Practically every day you read something in the newspaper which goes on about the latest EU directives on banana skins and whatnot which seem as absurd as they are unnecessary. Plenty of people like to go on about how much better we’d be if we were out of the EU (those meddling work-shy bureaucrats! etc. etc.). So just why are we a member of the European Union in the first place?
Why do we need the EU?
Well, if you think about it like this: small island with its own import/export/business rules and duties surrounded by much larger countries and economies wants to increase its international trade. The countries on one side of this small island are all on the same continent, therefore trade across the borders with each other is easy. Small island wants in on this. Lo and behold, the EU is born.
So, being part of the EU enables us to export our goods and services to these European states easily and without having to pay extra tax. Also, our major financial institutions trade in the Euro market. If we were to leave, it would make things more difficult for them and some may relocate. There are many large international manufacturers such as those in the automotive and aerospace industries based in the UK who would likely move out too, as we would no longer be that competitive in terms of business location. The loss of that money pumping around the financial markets and the corporation tax would be a hard hit to take.
Where does the money go?
Taxpayers are often indignant that a proportion of their hard-earned wages is going towards a large EU pot, funding the above-mentioned bureaucrats’’ salaries and sometimes unnecessary legislation rather than towards the improvement of our own country’s infrastructure and services – and as EU spend on the UK is roughly 40% less than our contribution, on the face of things it seems like they have a reason to be. However, although we receive roughly £5bn less than we contribute, our exports to Europe were worth £12bn in 2012. It is easy to lose sight of the numerous benefits we gain in terms of our trade influence (and with that comes access to other powerful trading partners such as the U.S, China and Japan), and economic standing. Also, one thing a lot of people forget is that if we left the EU, we’d still be a European Economic Area, which would mean we’d be subject to the same legislation we moan about – but we’d no longer have a say!
The UK and Foreign Direct Investment
As a result of our efforts to become more attractive to foreign investors such as corporation tax cuts and changes in legislation to make it easier to set up and do business, the UK receives the most foreign direct investment (FDI) than any other European country. Our membership of the EU also helps this, because a key factor in determining the attractiveness of a country to FDI is the size of the potential market. Companies and investors here have access to the US because of our strong relationship with them, as well as to the rest of Europe.