So 50% of our trade goes to the EU, eh?

Leave aside whether it is 50% (the Rotterdam Effect etc) and ponder the way the world is changing.

The BRICs are growing mightily. 5 to 10% growth rates….and all the usual longer term forecasts assume that this convergence is going to continue for decades. The entire global economy is going to undergo quite radical changes.  Certainly the weightings of which country is what percentage of the global economy is predicted to change massively.

In the medium term:

Exports will drag the UK back to sustained growth as the country “re-orientates” to markets in Brazil, Russia, India and China.

Currently, just 5pc of UK exports go to the emerging “BRIC” nations – less than to Ireland alone. However, ITEM is forecasting annual growth in exports to the region to average 11.7pc a year until 2020. By comparison, the total value of UK goods and services exports around the world is expected to (grow, I think they mean-Tim) be 8.5pc a year for the next decade.

So, in the short term we would expect our non EU exports to be growing as there\’s not that much growth in the EU but there is elsewhere. In the medium term similarly and in the long term….why, it\’s just the same!

Think of the economic projections the IPCC reports on climate change are based upon. By 2100 we expect (as long as we don\’t screw it up) the global average income per capita to be around what the US one was back in 1990. We expect the BRICs to be (well, there\’s a question mark over Russia, to be sure) richer than we are now.

China and India both to be far larger economies than either the EU or US: Brazil alone to be 50% or so of the entire EU economy.

So that\’s where the economic growth is going to be: and clearly, given that the UK comparative advantages seem to be in certain high tech goods (jet engines, we make 1/3 of total world consumption, certain chips like ARM etc) and financial services, that\’s what we\’ll probably be exporting to those places.

Yes, exports are indeed going to work and imports going shopping. But in order to go shopping one does have to go to work.

OK, so that\’s the likely scenario for the next few decades: vastly faster growth and thus appetite for our exports outside the EU rather than in it.

So, what should our political response to the EU be then? All the opportunities are going to be outside the EU thus we should tie ourselves more strongly to the EU apron strings?

Umm, no, that doesn\’t make much sense, does it?

All the opportunities are going to be outside the EU so we should loosen the EU apron strings?

Yes, that sounds quite a lot more sensible, doesn\’t it?

And to be more specific: London is the international financial capital of the world. It\’s got one of the things we really can sell to Johnny Foreigner. So we\’d better not let the cretins fuck over one of the industries we can actually sell to those fast growing areas of the world, eh?

12 thoughts on “So 50% of our trade goes to the EU, eh?”

  1. Tim
    The Germans have made it quite clear the EU is politics first followed by trade. The City will be regulated in the interest of “fairness and transpirancy”, or rather the EU definition of those words which will be translated into a death sentence. Ever closer union and all that rubbish. Unless the City grows some they are toast.

  2. Sounds like the plan should be to stay engaged in the EU to protect that access to the common market that takes 50% of our exports now, making sure no-one fucks up bank regulation or weakens the principles of the single market, right? Best done as an active player in the EU, I’d think. You’re not suggesting California secede and focus on trade with emerging markets, are you?

  3. This sounds like everything yo hate. The govt trying to back ‘winners’, calls for subsidies, trade c onduted at national not company or individual level, etc etc.

  4. Ambrose – “stay engaged in the EU … making sure no-one fucks up bank regulation”

    And if that’s impossible, because of the EU politics? What if the only options are leaving the EU, or staying in an EU with badly fucked-up regulation?

  5. And if that’s impossible, because of the EU politics? What if the only options are leaving the EU, or staying in an EU with badly fucked-up regulation?

    Luckily, they aren’t – which is why the UK government’s lobbying has ensured that the EU won’t pass any financial services regulations that meaningfully restrict the City, despite the fact that several EU states originally wanted to do so.

  6. “which is why the UK government’s lobbying has ensured”

    Interesting use of “ensure” there.

    The UK being a supplicant and begging that the current person heading the post takes a view mostly to the UK’s liking is not “ensure”.

  7. Pingback: Tweets that mention So 50% of our trade goes to the EU, eh? -- Topsy.com

  8. 50% of our trade goes to the EU

    I could be wrong, but a year ago I seems to remember people bandying around a number closer to 80%.

    Like many numbers used by people with agendas, I’m mightliy suspicious of this one (and the 80% used previously).

  9. Just to put the China versus EU thing in perspective.

    Between 2005-2006 the EU added more than three times more in absolute terms to its GDP than did China.

    http://www.wolframalpha.com/input/?i=%28%28eu+gdp+2006%29-%28eu+gdp+2005%29%29%2F%28%28china+gdp+2006%29-%28china+gdp+2005%29%29

    10% growth in something very small still isn’t massive, (As the string of disappointed ladies behind me attest). But even European growth rates when applied to something already large produce large increases.

    China’s ascent is by no means certain in anything but the very long term.

  10. “So we’d better not let the cretins fuck over one of the industries we can actually sell to those fast growing areas of the world, eh?”

    Good luck with that.

  11. The UK being a supplicant and begging that the current person heading the post takes a view mostly to the UK’s liking is not “ensure”.

    Given the credible threats that the UK could issue in the event that financial legislation were to significantly disadvantage the City, yes it is. Everyone who actually understands anything about EU policymaking knows that no financial measures will be passed without the UK and French government’s agreement (Paris is also an important international financial centre, more so than Frankfurt, and the French government is also very keen not to erode its advantages there).

    The fact that lots of people are scaremongering highlights the fact that they don’t understand how EU policymaking works (the main pragmatic rather than constitutional point about EU policymaking is “for anything significant to happen, Germany, France and the UK all have to either approve of it or not care about it”).

Leave a Reply

Your email address will not be published. Required fields are marked *