BRITAIN: Better Off Out

At the heart of the case for Britain "being in Europe" is a fear of being left out of something bigger than we are. We are told that our economy is too small, or our resources too limited, to stand outside. Britain, we are warned, "could not survive outside the EU".

The British economy is not a "small" economy. It is the fifth largest in the world, and the third largest in the EU. Britain is a member of the Group of Seven major industrial nations, the World Bank and the International Monetary Fund.

By virtue of her history and the fact of being an island, Britain has built and sustained a world-wide spread of trade and financial investments more extensive and far reaching than any other country in the EU. Britain is the world's largest global investor outside the United States, with a portfolio of gross external assets of £1,930 billion. This is equivalent to the Gross Domestic Product of Austria, Belgium, Finland, Greece, Ireland, Luxembourg, Netherlands, Spain, Sweden and Italy combined. Some two-thirds of our overseas direct investment lies outside the European Union.

Not only could Britain survive outside the EU, but free of the EU straitjacket she would be better placed to achieve superior economic growth and meet the aspirations of her people.

Obsession with the EU has obscured fundamental truths about the nature and patterns of Britain's trade with the world. When we look at the total picture - exports of services and investment income receipts as well as exports of goods - the EU accounts for less than half. Taking investment income, for example, the EU accounts for 39 percent of the UK total, and in services for 37 percent.

The United States remains by far our largest single country trading partner, accounting for £51 billion, or 16 percent of current account credits. Germany accounts for £35 billion and France £26 billion.

Despite 25 years of EU membership and much vaunted convergence, the UK economic cycle is closer to that of the US than to Germany.

Europe's economic performance in recent years has proved abysmal. This reflects deep structural faults - and over regulation by Brussels. Continental economies are uncompetitive, inflexible and over-taxed. The EU has been losing out to America on the world economics stage. The EU's share of world merchandise trade has been shrinking. And her share of global cross-border investment has also been falling.

Membership of the European Union has proved to be a huge cost to Britain, with few offsetting advantages. The running deficit on Britain's dealing with the EU has been a huge drain on the economy. In the ten years 1987-1997, the current account deficit with the EU has amounted to £130 billion. Nearly half of this deficit has been incurred since the launch of the Single Market.

Britain has been a hefty contributor to the EU budget. Between 1973 and 1996 she contributed in gross terms £94.2 billion and the figure has since risen to over £100 billion. Her contribution in net terms (that is, after subsidies and and regional aid grants) is close to £30 billion.

The Common Agricultural Policy costs £30 billion annually. and dominates EU expenditure. It is inefficient, bloated by administrative costs and riddled with corruption.

The European single currency represents the largest transfer of control yet over a nation's economy to EU institutions - especially to the European Central Bank. Britain would lose control of her interest rates and monetary policy and face growing pressure for tax harmonisation. She would effectively lose the ability to manage the economy and secure interest and tax rates that were most appropriate to UK conditions. This transfer would be permanent and irrevocable.

The European single currency is not right for Britain. Our economy is more sensitive than those on the continent to changes in interest rates, while we have a higher proportion of our trade with non EU countries.

The project is also politically driven - to take the EU further down the road of "ever closer union".