The Brexit debate has been part of our regular media diet since the EU Referendum formed part of the Conservative party’s general election manifesto and with the big day around the corner many voters remain uncertain as to the pros and cons of either result on the political, economic and social landscape in the UK.
Although voters have been bombarded with facts and speculation, argument and counter-argument from politicians to economists and commentators to think-tanks, one recurring message is that the electorate remain unconvinced about which arguments are the most persuasive.
With an eye on this Thursday, here are some of the key areas being debated and the perceived arguments for those in favour of leaving the EU or remaining in it.
Trade with EU Member States
The UK has a combined value of exports and imports equal to 60% of GDP and as one of the world’s most accessible economies sends 45% of its exports to EU states whilst they account for 53% of imports to the UK.
Vote Leave claim a new UK/EU deal based on free trade and co-operation, and similar to the one Switzerland enjoys with the EU, without the supremacy of EU law, free movement of persons or paying millions of pounds to Brussels annually, would be better than the current deal. In contrast, Britain Stronger in Europe states UK businesses can continue to benefit from the existing 500 million person single market and the current free trade agreements the EU has reached with countries around the world by staying within the EU. Additionally, whether you believe Barack Obama’s statement that the UK would be at the wrong end of the trade agreement queue should it leave or whether you thought it was a cynical pro-EU tactic, it certainly got the attention of UK business.
A country’s openness to international trade has a large influence over the incidence and administration of tax. Co-operation is seen as an important way of combating tax evasion with bilateral treaties and EU rules having an impact.
Supporters of EU membership believe being ‘inside the tent’ enables the UK to work closely with EU counterparts on tax issues such as the VAT treatment of cross-border transactions as part of the EU VAT Forum. In contrast, Leave campaigners state the power wielded by the European Court is a prime example of how the UK has lost its sovereignty and that the UK’s VAT rate of 5% on ‘energy saving materials’ would not have been found contrary to EU law if the UK was outside the EU. As a result, it is alleged that the proposed increase to 20% will cost the sector £310 million between 2016-17 and 2021-22.
Regional Development Funding
RDF money attempts to close the economic gap between less wealthy and wealthy regions of the EU. There are numerous cities across the UK that have benefited from RDF and in 2015 the EU’s investment bank invested Euro 7.8bn in UK infrastructure, education and research.
The official Leave campaign believes the UK would benefit from spending its own money on its own priorities. They are critical of the UK’s status as a net contributor to the EU and the fact the UK receives less in structural funds than Germany, Spain, France, Italy and Portugal with only Denmark and the Netherlands receiving less than the UK. ‘Remain’ supporters claim there are no guarantees the money handed to Brussels would be kept for regional development and that leaving the EU would harm the UK economy and therefore the amount of money for public spending. A point articulated recently by former Prime Minister Gordon Brown.
Customs and borders are central to international trade and when the legal frameworks on each side differ processes need to be implemented in order to comply with local laws and taxes.
Vote Leave states the UK needs to be in sole control of its border checks and can install the necessary measures to prevent the illegal movement of drugs, migrants and terrorists more effectively. The official Remain Campaign states the UK already controls its own borders and that the UK’s special status in the EU keeps us out of the passport free Schengen Agreement. Further to this, EU membership means no duties on imports from the EU which means cheaper stock for UK businesses who rely on EU goods as part of their supply chain.
Labour and Skills
Although business leaders agree that access to talent is crucial for businesses to thrive, pro-Leave advocates state the current immigration policy is an open-door for low-skilled labour and prevents highly-skilled people from outside the EU coming and contributing to the UK.
Remain campaigners argue that EU funding supports apprenticeship programmes and allows employees of companies based in several EU countries to move around offices more easily. Remain campaigners also point to HM Treasury research which shows ending the free movement of people would see a loss of access to the single market, a rise in prices and an increase in jobs lost.
The arguments continue and it is far from clear what the result will be and how it will affect the UK. Larger businesses appear to be in favour of remaining and some have even advised their employees to vote to remain, however, Leave and some SME’s say EU bureaucracy prevents them from getting on with growing their business and creating jobs. The only certain thing in all this is that no-one actually knows what the impact of voting either way will truly be, so whatever the UK chooses to do it will be interesting to see the impact on an economy still wrestling with the fall-out from 2008.