EU would be a much higher % of its total exports than EU exports to the UK would be of its total. So the potential loss of some or all of both export markets would affect the UK far more than the EU.

On the import side we are far more likely to need the imports that we get from the EU (the EU being a large % of world exporting countries) than the EU needs us since it would have a greater choice of where else it could source its imports.

True if all trade stopped at a stroke the proportionate affect would be bigger for the uk but in many cases products can be substituted, 20% import tariff on vw and we will buy more of the Hondas that are currently exported to Europe instead.

HAMISH_MCTAVISH wrote: »

That's the lump of labour fallacy though.....

There isn't a fixed number of jobs, immigrants create demand as well as supply, so they don't steal jobs from the native born.

To imagine how that works in practice, just imagine the UK decades ago with 10 million fewer people. Why aren't there 10 million more people unemployed today than there are? If the supply of jobs was fixed then there would be. But it isn't, so there aren't....

This is of course true in theory and practice for the average worker. However at least initially eu migrants are not like the average (hence paying more tax than they take out). The important factor is that by being more likely to purchase non uk products and sending remitences back to their country of origin they are taking more demand out of the economy than a uk born worker doing the same job.

Generali

Linton wrote: »

Yes, if you are talking about the extreme case of both sides imposing high import tariffs on each other. However it is surely very unlikely that the other extreme of zero impact would be the case either.

The problems with trade agreements would likely be:

- The UK would be seeking access to a large market than the EU is so the EU has the whip hand
- The UK would have to either negotiate through another body or by herself. That means either that she gives up some of what she wants to the larger negotiating team or each time she negotiates she will have to set up a negotiating framework, all the time understanding the impact this all has on previous bilateral trade agreements.
- Trade agreements with the EU could be torn up. If the UK displeased Poland or Luxembourg and the aggrieved party could summon up the political support, UK companies could simply find their export markets closed.

Britain has thrived for centuries as a trading nation: one of the reasons the UK was so powerful militarily was to ensure that trading routes could be kept open. To shoot the ability to trade freely from under your foot means risking a shot to the foot instead.

DavidF

I would have thought that the EU WOULD impose punitive tariffs on ANY member country that left the EU. The EU wants to continually expand. The last thing they would want is to see 1 country leave with no penalty and other countries to think hey we want some of that. I am pretty sure there would be tariffs to simply deter any other countries from following suit.

wotsthat

DavidF wrote: »

I would have thought that the EU WOULD impose punitive tariffs on ANY member country that left the EU. The EU wants to continually expand. The last thing they would want is to see 1 country leave with no penalty and other countries to think hey we want some of that. I am pretty sure there would be tariffs to simply deter any other countries from following suit.

There would be an element of cutting off the nose to spite the face if this was true to any extent.

However, it's certain that the cost of trade in terms of complexity would increase. It's a doddle doing business with European countries and difficult to envisage how it could possibly become easier as a non member.

CLAPTON

Linton wrote: »

More UK people would rather buy a BMW than a Jag! So they wouldnt be pleased either.

I dont know the numbers but I would guess that BMW would be less concerned at the loss of the UK market than Jaguar/LandRover would be at the loss of the EU market. Wouldnt it tend to push Jaguar/LandRover to increase its manufacturing in China since it would lose the EU advantages of manufacturing in the UK? After all Jaguar isnt a UK owned company and hasnt been for the past 25 years.

Yes, if you are talking about the extreme case of both sides imposing high import tariffs on each other. However it is surely very unlikely that the other extreme of zero impact would be the case either.

Germany is entering recession : they have prospered on the back of the huge market for German manufactured products in Russia, India, China. These markets are declining and German sales falling.
Now would not be a good time for Germany to lose the UK market.


But there may well be a negative overall decline in both UK exports and imports to the EU : maybe we will benefit from cheaper food imports from the rest of the world without EU tariffs.

zagubov

HAMISH_MCTAVISH wrote: »

That's the lump of labour fallacy though.....

There isn't a fixed number of jobs, immigrants create demand as well as supply, so they don't steal jobs from the native born.

To imagine how that works in practice, just imagine the UK decades ago with 10 million fewer people. Why aren't there 10 million more people unemployed today than there are? If the supply of jobs was fixed then there would be. But it isn't, so there aren't....

I'm not totally comfortable with the concept of the lump of labour fallacy (I don't disapprove of it, I'm not sure I fully understand it).

I understand the idea that somebody being in work generates work for other people., and that bringing in an industry or business employing 100 people directly generates about another say 50 jobs

I fully appreciate the benefits of migration to seek work, but I'm puzzled how having outsiders relocating to do work while unproductive (albeit reluctantly so) locals receive benefits doesn't cause needless inflation.

Is the increase in production of goods and services equal to the money distributed to the migrating worker and the local welfare recipient?