Wednesday 22 June 2016

Let the Past Speak for Britain's Future...

Let the Past Speak for Britain's Future

This article concentrates on one theme: Economics

It was in 1973 Britain finally gained entry into the Common Market giving the EU its old name.  Edward Heath, the British Conservative Prime Minister, had steered British entry into the EEC in 1973.  Support for joining was by emboldened when 67 percent of the electorate voted yes to continued membership in the referendum of June 1975. With President Charles DeGaule, out of the way, France finally acceded to Britain’s entry.  At that point Britain was experiencing rising labour costs, strikes and an overvalued currency before the oil crisis that came in October following the Arab–Israeli War or Yum Kippur war.  With most of the Western Europe recording record figures Britain’s economy, by contrast, was in the preceding eight to ten years experienced a corresponding deterioration in the balance of payments and the outlook was anything but bleak.  It was a time when earnings rose by 9 percent and productivity by only 1 per cent. Never in Britain's history has so large a gap recorded between wages and productivity.   “By the conventional accounting, this leaves us [Britain] with real first-line reserves of a mere £88 million (as against liabilities of over £4.000 million).” In spite of further efforts to reduce inflation, the pound continued to lose value, reaching a record low against the dollar in June 1976.  Germany and America by way of the IMF financed Britain to the tune of £3.9Billion. 

The economic instability was so bad this is how Dennis Healey, the Chancellor of the Exchequer expressed the mood of the people “I wouldn’t have your job for a million pounds, why on earth do you want to be Chancellor of the Exchequer at a time like this?”.  This extract from his budget speech of 12 November 1974, “...existing price controls squeeze them [private companies] much harder than anyone ever intended, almost to strangulation in some cases”. He went on  "we could all be set for a great slump on the size of the 30s and an international trade war which would sweep away the framework of international cooperation.” The fear was that Britain’s postwar modernity – embodied in technological advance, economic growth, consumerism and individualism – appeared in doubt.   Britain’s national economy had staggered from crisis to crisis for most of the post-war decades.  This situation finally culminated in the Winter of Discontent’ of 1978/79; major trade unions undertook a series of angry, concerted strikes against their ‘own’ government: rubbish went uncollected, the dead were left unburied.

This community spirit, led by Germany saved Britain from defaulting on its loans received a ‘Bailout’.  Since joining the European club whether, by agreement, negotiation or downright arguing, Britain’s economic health turned for the better and had access to a tariff-free market.  Since joining the EU, Britain’s relative economic performance has improved; GDP per capita has grown faster than France, Germany and Italy since 1973. Some people will rightly argue that all this improvement not solely credited to the EU but at the same time, it needs to be noted British entry has not damaged British growth. Some also believe, in this global age, it is just as easy to trade with Australia as it is to trade with France.  Aside from this dubious observation, The Dominions such as Australia, New Zealand, and Canada have since 1966 joined up in trading agreements independently with other countries.  Many of them are members of The Trans-Pacific Partnership (TPP) some Economist goes so far as to describe it a trade “one of the most ambitious free trade agreements ever signed.” Currently, 44% of our exports go to the EU, and 48% of foreign direct investment into Britain comes from the EU.  EU exports to Britain per member remains small to the point of insignificance if special privileges requested.  As a highly industrialised nation Britain imports most of its food locally, almost at its doorstep; Spain, Greece, Portugal, Italy and France non-dollar countries that can otherwise drain its dollar reserves.  This radical transformation has all the signposts for the way ahead into the future.  Additionally, ‘collective’ spirit and integration are key to resuscitate the Community’s role as a possible bulwark against financial disorder.  Will all that disappear with a Brexit? Clearly not. But it will be adversely affected. This is from an Ernst & Young survey of foreign direct investors (the companies that build factories and offices here) last year:

With 72% of investors citing access to the European single market as important to the UK’s attractiveness, the referendum has the potential to change perceptions of the UK dramatically, posing a major risk to FDI. Our survey indicates that 31% of investors will either freeze or reduce investment until the outcome is known.

Voting IN is security for the generations to come. Yes, Britain is stronger in Europe.  


Unknown said...

I agree. Let's hope everyone sees sense and we get a good result tonight/tomorrow.

Unknown said...

I agree. Let's hope enough others do for a good result tonight/tomorrow !