Many of us, not being economists, rely on those who are, or have shown, traits towards understanding economics. Economic facts are, to most of us, activity covering production, distribution, consumption and trade of goods and services. To understand the UK economy is a complex matter of measuring markets.
One market of interest is the Single Market of the EU. To quote a politician “We have a deficit with the rest of the European Union of between £80 and £100 billion a year. We are the major customer for the European Union, of any country in the world. Whilst we’re still in the EU the biggest customer is the US, once we’re out it will be us”. Data from the EU confirms the UK imported about £109 billion more in goods than it exported to the rest of the EU in 2015, according to EU data. But it exported about £17 billion more in services than it imported. So overall, the UK ran a trade deficit of about £92 billion”.
Our combined trade deficit has been increasing at the same time as the UK is living on debt. We now spend a smaller percentage of our GDP on our NHS than do France and Germany and we are planning to spend a reducing percentage of our national income on health, at a time where demand is rising rapidly. Public spending on the NHS across the UK is projected to go from 7.3% of GDP in 2015/16 to to 6.7% of GDP by the end of this parliament.
We are already taxed to broadly the historic limit of taxation in the economy. If you look at figures going back to the 1970s, the tax take to GDP varies between 34% and 38%. If you look at the Treasury red book we are heading back towards the 38% level.
A Labour politician claimed “The Government seems to want to strike a deal with the EU that allows us to control free movement of people and yet at the same time somehow retain access to the single market, including keeping passporting in the City. I do not believe such a deal is possible. Let’s not give up on an ambitious negotiating strategy which allows us to stay in the single market and make some changes to freedom of movement, which is really why most people voted for Leave”.
Did we? I can’t recall voting leave just to change freedom of movement. Perhaps some did. But I didn’t want to have citizenship of a federal government thrust on me. I didn’t want total loss of sovereignty to Juncker et al. And above all I didn’t want our fishing, agriculture, and financial services to continue to feed the greedy German economy at the expense of our own. Germany’s trade surplus for 2016 rose to 252.9 billion euros ($270.05 billion), surpassing the previous high of 244.3 billion euros in 2015. [Source the German Federal Statistics Office]. The French economy is in deficit of €45.7bn [Source finfacts].
All in all we are borrowing to pay for our imports. Very simply, if goods with greater value are flowing INTO the country than the value of goods being exported, logically the MONEY going out is greater than the money coming in. As a result, there is less money, or wealth INSIDE our economy, which means the same number (or greater as population increases), are competing for a piece of the “pie”, a pie that gets smaller and smaller as the trade deficit continues.
Given the above, why would anybody want to negotiate for the UK to retain so called economic benefits of the EU single market that only benefits Germany? In Florence Theresa May said “The British people have decided to leave the EU and to be a global, free-trading nation, able to chart our own way in the world. The strength of feeling that the British people have about this need for control and the direct accountability of their politicians is one reason why, throughout its membership, the United Kingdom has never totally felt at home being in the European Union”.