Have we in the UK been getting steadily poorer year-on-year over 46 years in the "European Project" [the EEC and then the EU] than if the UK had been out?
What is the evidence?
Remainers claim "We're better off in". But is it true? And if "We're better off out" people should know.
The UK is tipped to overtake Germany and become the largest economy in Europe. Will the UK's Gross Domestic Product [GDP] increase faster if we are out of the EU and make us in the UK all wealthier? And could that be sooner than later if we are out?
As you will see here, the UK has been getting poorer and so has everyone else in the EU. What is most disturbing is the scale of this and the cumulative effect over those 46 years. £350 million on the side of a big red bus starts to look insignificant.
Additionally, this article addresses only the reduction year-on-year in GDP compared to other advanced nations. There have been legal decisions and other aspects of EU membership which unseen to everyone have been costing tens and hundreds of billions over the 46 years. So the entire EU including the UK have not just become poorer in terms of annual income. We are also poorer in terms of the accretion to capital assets of the nation year-on-year which we might have enjoyed if the UK had not joined the EU.
And we come to the real question about Brexit. It is not "are we better off in than out" or vice versa. The arguments now are cast in terms of economic benefits. So if the economic benefit of leaving can be shown to be better if we are out, that may answer the issue for now, but we also need to answer the more important question - what is wrong with the EU that we should never rejoin it - because that campaign has started before we have even left.
GETTING ANSWERS
Comparing historic annual economic growth with other world regions can help provide answers to such questions. It must be over the long term and not just a couple of years. But with all the claims and counter-claims of each side, Leavers and Remainers accusing the other of [putting it politely] being "economical with the truth" or "gilding the lily", whom are we to believe? On this issue in the run up to the 23rd June 2016 Brexit Referendum you cannot even believe Full Fact, disporting themselves then and now as "The UK's Independent Factchecking Charity".
THE EU-ANTARCTICA ALIGNMENT
Boris Johnson's 29th May 2016 Telegraph newspaper article was headlined "The only continent with weaker economic growth than Europe is Antarctica". All in all, notwithstanding the trend to attacks on the reliability of the pronouncements and promises of the UK's current Prime Minister, it appears reliable and sound overall making useful points. Johnson included that:
"Since 2008 the US has seen gross domestic product go up by about 13 per cent; the EU's has gone up by 3 per cent. The EU is a graveyard of low growth; the only continent with lower growth is currently Antarctica. That is partly because of the sclerotic one-size-fits-all Brussels approach to regulation; but, worse, in the last decade the EU has been suffering from a self-inflicted economic disaster – the euro."
The Antarctic alignment with the EU's economic prospects was a lyrical poetic picture making a point. Antarctica, the fifth largest continent is the most desolate and cold place world-wide. Over 97% of its 5.5 million square miles are frozen assets – ice-covered all year. Populated by an estimated 8 million penguins: their main domestic product [aside from chicks] is gross – penguin poo. The remainder of the continent's economy is considered to include fishing, tourism [around 60,000 tourists per annum] and scientific research [about 4000 researchers during the warmer months].
The stark contrast with world growth was implicit and exposed the weakness of the EU's historic growth record. This spawned a rash of repetitions and responses.
THE REMAINER RESPONSES - "SUNNY DAY ECONOMICS"
Remainers tried to dampen the impact. The real comparison was the EU's poor economic growth compared to the rest of the world, so defending against the Antarctic comparison was a hopeless cause. But could the EU-Antarctica comparison have distracted from the real issue: is the UK historically poorer in the EU than it would have been and so wealthier in future if out? That is the ball. Keep your eyes on it.
In 2016 Full Fact presented themselves as checking claims made in the run-up to the 23rd June 2016 Referendum. Full Fact did not in fact-check adequately the information they claimed to have fact-checked. They published information which was unreliable and misleading. An example is a Full Fact 16th June 2016 website entry claiming to have fact checked Michael Gove's 15th June 2016 BBC Question Time special. Full Fact tweeted "EU recently had the lowest growth of every continent but has now overtaken S America".
That is Sunny Day Economics - sticking your head out of the window on a sunny day when it is raining in France and claiming the UK has the more pleasant sunnier climate, whilst ignoring decades of statistics.
So much for charity "Full Fact" [Major funder Google]. ITN re-published their claims in more detail including that:
"But from 2014 until now, South America and Europe as a whole have grown more slowly than the EU. It has also been declining as a share of the world economy for several decades, though this mainly reflects fast growth in other regions."
Whilst admitting the overall problem, ITN's version of the Full Fact fact-check repeated two points which are misleading. This was still also Sunny Day Economics – in this case the Sunny Day is a period of at most 2.5 years. The UK has been in the "European Project" for about 46 years. EU economic growth historically has been for long periods the worst in the world – not 2.5 years. It would be the same if they relied on 2.5 seconds, minutes, hours, days or weeks or months. It is all Sunny Day Economics. And the "growth in other regions" excuse just will not do, as will be seen, reading on here.
Also on 16th June 2016, Justin Haque, a Devon businessman, published a political commentary in the South Hams Gazette "The case for Leave" also covered by other local Devon Papers. Haque included briefly Boris Johnson's amusing and colourful claim that "the only continent with weaker economic growth than Europe is Antarctica!". The idea appeared on Vote Leave's Twitter feed the same day.
Two days before the 23rd June 2016 Referendum, a politically active academic economist [declared interest: Labour Party member], wrote a response to the Vote Leave tweet: "Fact Check: does only the economy of Antarctica grow slower than the EU's?". The response was published alongside what was meant to appear as a peer review of the response written by a University of London Professor of economics. The response included the following comment about Antarctic economic growth:
"… Antarctica, …. has virtually no economic output. … the claim is simply false: the Latin American continent has lower growth than the European Union, …."
That was misleading. Johnson cited an historic period 2008 to 2016, which at around eight years is a more reliable and more scientific approach. The academic cherry-picked and his reviewer allowed that without comment. He qualified his claim about Latin America with [emphasis added] "according to the latest figures from the International Monetary Fund's World Economic Outlook".
The figures were just for one year, 2016, and were so not comparable or representative of historic economic growth to Johnson's 8 years – more Sunny Day Economics – more heads sticking out of windows.
The academic economist did make some better points such as "comparing continents' performance is not particularly illuminating. Continents are geographical rather than economic areas". However, the comment that "Comparing Britain's relative growth to the other leading G7 economies shows that it has been doing relatively well recently." was less than illuminating. Yet again, one year, a Sunny Day Economics year, 2015, was cherry-picked by the author. Additionally four of the G7 are EU member states: UK, France, Germany and Italy. So not much of a comparison. The other three are Japan, the United States and Canada. Japan's economic growth has been historically poor for many years and the US, long the economic powerhouse of the world, has led all the other G7 historically for economic growth with the UK second only to the US.
The author of another response challenging Johnson's Antarctica economic growth article claimed EU economic growth had improved, citing just one year, 2016: "the EU expanded faster than the US for the first time since 2008". Not only was that Sunny Day Economics, that was [for these purposes] by a relatively inconsequential 0.1% [according to MarketWatch: 1.7%, compared to 1.6% for the US].
That writer went on to admit "It is true that the EU economy was sluggish" but blamed this on "recovering from the recession and eurozone crisis". That crisis was a result of the EU's own creation – the Eurozone – contrarian economically, it was and remains an EU politically driven self-inflicted wound. Relying on one year also ignored the continuing historic problem over decades – more Sunny Day Economics.
The author also compared what is not comparable to advanced European economies: "Africa's growth slowed, Asia was steady and Latin America contracted. Antarctic's economic growth is unrecorded."
THE QUESTION & THE DATA - IMF WORLD ECONOMIC OUTLOOK DATABASE
Would UK economic growth have been better if the UK had historically not been part of the EU? Can the Leave confidence in the UK's ability to trade outside the EU bloc be justified with evidence?
Let us look a little more scientifically at empirical evidence of the performance of the EU using historic economic data. Historic data makes it more difficult to make excuses. It evens out temporary disparities over time. Where there is a world economic downturn, that ispo facto affects the world. Figures covering the world economy over such a period provides fewer hiding places for those with something to hide [eg. the EU and especially the failing Eurozone].
In 2017 Global Finance Magazine [GFM] published comparative world economic growth figures. The magazine is not polemical. It aims to help corporate leaders chart the course of global business and finance, so it needs to publish reliable information. GFM chose particular regions and country groups to make economic growth comparisons.
The original data came from the International Monetary Fund [IMF]. The regions and country groups which GFM used for comparisons are the IMF regions and country groups. In two sets of figures, the totality of the figures covered a twelve year period – the more relevant figures covered 10 years - 2008-2017 - that is less likely to be considered Sunny Day Economic data.
One might like to see figures over a longer period – specifically the entire 46 years of UK membership of the "European Project". Convenient data for that entire period does not appear to be readily available. The risk in using data over such a long period lies in its reliability: who produces those figures, how they do it, what adjustments they make and how reliable their interpretations might be in the light of world events and events affecting specific countries and regions over such a period, such as the Gulf Wars, the dissolution of the former Soviet Union, the fall of the Berlin Wall and reunification of Germany. And more importantly there is also author bias – by accident or by design.
ITS STARTS BAD AND GETS WORSE
IMF world data starts in 1980, so comparisons over longer periods are possible. However, assuming one can take the GFM 10 year average figures on face value, sourced from original IMF data, one can see that over a 10-year period from 2008 to 2017 the EU's Eurozone had the lowest average economic growth over that 10-year period in the world at a seemingly dismal 0.4%. The wider EU's economic growth over that 10-year period was second worst at 0.7%.
By comparison the 10-year average GDP growth world-wide was 3.2% or 8 times that of the Eurozone and 4.5 times better than the EU. In effect the overall world economic growth sits in the middle providing a benchmark to compare the best and worst performers in the world.
THE EU/ARTARCTICA ALIGNMENT SEEMS TO HOLD TRUE
So, shocking but true, Boris Johnson's 29th May 2016 Telegraph published analysis of the EU-Antarctica economic alignment holds, despite the valiant but [one hopes] misguided efforts of charity "Full Fact", ITN, economic academics and others. Sure, its eye-catching and sure, Antartica is the antithesis of an advanced economy, but that makes the comparison of the EU being second worst to Antartica stark and difficult to fault.
It is still likely to be misleading to compare developing economies with the EU. Economies of developing nations can experience greater annual GDP growth and faster historical economic growth than the more mature advanced economies of developed nations over the same periods. This seems to be reflected in the GFM figures for regions experiencing the greatest historic economic growth over 10 years.
GFM ECONOMIC GROWTH FIGURES - EU v THE WORLD
- Emerging and developing Asia was top over 10 years with 7.2% average annual GDP growth;
- Emerging markets and developing economies were joint second at 5% with the ASEAN-5;
- surprisingly, Sub-Saharan Africa was fourth at 4.7%.
- Middle East, North Africa, Afghanistan, and Pakistan were fifth at 3.5%;
- Middle East and North Africa taken alone next at 3.4%;
- Emerging and developing Europe was seventh at 2.7%.
However, when we compare Advanced Economies [but excluding the G7 and Eurozone], at 2.4% average 10 year economic growth the performance of the EU and Eurozone are substantially worse [0.7 and 0.4% respectively].
- Latin America and the Caribbean are also still better coming in at 2.2%;
- the Commonwealth of Independent States [ie. former Soviet Union aligned states] is at 1.2%;
"Advanced economies" at 1.10% is still substantially better despite that figure being dragged down by the inclusion of the average economic growth of the ailing EU and Eurozone in that economic grouping.
The better comparison with the EU and Eurozone is probably with the "Advanced economies excluding the EU and Eurozone" – which is still six times better growth than the Eurozone and 3.5 times that of the EU.
THE LONGER TERM BIGGER PICTURE - IMF DATA 1980 TO 2018
During 1980 to 2018 the worst performers for average annual world economic growth were:
- the Eurozone - bottom at 1.49%,
- the former Soviet Union aligned states [Commonwealth of Independent States] next at 1.81%
- third worst is the EU at 1.89%.
[Data for 2017-2018 estimated by the IMF]
Obviously, attempting to cover such a long period since the end of 1979 one needs to consider relevant world events, but the figures still provide a comparison to world economic growth performance. And it is going to source and not relying just on the GFM figures [even though in turn also sourced from the IMF].
The dissolution of the Soviet Union in 1991 left the economies of those states in a dire condition. Extremely poor economic growth dragged down their average economic growth figure over the period since 1992. For example 1993 to 1996 the economies contracted dramatically instead of growing. There were large annual contractions in GDP of -9.57%, -13.86%, -5.34% and -3.57% respectively. That has changed substantially as the GFM figures indicate with that grouping having a 1.2% 10 year average economic growth to 2017 compared to the Eurozone of 0.4%.
The Eurozone started with the euro's launch on 1 January 1999. It was then an 'invisible' currency, only used for accounting purposes and electronic payments for the first three years. The big change came on 1 January 2002 in 12 EU countries with the biggest cash changeover in history. The Eurozone grew over time as other EU states joined that currency system. So one must bear in mind the world has been changing when looking at the figures.
WHERE-EVER YOU STAND THE VIEW IS SIMILAR
No doubt Remainers will endeavour to criticise and undermine the figures presented here. However, by keeping faithful to the original data and avoiding "adjustments" it is likely to be more difficult to argue with. They will of course try no doubt. At least Sunny Day Economics and cherry-picking can be shown up for what it is.
Whatever one's perspective and whatever counter-arguments might be deployed, the plain and stark fact, whichever way one looks at this is, the EU [which includes the Eurozone] on these IMF sourced figures has the worst 10 year average historic economic growth in the world and the Eurozone is worst of all at 0.4%. That is far from the world benchmark of a 3.2% ten year average growth, which sits in the middle of the best and the worst economic growth regions in the world. It is 8 times that of the Eurozone and 4.5 times better than the EU.
And the EU and Eurozone have consistently been bottom on average annual economic growth since 1980 with the temporary exception of the Commonweath of Independent States on their sudden emergence following the dissolution of the Soviet Union.
OTHER LESSONS?
What can we say about the top performing countries for growth in the world even if we cannot fairly compare their impressive growth figures as fast developing economies with more mature developed nations?
We can say this: those countries' economies have been growing in many cases over decades with a cumulative growth record which tells us something. The people in those nations have more money to spend now than they had twenty or thirty years ago. A country like Bangladesh with annual growth in the region of 5-6% over many years will be far wealthier now than 30 years ago.
And we should also consider the IMF "Other Advanced economies" which can be more easily compared to the EU and Eurozone and which have had substantially better historic economic growth. They will also have more money to spend: countries like Australia, New Zealand, Singapore, Israel and Korea. To those one must add the G7 powerhouse of the USA and also Canada.
And when people in other countries have more money to spend, does the UK have products and services they could need or want? Are there greater opportunities for trade now world-wide than 10, 20, 30 and 40 years ago? And if so, are we better off out of the EU?
An in-depth analysis of these questions is for another article. The Leave answer we know is in the affirmative, but is it justified?
THE LEAVE ARGUMENT MAKES SENSE - EU TRADE OR WORLD TRADE?
When put in a perspective as done in this article, backed by empirical evidence, one can start to see the sense of it. This fills in some of the detail providing more clarity for what many Leavers know intuitively.
We can summarise the EU's economic growth record as the worst in the world. It is not even keeping up anywhere near other advanced economies. There are 500 million people in the EU and many member states are not wealthy and net recipients of the EU budget contributions.[eg. like Bulgaria]
The Rest of the World is estimated to comprise just over 7 billion people and many more countries than the EU including many developed economies. The opportunities for trade must logically be far greater than those presented by the vastly smaller EU trading block. Perhaps this might be behind the recent claims that Angela Merkel allegedly expressed concerns about Brexit making the UK a competitor. And if that is what the EU is about, suppressing competition from the UK, is that alone reason to be out? What does Merkel know that others do not about the potential economic consequences for Germany of the UK leaving the EU?
One might ask whether the EU is the kind of anchor which instead of stabilising the economies of member states, destabilises by dragging their economies down? What view should citizens of the PIIGS take? Portugal, Ireland, Italy, Greece and Spain are the economic basket cases of Europe needing bailouts with invented EU money conjured up like a magic trick literally overnight to stave off a collapse of the Euro, as Donald Tusk described in an interview about the crisis and the EU's management of it. Tusk seems to be genuine honourable committed passionate and sound, so no personal criticism of the man is intended here.
And when one looks further one thing is noticeable about the EU debate. That is how Europhiles become very quiet and do not engage in discussion to argue about the wider economic, social and political instability across the EU member states which has followed the unhelpful EU policy of austerity. To avoid discussion they keep silent, hoping to push or provoking debate onto other issues. They need to be challenged and all need to know and master a knowledge and understanding of the manifold failings of the EU to do so. It is no easy task because there are so many.
THE REAL BREXIT QUESTION
And we come to the real question about Brexit. It is not "are we better off in than out" or vice versa.
The real Brexit question is not being debated nor has it been, nor are the public being informed. Europhiles and Remainers alike also tend not to engage in the debate about all the things that are wrong with the EU – pushing the subject onto other issues instead.
What is wrong with the EU goes beyond economic growth and the destabilising effect the EU has had across Europe since its formation nearly thirty years ago.
And what looms large in any picture of peace in Europe is not how the EEC nor how the EU has helped maintain peace. There has been an exponential rise in prosperity since the end of World War II. That rise in prosperity would have happened with or without the EEC and EU. It has been seen across the entire world. Simply put, people in the developed EU economies have been too busy making money since 1945 to want to go to war with each other.
But once we see economic, political and social instability, especially if there is recession and economic decline, then there could be instability which might see a return to conflict between nations in Europe. The relatively recent Balkan wars are a demonstration of what can happen – that was war in Europe – whether anyone likes to see it as that or not – and there were war crimes trials – which we have known before then.
Never forget that some of the ordinary people walking down the street in your town in your road where your live are capable of doing what was done in the Balkan war and before. We are all fallible and subject to the same psychological pressures whether we like to admit that or not. Some are more fallible and more subject than others. The message is not to blame people but to recognise the reality. The ultimate question is whether the "European Project" is ever capable of ensuring peace in Europe. Frankly, it is creating instability socially, politically and economically. And in this writer's view it is not the driver of peace – peace since 1945 is built on prosperity and enjoying all that brings.
Is economic growth – or at least political and social stability – more important than the EU? And regardless of what happens to the world in the coming decades.
It is all well and good speaking of our friends and partners, but historically Europe has been mired in conflicts over centuries. Those conflicts have not gone away. What social, political or economic changes might return the continent to greater or wider conflict? One cannot pretend it is impossible. Indeed we see it happening now – albeit and inappropriately not all is reported in our newspapers or on our television screens, including it seems events in the UK.
And are France and Germany and other EU states friends? Do not be misled by the mellowing of rhetoric over the past three years since the Referendum. The EU has mellowed most likely because of what some might interpret as posturing and statements aimed at the UK were counterproductive, persuading former Remainers to want to support leaving. And they need the UK's money. Voting to veto extensions to the Article 50 period is like Turkeys voting for Christmas. There is little doubt that whilst the prospect of keeping money coming into the EU Commission and Council's coffers from the UK remains, they will extend the period. Where the breaking point is and when an EU member state might veto an extension is moot.
And if the EU becomes the centre of the EU "Empire" as some claim it has been described by its proponents, and if it then has military forces under its control, what use might be made of them in dealing with dissent and conflicts internal to or between the EU states and the EU?
How easy would it be to suspend the rule of law in the EU in the event of a widespread collapse of social order or dissent against the ruling class?
These are merely questions. They are not predictions but they are issues any sovereign state concerned for the prosperity and security of its nation should contemplate, no matter how remote the concerns might be thought.
So economic growth is one small part of the picture – but it is an integrated picture. Growth and prosperity would have happened regardless of the EEC and EU and they are what have held the European project together – despite the questionable competence of the EU institutions and politicians. A diminishing of growth and prosperity is today seeing a less stable cohesive union of European states. Gilet Jaune in France were being reported but what else is happening in the EU which is not?
Any analysis of the problems of the EU would fill several volumes. Do you want to spend the time reading them if anyone wrote them? Or should the UK leave the EU in every sense and make its own way in the world unrestrained by the negative ambitions of France and Germany to capture and control a potential future competitor?
You are on notice. You might be able to change what happens next.
[SUBSTANTIALLY REVISED AND UPDATED 11/11/2019]