Our place in Europe

As Tristan has noted, Cicero has another well-thought-out post on his blog. Personally, I’m kicking myself as I nearly went to Andrus Ansip’s lecture at the LSE but bailed out at the last minute. (I might have known Cicero’s true identity!).

Cicero writes “The Liberal Democrats have an opportunity to speak out for a genuinely Liberal Europe… in favour of free trade and freer movement in services and agriculture, [and] against a European super state and "ever closer union". He is spot on.

I have been advocating for some time a shift in emphasis for the Lib Dems from “The party of Europe” to “The party of European reform”. This would contrast with Labour, who are largely in favour but have learnt to keep quiet and not rock the boat for fear of alienating the voters, and the Conservatives, who largely want to leave but have learnt to keep quite and not rock the boat for fear of alienating each other.

I agree that it is in Britain’s interests to be in Europe, but it is not in Britain’s or anyone else’s interests for Europe to pursue “ever closer union” or to develop into a socialist state.

The European Union needs to trim down its areas of competence and embark on a massive liberalisation and deregulation programme. As liberals we should not meekly go along with the European agenda; we should be pressing loudly for an end to farm subsidies, an unfettered free-market within Europe (for goods, services, labour and capital) and less protectionism against imports (from any of those four categories) from abroad.

What is more, “harmonisation” should not be used as an excuse to eliminate variety, innovation and competitive advantage. There is no reason why a single market cannot thrive where different tax codes, different regulatory regimes and even different currencies exist. Of course Europe should not tolerate manipulation of regulatory regimes as a covert form of protectionism, but neither should we assume that bland uniformity from Athens to Aberdeen is a necessary feature of any market. There is no amount of economic efficiency or market clarity that justifies refusing to allow individuals to transact in their traditional quantities and measures.

Neither is there any reason why job protection should be the same in every corner of the Union: can workers not judge for themselves when considering taking a job abroad how the labour laws will affect their future? Or do we need a paternalistic super-state to protect us from the effects of making a decision.

Again, there is no economic justification for suggesting that one member state should not be allowed to experiment with a low-tax high-growth model while others opt for a high-tax high-welfare system (Oh! That the UK could be allowed such variety!). Efforts to impose tax harmonisation are an attempt by high tax economies to undermine the comparative advantage of lower tax competitors in the name of the “level playing field”.

Britain’s place is in Europe. But it is in a liberal Europe. The Liberal Democrats should press that point home in Brussels, Strasbourg, Westminster and their constituencies. It will appeal far more to voters than unquestioning loyalty to European integration or a shy admission of support. It is also the right position to take.

A slap in the face for Migration Watch

Yesterday I reported that Migration Watch had produced figures claiming that the economic impact of immigration from the 2004 EU accession countries is worth just 4p a day per UK citizen or “less than the equivalent of a small Mars bar a month”.

As I noted in my piece yesterday, Migration Watch’s figures for how much each person has benefited do not correspond with those from the Government, the London School of Economics or the Confederation of British Industry.

Today David Blanchflower, one of the nine members of the Bank of England’s Monetary Policy Committee, hit out at Migration Watch, pointing out that immigration has been a vital tool in keeping a lid on inflation (which, though rising under Gordon Brown, is still under control). Immigration “has tended to increase supply by more than it has increased demand in the UK (in the short run), and thereby acted to reduce inflationary pressures.”

As for the oft-cited error that immigrants are stealing our jobs or pushing down wages, this is nonsense. Mr. Blanchflower and the two Bank of England economists with whom he co-authored the report, write that “empirical literature from around the world suggests little or no evidence that immigrants have had a major impact on native labour market outcomes such as wages and unemployment.

But the impact of these immigrants on employment has not been neutral. Oh no! It has in fact reduced joblessness: “There seems to be broad agreement that immigration is likely to have reduced the natural rate of unemployment in the UK over the past few years.”

So, just to get this straight, not only have these hard-working taxpayers added 0.5 per cent to GDP and paid £2 billion in taxes in 2005, but they have also kept both unemployment and inflation lower than they would otherwise have been.

Not only does that leave egg on the face of Sir Andrew Green, but it also demonstrates that the Government were stupid not to repeat the trick by allowing Bulgarians and Romanians to join our economy based on need and not bureaucratic bean-counting.

An awful lot of Mars Bars courtesy of the Poles

Matt Davies reminds me that Migration Watch have produced figures on the economic impact of immigration that dispute those produced by HM Government. According to Migration Watch, the economic impact is worth 4p a day per UK citizen or “less than the equivalent of a small Mars bar a month”

Now you've got to admire those Poles. They make it all the way here with millions of fun-sized mars bars on their backs... That's what I call hard working!

The point of Migration Watch’s figures was to dispute Government figures that migrants have contributed 0.5% to GDP over-and-above what would accrue merely by enlarging the population. However, I have a lot more faith in the Government figures – not because I am particularly disposed to believe what comes out of Whitehall, but because they are supported by research from the London School of Economics and have the confidence of the Confederation of British Industry.

These figures not only add up to £5 billion (c. £1.60 per person per week, which under Labour means almost £1 per person that passes through Government hands) but they are also compounded because they are growth figures. In other words, we gain £5 billion in 2005 and £5 billion £100 + annual growth since 2005 every year from hereon in.

That’s a hell of a lot of Mars Bars!