Fact, Fiction and Brexit: Truth-Squadding the Arguments
The U.K.’s referendum on its membership in the European Union has prompted a whirlwind of claims about the bloc, some more accurate than others.
Both sides are clashing over the effects an exit will have on trade and investment, especially after the publication of a U.K. Treasury report this week predicting a decline in British output of as much as 7.5 percent after 15 years, costing as much as 2,100 pounds ($3,000) per person. Proponents of the Leave campaign call the analysis absurd. While some assertions are difficult to judge, others benefit from closer inspection.
As Britain’s voters try to work out fact from fiction ahead of the June 23 poll, here are five truths and five fallacies about the EU, the U.K.’s place in it and what an exit could entail.
If the U.K. voted to leave the EU, also known as a Brexit, it could take years for the country to extricate itself from the union.
A British government report released in February suggested the U.K. may face a decade of uncertainty as it disentangles itself from all the EU regulations it has acquired over its 40 years of membership. The EU treaties outline a process for nations that want to leave the bloc that lasts about two years but many analysts believe that’s far too optimistic in the U.K.’s case.
One EU official in Brussels, speaking on condition of anonymity, said Britain’s annual legislative program would probably be dominated by the conversion of EU laws to British ones for 10 years in the case of a U.K. exodus. Government departments may need to be overhauled and new ones created as British civil servants take on new responsibilities. The speed of the process would depend on how easy the EU’s other 27 governments want to make it. And if there’s a determination to discourage other countries from following the U.K.’s lead, that’s where there could be trouble.
The U.K. frequently gets out-voted by other member states on EU issues.
Most EU legislation needs a weighted majority of nations to approve it. Brexit supporters complain that the U.K. is often in the minority and so often must implement European laws it doesn’t agree with.
There’s an element of truth to this. According to a report by Simon Hix and Sara Hagemann, politics researchers at the London School of Economics, Britain was in the losing minority far more than any other country in 2009-2015. It lost 12 percent of the time, compared to the next most frequently losing governments, Austria and Germany, which were defeated 5 percent of the time, according to data from VoteWatch.eu.
However, there are some caveats including the fact that most issues are decided by consensus, and, as Hix and Hagemann say, “perhaps the U.K. was on the winning side on all the key issues it really cared about.”
The U.K. may find it difficult to establish favorable trading arrangements with the EU if it leaves.
Britain sees free trade within the EU as one of the bloc’s biggest attractions. Brexit campaigners say there’s no reason why that should change if the U.K. leaves because it would be in the interest of many EU countries to continue that open trading relationship.
It may not be that easy however because any free-trade arrangement would have to be approved by all EU countries, many of which may not want to give the U.K. an easy ride.
“There is a risk that the more integrationist member states seek to make an example of the U.K. to discourage other potential leavers,” Caitlin Webber, Bloomberg Intelligence global trade policy analyst, said in a note.
Brexit could leave European banks short of liquidity.
European banks that bought bonds backed by U.K. mortgages, bank loans and credit-card debt may find they no longer count toward their emergency cash reserves.
Under the Basel Accords, banks must maintain an adequate amount of high-quality assets that can be quickly converted to cash to meet liquidity needs for 30 days. What’s more, their underlying assets must originate from an EU member state. That means some bonds backed by collateral from Britain, if it left the EU, may be excluded, according to analysts.
Banks could be left having to replace as much as 108 billion euros ($122 billion), according to Manuel Trojovsky, a Munich-based analyst at UniCredit Bank AG.
David Cameron’s renegotiated terms of EU membership fell short of the widespread reforms he outlined in 2013.
A marathon February summit in Brussels gave Cameron a settlement that enables the U.K. to limit some benefits to migrants, delay euro-area-led financial legislation and stop any symbolic progress to an “ever closer union.”
When Cameron gave a speech at Bloomberg LP’s London headquarters in 2013 he said the EU needed “fundamental, far-reaching change.” What he got, according to Charles Grant, director of the Centre for European Reform in London, was “a collection of modest reforms” and it “will be hard for Cameron to claim that this is transformational.”
The U.K. pays 55 million pounds ($79 million) per day to the EU.
This is Britain’s bill for membership, according to Nigel Farage, the leader of the U.K. Independence Party, but the truth is more complicated.
The contribution varies from year to year and according to U.K. Treasury data, Britain’s membership fee in 2015 was 18 billion pounds. But the U.K. never actually pays that because of its rebate -- a discount obtained by Margaret Thatcher in 1984 -- which knocks an annual 5 billion pounds off the total.
In 2015 about 4.5 billion pounds of the remaining 13 billion pounds was sent back to the U.K., mainly to subsidize the agriculture industry and as an investment in the country’s poorest areas. Which leaves the U.K.’s net contribution to the EU in 2015 about 8.5 billion pounds -- or 23 million a day.
This is reduced further, the U.K. Treasury says, by EU grants direct to the private sector, such as for research projects. In 2013 this amounted to 1.4 billion pounds.
The U.K. would find it easy to be just like Switzerland and Norway.
Pro-Brexit campaigners point to the statuses of Switzerland or Norway that aren’t part of the EU but enjoy some of its benefits, like the single market.
But this comes at a price. According to the London School of Economics, Norway’s financial contribution to the EU on a per capita basis is 83 percent of the U.K.’s payment and Switzerland’s contribution is 41 percent. And the U.K. wouldn’t have any say in the single market’s rules if it wasn’t part of the EU.
It would be easier for the U.K. to secure a free trade deal with the EU in the goods sectors than for services, according to the Open Europe think tank. “All sectors would suffer from the U.K.’s loss of voting rights in the EU, but for industries such as the financial sector the impact could be greater,” according to an Open Europe report, published last year.
If the U.K. left the EU it would have greater control over how many migrants it took from the Middle East and Africa.
While more than a million refugees came to Europe in 2015, mainly from war-torn Syria, very few ended up in the U.K. Under the existing terms of Britain’s EU membership, the U.K. is not in the Schengen borderless travel area so it can control who comes into the country. It also has an opt-out from home affairs legislation, meaning it did not take part in EU projects to share the burden of refugees arriving in Greece and Italy last year and is not involved in plans to overhaul the bloc’s asylum policies.
Leaving the EU would however enable the U.K. to control immigration from other EU nations whose people currently have a right to live and work in the U.K. on a par with British citizens. At the moment Polish citizens form the largest foreigner population in the country. Whether that would continue would depend on the type of agreement Britain makes with other countries.
“If, as is likely, a post-Brexit government made it harder for EU citizens to live, work or study in the U.K., Britons wishing to remain in or move to the continent would face similar problems,” Jean-Claude Piris said in a note for the Centre of European Reform.
The U.K. would be forced to join the euro if it stayed in the EU.
Britain and Denmark are the only two EU countries that are not legally bound to join the single currency and that is not about to change. The settlement obtained by Cameron in February reiterates that “the United Kingdom is entitled under the Treaties not to adopt the euro and therefore to keep the British pound sterling as its currency.” The prime minister also won wording to prevent the U.K. from ever having to participate in bailouts of euro-area nations and to protect its interests when the EU is discussing financial and economic legislation.
The EU wants to:
- Restrict the amount of coffee people drink and how hot it can be.
- Ban dairy products from school dinners.
- Make it illegal for tourists to take photos of famous monuments.
- Force cows to wear diapers.
- Standardize car license plates across the bloc.
- Outlaw the sale of rhododendrons.
- Make it illegal to use the word “bankrupt.”
- Forbid children from blowing up balloons.
These were all reported by British newspapers but aren’t true. While some have an element of fact in them -- the EU’s food safety authority was asked to issue guidance on caffeine intake, and members of the European Parliament (which doesn’t have the right to propose laws) did suggest common temporary license plates to make it easier to register vehicles when moving from one nation to the other -- the anti-EU stories are often more entertaining than informative.
While some of the wackier stories are false, it is the case that the EU did once ban the sale of abnormally curved bananas in some circumstances, did stop the sale of energy-sapping vacuum cleaners and is looking at strengthening minimum standards for candles.
--With assistance from Sally Bakewell and Alastair Marsh.
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