Why the EU market is of PARAMOUNT importance to Britain


This month, two Eurosceptic Little Englander MPs, Douglas Carswell and Mark Reckless (he’s reckless all right), defected to the UK Independence Party, which campaigns for British withdrawal from the EU.

Pro-withdrawal sentiment is indeed growing among the British people. And even those who don’t advocate Britain’s outright withdrawal have, in recent months, made foolish comments – up to and including the Prime Minister.

When he last visited China, David Cameron called on British schools to drop their old emphasis on teaching French and German and start emphasising Mandarin instead. British newspapers even misquoted him as saying “Ditch French and German!”

In any case, deemphasising French and German and withdrawing from the EU would be suicidal mistake, as the following three graphs show.

The first illustrates where UK exports go, country by country, using FY2009/2010 (i.e. a little aged) data. It comes from this Guardian article on global trade.

UK-exports-graphic-002

As can be seen from this Guardian graph, the UK exports almost FIVE times as much to Germany as it does to China, and over three times more to France than it does to China. Ditto the Netherlands. The UK even exports more to stagnant Spain and Italy than it does to China!

But most remarkably, the UK exports TWICE MORE to Belgium than it does to all of China!

Which means that despite the fantasies of Eurosceptics and even non-Eurosceptic ignoramuses who dismiss Europe’s importance as an export market and exaggerate that of developing countries, the EU remains, far and away, the UK’s most important export market and will remain so for many decades to come.

But the graph shows exports to EU countries declining and those to China increasing, doesn’t it?

Yes – but for the UK’s exports to China to match those to Europe, the former would have to grow at absurdly high, unsustainable rates for many decades.

For UK exports to China to match the importance of UK exports to…

  • France or Netherlands, they’d have to more than triple (i.e. grow by over 200%).
  • Belgium, they’d have to more than double (i.e. register growth of over 100%).
  • Germany, they’d have to quintuple (i.e. growth by an astouding 400%).

This will not happen for decades, if ever.

China’s economy is now showing signs of slowing down and cooling. It cannot maintain a growth rate of almost 10% forever, and it won’t grow faster in future years unless economic reform is accompanied by political reform – which the CPC is unwilling to carry out.

The second graph comes from EconomyWatch and illustrates Britain’s exports to her seven biggest trade partners (in the graph, England is wrongly equated with Britain). Again, European countries dominate the pack, with the US as the only non-European country among Britain’s top export partners and being closely followed by Germany despite occupying the top spot.

England_Trade1

Again, the data is telling. China, India, Russia, Brazil, and other developing countries are nowhere in the graph. Not only aren’t they among the UK’s top five export partners, they aren’t even among the top seven! And while the US still occupies the top spot, which it traditionally has held since 1776, Germany is just slightly behind, followed by the Netherlands, France, Ireland, Belgium, and Spain. (Again, as we see, the UK exports more to the tiny country of Belgium than it does to China.)

Think about it: the UK not only exports far more to Germany than it does to China, it exports almost as much there as it does to the US, despite the latter having an economy and a population several times larger! That is to say, the average German buys several times more worth of British goods and services than does the average American!

Again, to let it sink it: Germany is not only far bigger an export market for the UK than China is, it is almost as much important as the US juggernaut.

Not only that, but France and the Netherlands – with a combined population equal to Germany’s and a combined GDP smaller than that of their eastern neighbor, buy even more of British goods and services than the US does – and, of course, far more than China does.

And now, finally, the third and most recent graph, using 2012 data on UK exports and imports, from the BBC using HM Revenue&Customs data.

uk_imports_exports

As the graph demonstrates, the UK exports more to the rest of the EU than it does to the rest of the world COMBINED, and the EU, as an export market, dwarfs all others in terms of importance. North America and Asia & Oceania, tied for second in terms of importance to UK exports, still pale into insignificance compared to the EU. This is even more so of “non-EU Europe”, “Middle East & North Africa”, Sub-Saharan Africa, Latin America, and “other.”

Let me repeat that: the UK exports more to the rest of the EU than it does to all other regions of the world COMBINED, and as the destination of 51% of ALL UK exports, the EU dwarfs all other UK export partners in terms of importance. No other region of the world comes even close to being as important to British exporters as does the EU.

North America – i.e. the US and Canada (a former British colony) combined – buy only 15% of what the UK exports. Ditto Asia & Oceania (a vast region that includes China, India, and Australia), for all the talk about its importance as an export market.

Non-EU Europe – mostly Russia – accounts for only 8%.

That should put to rest any fantasies of Britain’s withdrawal from the EU and of China, India, and other countries replacing the EU as Britain’s top export partners. It won’t happen. Not within my lifetime, and probably not within the lifetime of children born today.

Also, it is worth adding that the EU, as a juggernaut with 500 million people and the world’s largest GDP, is the world’s largest trading powerhouse, and thus, having a trade agreement with the EU is a top priority for everyone, from huge countries like the US to small ones like South Korea. By contrast, if Britain were to leave the EU, signing a trade agreement with her would be a priority for few countries.

I repeat: Britain stands ZERO chance of surviving economically outside the EU.

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