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options. Exit could entail a complete break, with the UK relying on WTO rules to regulate its trade with the Union. In this case, the potential effects are significant, as these rules do not forbid all tariffs, whilst doing virtually nothing to address non-tariff barriers. Alternatively, the UK could negotiate a deal with the Union that sees it adopt a position like that of Norway or Switzerland. Whilst the relationship of each with the EU is different, they both enjoy at least some access to the single market. Both, however, have to comply with EU regulations over which they enjoy no direct influence. Whilst the Swiss enjoy a slightly looser relationship, this means that they do not, for instance, benefit from full access to the EU’s market for financial services, which would obviously be crucial for the UK. The devil, in other words, will be in the detail. And much will depend on the way in which negotiations between the UK and EU proceed, and whether other member states are willing to offer generous terms to London. What is clear is that a referendum vote in favour of leaving will not be the end of the matter, as British and EU negotiators will need to agree on a mutually acceptable new relationship.
What are the financial facts behind the UK’s relationship with Europe? Do we contribute a lot more than we receive back in subsidies for industries like farming or investment in infrastructure in regions such as Cornwall and Wales? It is virtually impossible to stipulate accurate
facts about the relative costs and benefits of UK membership. On the one hand, British contributions to the EU budget amount to about 0.5 per cent of UK GDP. A small proportion of this comes back to the UK via payments from, for
instance, EU structural funds. Above and beyond direct payments, however, participation in the single market is said to be worth between four and five per cent of GDP. Whether some or all of these benefits could be retained in the event of exit from the EU will, as I mentioned earlier, depend on the relationship a British government charged with negotiating such an exit could negotiate. Does the US really value the UK’s membership of the EU and, if so, why?
Officials in the Obama administration have certainly stated, both publicly and privately, that they would like to see the UK remain in the EU. The reason given tends to be that the UK benefits from membership, and will enjoy far greater international influence within than outside the Union. It is also the case that successive American administrations have seen significant benefits for themselves in having the UK within the EU. Britain is seen as an ally on economic issues such as liberalisation of the market and the protection of the financial services sector. In the area of security, many in Washington see London as a useful bulwark against schemes to provide the EU with more autonomy that might lead to it becoming a competitor to NATO.
What about the current internal dynamics in Europe? Switzerland has rejected free flow of EU migrants (with a referendum vote just scraping 50 per cent) despite committing to this in their agreement with the EU. Are we likely to see more scepticism and borders going up against migration across Europe? If so, how closely is this linked with a public perception of less money/fewer resources? The Swiss have indeed voted to impose quotas on EU migrants. But, as ever, the details are yet
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