We need to get off the EU’s escalator to low growth

I am fortunate in having a number of close colleagues outside the European Union and they give some interesting insights on our current debates in the EU and the Parliament over Brexit and the future. I found particular common ground with one such colleague, a former management consultant with much China experience.  Our thoughts dove-tailed in regard to the current Referendum debate. These thoughts are best summarised as:

  • Voters in the UK in this debate are thinking far too short-term.  Everything is focused on short-term and mainly trivial issues. The UK entered the EU some 40 years ago, so a decision to stay or to go should take into account a similar horizon: let us say to 2050.
  • The economic arguments are absolutely key. As the Chinese say: ”Rich country, strong army”. With a strong economy you have many choices. With a weak economy, you become a victim.
  • By 2050, the EU will stand at 10-15% of the world economy. General agreement is 12%. The rest of the world is growing much faster, so the EU is sliding backwards and will do this even faster if it follows the mantra of “more Europe” by adding more countries, weak economically and thereby increasingly weakening the Union.

Zbigniew Brzezinski, a former Presidential Adviser in the USA, went on record as saying “The EU…acts as if its central political goal is to become the world’s most comfortable retirement home…certainly not its economic heart.”

For the UK, the question in the Referendum should be “will the UK fare better in 2050 inside or outside the EU”. To fare better means to be more successful economically. The worry here is that the EU has been pursuing econo-sclerotic policies since the early 1980’s and there are no signs that this will change.

On the present course, the EU in 2050 would have in excess of 35 member states and a declining position in world terms, particularly in GDP per capita. It would not satisfy any definition of a “super-state” within the original vision identified and developed by Jacques Delors, widely regarded as the EU founding father.

The clear divisions between existing EU member states regarding economic performance and dynamism can only become more pronounced. Talk of a two-speed Europe may prove aspirational.  A four or five tier Europe is more likely, with the ever growing drag anchor of sub-performing economies cushioned within the EU protective blanket.

The UK faces a once in a lifetime opportunity to exit this introverted, politically motivated straight jacket, but will UK votes take that opportunity or succumb to the UK government “Project Fear”, thus depriving generations to come the opportunity to benefit from a society and economy where they can stand tall in the global environment, outside what is becoming a EU totalitarian regime, conceptualized 60 years ago and, in its present form, well beyond its “sell by date”.

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