Category: Europe

If the under 45s vote then we’ll remain in the EU

Interesting interview with Dr Michelle Harrison, Global Head of Public Affairs at Kantar on the Today programme this morning.

There is obvious confusion amongst much of the electorate.  People want facts – but what facts are there when the issues demand speculation about the future?

People understand the key issues but don’t know what they should believe. And with a background of distrust of politicians they don’t know who to believe either. In fact people don’t really see the relationship with the EU as an issue – it’s not high up on their agenda and is instead driven by Westminster not the electorate. So disengagement and confusion is not surprising.

37% of people in the UK think that the EU is working for them – marginally higher than in Germany (36%) and France (30%). And yet we have the referendum. So it’s something driven by the politicians, but they’re not trusted.  Hmm. Maybe that’s why people’s awareness (or ‘cut through’ in the jargon) of the campaigns is low.

On the theme of immigration and border control – 20% think it’s an issue but a similar percentage think it’s not an issue.  But it is an explosive issue. And an issue full of contradictions – people’s personal experience of immigrants (positive) is not the same as media coverage (negative).

Turnout is critical. Polls say there is a slight lead for remain. But that majority disappears amongst those likely to turnout. Over 45s are more likely to want to leave and they are also more likely to vote. It will come down to each of the campaign’s ability to get their vote out. If turnout of under 45s is low then the Remain camp’s lead in the polls is eroded.

Some people may believe that if we leave and then decide it’s not working then we can rejoin. But that may be another ‘join the back of the queue’ scenario. If we leave, someone in their 20s today might be in their late 40s by the time they get back into the EU with all its opportunities. That’s their early and formulative working life defined and gone.

Older people have benefitted from free higher education, house price inflation, secure employment and guaranteed pensions.  Meanwhile young people are paying for their education, they’re employed on temporary contracts, they can’t afford their own homes and their pensions are far from certain. The decision on 23 June could be yet another example of the old stuffing the young. The vote will affect young people for most of the 30+ years of their working lives while for older people this is mostly already over. Older people may carry the vote to leave, but young people will bear much more of the impact. The young only have one opportunity to avoid being stuffed again – turnout and vote on the 23rd.

The EU’s a bargain – only £1.70 per week!

The EU publishes revenue and expenditure by subject and by country. So here’s a summary for the UK:

What does it cost?

In 2014 the EU’s total budget was €142bn.  Towards this, the UK contributed €14bn (10%) [1]. This equates to £216m (GB Pounds, not Euros) per week.

EU budget = €142bn UK contribution = €14bn (10%)

Germany contributes more of the budget (20%) as do France (15%) and Italy (11%).

The total population of the EU’s 28 member states is 507m people (2014 estimate) of whom 64m (13%) live in the UK.

EU pop = 507m UK pop = 64m (13%)
UK population as % of EU population

So the UK has 13% of the people but pays 10% of the cost. In 2014 the EU cost each European citizen €280 (budget / population).  The UK’s contributions cost each UK citizen somewhat less at €220 (or £175 per person).

EU = €280 per person. UK = €220 per person.

In 2014 the Gross National Income (GNI) of all EU states was $18tr (€16.2tr). Of this the GNI of the UK was $2.8tr (€2.5tr or 15% of the EU total).

Germany’s GNI (€3tr) is much larger than the UK’s but France’s is the same and Italy’s is much smaller (€1.6tr).

The EU’s GNI equates to €31,300 per capita.  The UK’s GNI equates to a higher €38,000 per capita.  So UK citizens are wealthier. However, while EU citizens pay 0.9% of the per capita GNI towards the European budget, UK citizens pay less at 0.6% of per capita GNI towards the European budget.

So we have more of the people, we’re better off but we pay less.

What do we get back?

The EU budget isn’t just about what you put in. It’s also about what you get back.

Of the EU’s total expenditure in 2014, €7bn (4.9%) was allocated to the UK [2,3]. Countries that receive more than 5% of the EU’s budget are: Germany (8.1%), Greece (5%), Spain (8.1%), France (9.5%), Italy (7.5%) and Poland (12.2%).

uk balance

So in cash terms, the UK puts in (€14bn) more than it gets out (€7bn).  The net cost to the UK is €7bn [4], or €110 per person.

This equates to £1.70 per week per person [5].

A form of taxation?

An established role of taxation is to redistribute wealth. This should be from the rich to the poor although there have been instances of the opposite being the case.

If the net contribution of the UK and other ‘rich’ countries is seen as a form of taxation with the aim of redistributing wealth then it is entirely justified.  It is no different to London and the South East contributing more in net terms to the Government’s coffers than the North East or N.Ireland.

Is it worth it?

Putting aside the redistribution of wealth argument, membership of the EU has a net cost in cash of £1.70 per person per week.  For this we get:

  • The political stability and security of having all 28 states economically and socially linked to one another, thereby securing the longest ever period of peace in Europe
  • Visa free travel across 28 states
  • No customs duties when travelling between EU states
  • Rights to study, work and live in 28 states
  • The ability to hire or employ anyone from any of those states
  • Common standards across Europe protecting consumers
  • CE mark on products to show they meet safety, health and environmental standards
  • Protection of 26,000 natural habitats and landscapes across Europe, backed up by the European Court
  • Recycling standards on electrical goods
  • Employment rights including maximum working hours
  • The Charter of Fundamental Rights protecting citizens’ rights across the EU
  • Clean air and water regulations
  • And more.

Of course, BrExit campaigners will argue that we might get more benefits by saving our £1.70s and spending them on something else. Really?

Notes

[1] National Contribution plus Own Resources.  The UK Government has a different figure. They say that the contribution was €17.8bn. Some of the difference can be explained by the EU figures being the budget while the UK figures are the outturn. UK GNI was also higher than forecast. However, the UK Government formats the figures differently to the EU. In particular there’s €2bn of VAT and GNI adjustments that show in the Government’s figures but not in the EU’s. Using the Government’s figures the UK contribution equates to £274m per week or £2.57 per person.  This figure is the same as the EU’s final budget for 2013.

[2] The EU budget allocates expenditure against each country although it stresses that this is an accountancy exercise only as it does not take account of the indirect and non-financial benefits of membership.

[3] UK Government figures again differ.  They show public sector receipts of €5.7bn.  The Government acknowledges that these omit some payments made “directly to the private sector, for example to carry out research activities. These payments do not appear in the public sector’s accounts. It is estimated that in 2013, these receipts were worth £1.4 billion.”  This would lift the expenditure benefiting the UK to €7.1bn.

[4] This is a rather simple calculation. The EU has something more complex which results in an operating balance (or cost) for the UK of €5bn.

[5] Using the Government’s figures for contributions to and receipts from Europe, the cost per person per week is £2.57. This figure is the same as the EU’s final budget for 2013.