by Callum Anderson

“Geography has made us neighbours. History has made us friends. Economics has made us partners, and necessity has made us allies. Those whom God has so joined together, let no man put asunder.”

That was president Kennedy addressing the Canadian parliament in 1961. However, to me, those words also hold particular resonance with Britain’s relationship with the European Union. As is well known, the prime minister has already made a commitment to giving the British people a referendum on British membership of the EU in 2017. The argument is set to be intense: I’d like to set out why Britain must retain its EU membership.

If Britain wants to be prosperous in the 21st century, it must engage not only with countries such as China, India and Brazil, but also with EU members. But what has the EU achieved during Britain’s membership? It has continued to maintain the peace, helped to bring down the Berlin wall and the iron curtain, and welcomed new states from across Central and Eastern Europe into the EU family. Moreover, hundreds of thousands of Britain’s take advantage of our EU membership every year.

According to Eurostat, the EU’s independent statistics office, 711,151 UK citizens lived in other EU countries in 2011, whilst the British Council has stated that 9,095 UK students participated in the ERASMUS programme, the exchange programme allowing young Britons to study in other EU countries not only free of tuition, but with the help of a grant from the EU. Moreover, without the EU, British workers wouldn’t have a range of protections that they take for granted including, but not limited to: a maximum number of working hours, guaranteed breaks and protection against being forced to work long hours.

Britain and the EU are, like it or not, bound together economically. Now, there are many who say: “If only Britain left the EU, it could simply join the European Free Trade Area, thus maintaining the current economic ties, whilst freeing itself to seek free trade deals with other countries – most notably the Commonwealth countries, the United States and China.” Sounds good, right? Well, if anything ever sounded too good to be true, then this is it.

First, it is important to note that a little over half of the UK’s trade is done with the EU; it just makes no sense to leave an economic trading bloc which we are so dependent on. Were we to just leave (almost certainly in controversial circumstances), than whilst it is unlikely that we would be economically cut off, it would be too dangerous to assume that countries such as France and Germany would allow British businesses to enjoy the same advantages of market access, as it does now.

Second, on the subject of trade, the EU is working towards a free trade agreement with the United States, the Transatlantic Trade and Investment Partnership (TTIP), which would boost EU GDP by at least €120 billion. With the UK economy experiencing stubbornly low growth, would it really be wise for Britain to turn its back on such an opportunity? There is no doubt that the EU can be prone to economic protectionism. However, I am of the view that as much as Britain needs the EU, the EU needs a Britain at the heart of the EU championing free trade. The TTIP should help Britain to encourage its fellow EU member states to roll back their trade barriers, and hopefully complete the single market too, with the service sector ripe for reforming.

Third, the UK has benefited from being a member of the EU. European Commission data has shown that between 1992 and 2006, EU GDP rose, thanks to the single market by 2.2 per cent, or £199 billion, with the UK receiving £25 billion of that. Furthermore, the House of Lords Select Committee on the European Union has estimated that EU Member States trade twice as much with each other as a result of the single market – which they estimate has meant that increased trade within the EU since the 1980s could have been worth around six per cent higher income per capita in the UK. What’s more, BIS estimates also suggest that 3.5 million jobs in Britain are linked, directly or indirectly, to the UK’s trade with other member states.

EU membership also enables Britain to benefit from investment, especially from non-EU countries. For instance, more than 1,300 Japanese companies, such as Nissan and Toyota, have invested in the UK, creating 130,000 jobs, more than anywhere else in Europe. The UK continues to receive a large share of world FDI, despite the global financial crisis.  For example, the UK was the fifth largest recipient of FDI, after the US, China, France and Hong Kong, receiving $46 billion in 2009. Without EU membership, Britain could see investment being diverted away to other countries, which would be devastating to economic growth and job creation.

Another advantage of Britain’s EU membership lies in the field of geopolitics. Over the next twenty years, economic and political power is going to pivot away from the US and the EU, and towards the emerging economies, in particular China and India, not to mention Brazil, Russia, Indonesia, and Mexico. Indeed, this impending paradigm shift will mean that Britain will need to be savvy in using its influence to maintain its global economic and political presence. A predominant part of this will be to remain an active member of the EU. We can not afford to isolate ourselves at a time when we need to build and reaffirm partnerships.

Being a permanent member of the UN Security Council gives the UK a voice at the top table.  As an EU member state, the UK exercises far greater influence internationally than it could on its own.  When the EU takes a common position – as it does in world trade or climate change – its size and importance gives it greater impact than any of its 27 members would have on their own.

Being a member of the EU enables the UK to leverage its influence in many different ways. On an issue like climate change, would China really listen to a little isolated island, that had voluntarily departed to the periphery of the EU? It is clear to me, that Britain must remain at the top table when these big decisions are made, something that EU membership provides, and not left alone in the dark.

So, all things considered, what am I not saying? Well, the EU is not perfect. It is an institution that, frankly, needs root and branch reform. The Common Agricultural Policy, a reassessment of the European Parliament and the European Commission, and the liberalisation of the service sector are just a few examples of where the EU must change.

However, I am of the view that as much as Britain will need the EU to thrive in the coming decades, the EU also needs Britain. The EU needs an engaged Britain, at the frontline of EU reform, advocating free trade and innovation and discouraging protectionism, but also in terms of global security and defence. I fear that without Britain, the EU risks sliding into unfettered federalism and isolationism, hostile to trade – the absolute opposite of what will need to be done in the coming decades.

Callum Anderson is a recent Economics and German graduate from the University of Birmingham

Tags: Callum Anderson, EU, FDI, foreign direct investment, reform, trade, Transatlantic Trade and Investment Partnership

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