The persistent myth about jobs in Britain being dependent on membership of the European Union has been debunked by a new report, with its author saying its “high time” that pro EU voices stopped “scaremongering”.
The Institute of Economic Affairs has today published research which says that, unlike scare stories used by pro-EU politicians including Ed Miliband and Nick Clegg, jobs are dependent on trade relationships and there is little evidence to suggest trade would substantially fall between British and European businesses in the event of a British Exit (Brexit).
And it says that politicians who insist on trotting out this line should be challenged on it, with the report’s author calling for a ‘rational debate’ on the true economic impacts of independence.
‘It can be said with certainty that three to four million jobs are not at risk if the UK leaves the EU’ it states, saying that there would be a ‘multitude of new policy decisions which would affect trade flows and the composition of the work force, from trade arrangements through to the regulatory policies adopted.’
Using statistics to clarify the argument, it highlights that prior to the financial crisis, the UK saw on average 4 million jobs created and 3.7 million jobs lost every single year.
Focusing on five key reasons why three million jobs are not dependent on the UK’s membership of the EU, it looks at policies such as import substitution and the dynamic UK labour market which managed to create more jobs each year after the financial crisis than were lost. The annual cycle is almost exactly the same as the 3-4 million jobs which are linked with EU trade.
Reinforcing a line which has been often used by UKIP leader Nigel Farage, the IEA says that jobs would not be lost because trade is more important than political union. With the UK being a vital export market for many EU countries, significantly Germany, there is little chance of a free trade deal not being negotiated should the UK choose to quit the control of Brussels.
‘The worst case scenario’ the report says, ‘would be a failure to negotiate a free trade deal in the result of Brexit. If this were the case, both parties would be bond by the WTO’s ‘most favoured nation’ tariffs paid by other developed countries, which would prevent the imposition of punitive tariffs by the EU.’
In fact, it argues that a move away from a customs union, where the UK does not have a seat at the WTO, towards a free trade relationship with the rest of the world would open more doors than would be closed by leaving the EU. The UK currently faces high external tariffs on importing goods from non EU countries, which not only has an upward pressure on prices but also negatively affects the likelihood of under developed countries being able to trade their way out of poverty.
With some of the EU’s own leaders admitting that the burden of regulation has a damaging effect on job creation and the survival of small and medium sized enterprises, conclusions on the overall impact on Brexit depends ultimately, it says, on whether the UK pursues policies which stimulate job creation and growth such as deregulating markets and implementing liberal economic policies as well as the billions which would be saved each year in membership fees.
“It can be said with certainty that three to four million jobs are not at risk in the event of a Brexit,” said the Ryan Bourne, Head of Public Policy at the IEA.
“It’s high time that politicians and commentators stopped scaremongering, and recognised that jobs are associated with trade and not the membership of a political union. The UK enjoys a dynamic labour market, and a range of outcomes would be possible as it adapts to new policies outside of the EU.
“The public deserve a rational and informed debate,” he added.
Backing up the reports findings, a letter from the chairman of the statistics authority, Sir Andrew Dilnot, they confirm that the ‘3 million jobs’ line is not an official statistic.
‘I understand that the estimate, of 3.3 million jobs, was produced by economists in HM Treasury, drawing on official statistics produced by ONS. The estimate itself is not classed as official statistics, and is therefore outside the statutory remit of the UK Statistics Authority’ he writes.
‘I note that the analysis has been made public in a number of places, including in a recent answer to a Parliamentary Question, which makes it clear that it ‘is not an estimate of the impact of EU membership on employment’:
“The Treasury estimate that 3.3 million jobs in the UK may be related to exports to other European Union countries. This figure is based on the assumption that the share of UK employment associated with UK exports to the EU is equal to the share of output that is exported to the EU, making allowance for the composition of the UK economy. It is not an estimate of the impact of EU membership on employment.”
UKIP economics spokesman Patrick O’Flynn MEP said the report debunked “the lie to the ridiculous claims peddled by all three other parties that leavng the EU would cause a jobs meltdown.”
“There may very well be net job creation in the wake of a British exit,” he said. “What is quite clear is that the ability to trade does not rely on membership of a political union, but the ability to be an independent democracy relies on not being absorbed into a political union.”
And he issued a challenge to the other party leaders, saying they “should all level with the British public.”
“The reason they want to stay in the EU is not because of any likely adverse effect on jobs or the wider economy, it is because the British establishment is doing very nicely out of the EU when it comes to jobs for the boys. It would be a rash punter who gambled against at least one of these gentleman ending up as an extremely well paid EU commissioner in the very near future.”