Gavin McCrone: UK should fill EU leadership vacuum not walk away

Warnings from the Bank of England, as well as other respected economic bodies, should be heeded and not simply written off as biased. Picture: PA
Warnings from the Bank of England, as well as other respected economic bodies, should be heeded and not simply written off as biased. Picture: PA
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A return to the passion that characterised the EU’s early days is needed to turn it around but its achievements are worthy of our continued support

The disappointing quality of the EU referendum debate must be leaving many people disillusioned and confused. The public, it is said, want facts. And it is certainly true that public understanding of the issues is not high. That is why it is so disappointing that both sides have resorted to claims and assertions, which are rightly distrusted. The Remain side have produced detailed forecasts showing the drop in UK GDP if we leave; they argue that this means recession, lower growth and a rise in unemployment. But people distrust forecasts and the more precise they are, the less likely to be trusted. The Leave side assert that the economy, freed of EU regulations, would be more prosperous and that trade deals could be done not only with the remaining EU, but with other countries round the world. But that is no more than a series of assertions.

Economic forecasting is not an exact science. But forecasts are worth doing because, barring some totally unforeseen event, they do give as good an indication as it is possible to make of the direction in which the economy is moving. When, therefore, institutions whose independence and integrity I respect, such as the Institute of Fiscal Studies, the National Institute of Economic Social Research and the OECD, all forecast a deterioration in the UK’s economic prospects as a result of leaving the EU, I accept that. It is shameful to accuse such bodies of bias. I also take seriously warnings from the Governor of the Bank of England and the head of the IMF.

Obviously there is much we cannot know about a post-Brexit UK. But we do know that almost half the UK’s exports go to the EU Single Market. The Single Market is not just a tariff free area: its aim was to remove all restrictions that could impede trade, such as different safety and quality standards in the member states. The regulations, about which the Leave side complain so much, have resulted in trade being much less restricted than before. Now that Boris Johnson and Michael Gove have both said they would not want a post-Brexit UK to be part of the Single Market, the likelihood of serious damage to exports from tariffs and other restrictions is all the more likely.

This freedom of access to the huge European market has been of great importance to many of the international companies that have invested in the UK. Scotland has benefited more than any other part of the UK from this, other than London, and is likely to be severely damaged if it becomes less attractive as a location for inward investment.

The claim by the Leave side that the EU costs the UK £350 million a week is, as John Major said on television, a falsehood and deliberately intended to mislead. As an excellent book supported by Sir Tom Hunter’s Foundation shows clearly (Britain’s Decision: Facts and Impartial Analysis, published by the David Hume Institute), the net cost to the UK is just under £8 billion a year or £117 per head of the UK population, less than 1 per cent of GDP. Contrast this with the huge amount that goes to national government. Because Scotland gets more back from the EU than other parts of the UK, the cost per head in Scotland is only £64 a year.

I first visited the European Commission in Brussels in 1963. What struck me then was the passion and enthusiasm of those I met. They said: “We are building a peaceful and more prosperous Europe. It must not be like the Europe of the past.” When I visited the Commission again ten years later after the UK had joined, with a committee of officials from UK government departments, I was disappointed to find that passion totally absent from my colleagues. The aim seemed simply to be for the UK to get back as much money as it could.

In the meantime what was the Common Market has become the EU and it has expanded and has supported and helped to anchor democracy in many states previously either ruled by dictators or by the communist party, a considerable if not sufficiently recognised achievement.

There are several other issues which require clear and decisive action at the European level and cannot be resolved by individual states: climate change, tackling pollution, security both against terrorism and an increasingly aggressive Russia, and most pressing of all – migration. Quite apart from the dreadful civil war in Syria, population growth in Africa is going to result in more and more people trying to get to Europe. A return of the passion and enthusiasm that I found on my visit in 1963 will be needed if these issues are to be tackled successfully. Britain will inevitably be affected by these issues whatever we do; and if there is something of a leadership vacuum at present, Britain should try to fill it rather than walk away.

• Gavin McCrone was chief economic adviser at the Scottish Office 1970-92 and subsequently a professor at the Edinburgh University Business School.