Sunday, 22 March 2015

Ukip Fever


Introduction

You've all met a Ukip supporter - it's a special kind of fever. Devotees of Nigel Farage's  Ukip have an almost religious faith that once we fulfil their key policy objectives – to leave the European Union and reduce immigration to a trickle, most of the UK's problems will be over, maybe even the common cold will be cured. You may think I'm being somewhat sarcastic or exaggerating, but give
or take, these are the arguments you hear.

I have listened to this Ukip dogma for several years now and it raises several key questions. We know what is happening to the UK economy now, whilst we are in the EU, but what would occur socio-economically if we left the EU? What would happen if UK immigration greatly reduced?
And, the most important question by my calculations: what would Nigel Farage's UK be like after we have reduced immigration and left the EU?

Difficult questions right, which fascinated me - yet I knew it would take careful research to answer them. I realised I would need a good
grasp of economics. So I temporarily sidestepped and studied an excellent economics course in one book - by Professor Ha-Joon Chang of Cambridge University – and read newspaper articles where similar questions had been asked. I thought about all that I had studied and asked, what did I think would happen if Ukip were in government in the UK? I have tried to summarise the main points of each issue. This is what I found out...

About the European Union

The EU is a political and economic partnership between 28 countries.
Created in the aftermath of the Second World War in 1958, the idea of the European Economic Community (EEC) is to encourage peaceful relations between member states by promoting free trade. A name change to the European Union in 1993
reflected the EU's diversification into other policy areas such as human rights and foreign aid. Any EU citizen can freely live and work in any other EU member state country. Goods and services can freely move within EU countries, without tariffs or taxes.

The case for EU membership

* Being in the EU, the UK benefits from an EU wide free trade agreement, with access to 500 million EU consumers.
* When the UK negotiates with Non EU countries, we come from a standpoint of being part of
an EU trading bloc which collectively makes up 20% of world GDP. The rest of the world has to take us seriously. If we left the EU, we
would be a less powerful actor on the world stage.
* We contribute 12bn a year to the EU, but the EU being our main trading partner is worth 400bn a year to us.
* 1.8 million British citizens live in other EU countries, a million in Spain.
* Upon EU exit, it may be hard to negotiate a free trade agreement; trade barriers could then be a problem.

The case against EU membership

* We may have to be signatory to laws we disagree
with, and compromise
more than we want to, to stay in the EU club.
* Norway and Sweden are doing 
okay
outside of EU membership.
* The Eurozone is not altogether economically healthy
, e.g. problems with the single currency have created low economic growth, high unemployment and austerity; perhaps
the UK economy would improve after exit.
* We would no longer pay 12Bn a year in contributions to the EU.


What might happen if we left the EU

There is no precedent for a country as large as the UK leaving the EU, so it's an unknown quantity, but economics can speculate. Overwhelmingly the main concern would be to negotiate a free trade agreement with the rest of the EU. If neighbouring EU countries were uncooperative about this and imposed tariffs on goods exported to their countries, this could badly affect our economic success by pushing up the end prices of the goods we sell to the EU and
to the rest of the world – consumers would buy from other countries if the prices were lower.  The Prime Minister of the day would need to be an excellent negotiator, in a risky situation where the stakes were high. Being in the EU gives us increased bargaining power worldwide; the loss of leverage on EU exit would strategically weaken the UK. Even if post exit EU free-trade
agreements were successfully negotiated, in the long term the
UK economy could be little different to
now, after
EU exit.


Main advantages of UK immigration

* Net migration to the UK was
260 000 in 2014 and 1 million in the last five years; this grows the UK economy.
* EU immigrants reduce the UK 'dependency ratio' - EU immigrants are half as likely to draw benefits
as native UK residents -
says a study by University College London.
* The
'non-activity rate' is 30% for EU immigrants versus 43% for the UK population as a whole. .
* Immigrants have filled gaps in the Labour market,
e.g. immigrant doctors and nurses.


Main disadvantages of UK immigration

* Working class people in the UK are seeing wages driven down by immigration, says Cambridge Professor Ha-Joon Chang.
* Increased demand and strain on scarce infrastructure resources such as housing, jobs, schools
and doctors’ surgeries.
* A larger UK population brings more pollution from car exhausts, heating
fuels, etc.

What would happen if immigration
reduced - Ukip style

Reduced immigration would lower UK GDP. Wages might increase due to less competition for the same jobs. Good for workers, but this could make it harder for UK business to
compete price-wise with local and foreign markets. Easing of strain on UK infrastructure would be helpful – we have a government very keen on the increased tax revenues that immigration brings, but weak on delivering that new infrastructure needed to cope with the new people. With fewer immigrants, we would lose the cultural enrichment they bring with them to the UK.

Main Ukip policy proposals

*  Leave the European Union.
*  Reduce immigration to the UK.
* Withdrawal from the Human Rights Act, replace
with
new British bill of rights.
* Abolish inheritance tax.
* Maintain a free at the point of use NHS.
* Repeal the Climate change act. (They cite that it costs us 18bn a year).
* Child benefit limited to first two children.
* They support a benefit cap and a 'streamlined' welfare system.
* Foreign Vehicles need a Britdisc (a new tax on foreign business operating in the UK)
* 200 000 new houses a year, Green belt protected.
* Reintroduce smoking in pubs.
* Migrants would need a job and accommodation agreed before arriving in the
UK;
no benefits for five years; citizenship application forbidden for ten years.

What it could be like if Ukip governed the UK

Ukip are struggling with endless
reports of racism in the party, although there is no clear evidence the Ukip leadership are racists – regressive would be a better description. But considering Ukip's ongoing anti-immigrant rhetoric it's reasonable to suggest that this can attract racists to the party. Ukip wants 200 000 new houses a year built, which is good to hear. Ukip wanting to withdraw from the  EU Human Rights Act is bad news – the EU Human Rights Act is a valuable protection for all EU citizens from any countries government becoming abusive. Even once Ukip has allowed immigrants into the UK, they still want to treat migrants less favourably than UK residents for a considerable time, which is unfair.
What about the idea of a Ukip Britdisc for foreign freight?  By doing this Ukip are imposing a trade barrier to EU trade, yet Ukip want to negotiate free trade agreements with the rest of Europe themselves. At the time of writing, many of Ukip's policies are unclear; the Ukip manifesto is not due to be published till 15-16 days before the 7.5.15 election. Nigel Farage is clearly intelligent, with a sort of soap opera actor's charisma. But has he really got the training for the job role of Prime Minister? Where is the politics or economics degree? How are Ukip's proposals to repeal the climate change act and bring back smoking to pubs going to help the health of the planet and ourselves?

Conclusion

Ukip sell us ideas about leaving
the EU and minimal immigration as concepts that will set the UK and us
free, but they seem to be about Ukip gaining more control. We should stay in the EU: the benefits of an EU wide free trade agreement, and valuable world influence gained by our EU membership, outweigh the disadvantages, e.g. the relatively small financial cost of staying in the EU. I support immigration, but too much immigration too fast creates GDP gains, but with infrastructure problems. EU reform with a % of population annual limit to immigration, agreed by and applicable to, all EU members would be beneficial. The European Union should continue to pursue GDP growth yes, but not above all costs. More new EU wide regulation to protect the environment and all EU citizens should be introduced. An appropriate balance between the need for EU market regulation versus useful market freedoms should be our primary goal. Ukip are a known - right-wing - unknown.

James Bickle.

Bibliography

1)
http://www.theguardian.com/politics/2014/oct/10/this-way-to-brexit-what-would-happen-if-britain-left-eu
2)
http://www.independent.co.uk/news/uk/politics/the-inout-question-why-britain-should-stay-in-the-eu-9213131.html
3)
http://www.ukip.org/policies_for_people
4) 
http://www.ukip.org/100_days_till_the_election_100_reasons_to_vote_ukip
5)
http://www.bbc.co.uk/news/uk-politics-20448450
6) 
http://www.independent.co.uk/voices/comment/lets-imagine-the-uk-votes-to-leave-the-eu-what-happens-next-9249248.html
7)
http://www.economicshelp.org/blog/6399/economics/impact-of-immigration-on-uk-economy/
8)
http://www.amazon.co.uk/Economics-Users-Guide-Pelican-Introduction/dp/0718197038
9)
http://europa.eu/about-eu/index_en.htm