The EU – A GDP Graveyard. Still Want to Rejoin? Read This

European Union Comment and Analysis Euro and Economy

If you want still to rejoin the EU, ask yourself after reading about nearly four decades of IMF economic data, how in the name of good judgement anyone might want to do that.

For those four decades the EU has been a graveyard for UK GDP along with the rest of the EU. Over that period the world and his wife has become comparatively wealthier as the UK has year-on-year [with the rest of the EU], become relatively substantially poorer.

The main rejoin argument focusses on prosperity – claiming we were better off in than out.

Sadly that is dramatically demonstrably not true as you will see here.

The EU and Eurozone have over four decades consistently been not merely bottom on average annual economic growth but very badly bottom – absolute rock bottom – and that is when compared to other similar advanced economies. The EU has consistently been rock bottom with the Eurozone, with the temporary exception of the Commonweath of Independent States on their sudden emergence following the dissolution of the Soviet Union.

So the EU cannot even beat the old Soviet Union and its successors for economic growth.

The £350 million figure on the side of a big red bus during the Leave campaign was a very stupid figure not because it was false but because compared to the IMF GDP data, it grossly underestimates the financial harm EU membership has cost every man, woman and child in the UK over nearly five decades of EEC/EU membership.

This is not millions but billions per annum.

The relative decline in economic performance recorded by the IMF data from 1980 is cumulative so it is billions per annum multiplied by five decades of EU/EEC membership. To compare 1973 when we joined the EEC to 2023, you have to take into account what the UK’s economy would be worth today if it was not dragged down by the EU/EEC every year for its nearly five decades of membership. These are eye-watering numbers. We are much poorer than we would have been if we stayed out.

Sorry Dominic – you did a great job in the view of many for Vote Leave but your £350 million figure was a mistake – you could have done so much better if you had the IMF data. But you would have needed a much much bigger red bus to fit the numbers on.

Perhaps no one believed Boris Johnson when he wrote in The Telegraph 29th May 2016 an article headlined “The only continent with weaker economic growth than Europe is Antarctica”. Perhaps it seemed too bizarre to be true. It was in fact true.

Whatever one’s perspective and whatever counter-arguments might be deployed, the plain and stark fact, whichever way one looks at this is, the EU [which includes the Eurozone] on these IMF sourced figures has the worst historic economic growth in the world.

For the GFM analysis[discussed below] the 10 year average 2008-2017 the Eurozone is worst of all at 0.4% followed by all EU states at 0.7%.

It is clear the UK avoided the GDP disaster of Eurozone membership by not joining.

In 2019 when I wrote The European Project is Making People Poorer for the Bruges Group I made a serious error. I did not spell out the bottom line right at the start. I am correcting this error now – almost – [if you forgive this brief introduction]. In that 2019 article I also analysed articles and opinions arguing against Johnson’s EU/Antarctica alignment. These however turned out to be what I termed “Sunny Day Economics” – they cherry-picked short periods of time – as short as one year and 2.5 years in some examples – to pretend the GDP reality was not as bleak as four decades of IMF data proves it is.

My mistake in 2019 was a consequence of my desire for people to see that the 2019 article was balanced, not polemic, with a fair assessment of the IMF data it was based on – GDP by country and region from 1980 to 2018. I wanted people to see it was not another biased twisted version of data like so many other articles throwing supposed facts around like truth was out of fashion but a genuine account of what is there. I wanted to show it was authentic reasonable unbiased independent and objective.

The rejoin false prosperity argument ignores the dangerous destabilising aspects of the EU in undermining European democracy and social values. Ursula von der Leyen is its unelected poster girl – the woman who – as her own party recognised – single-handedly almost destroyed the Wehrmacht, the German military – and who now, by some miracle of stupidity, is put forward to run NATO. Is that Joe Biden’s hand I see raised taking responsibility for that?

What we in the UK need is a vision of our place in the world, to repair the damage of the past 50 years of EU/EEC membership and of the kind of Europe we want and then to go about making it happen. The EU is damaging Europe and every man woman and child in EU states need to come to understand the damage being done to them economically and in all other ways. For our own peace and prosperity we need a strong Europe to keep its people safe and prosperous but it is weak.

IMF DATA 1980 TO 2018

EU & Eurozone Worst Economic Performers in the World

I reproduce here some of the data quoted in the 2019 article. [That article was not however based on that data alone but on other independent analyses also.]

If it were not for the dissolution of the Soviet Union in 1991, during 1980 to 2018 the two worst performing regions in the world were the Eurozone and the EU for average annual world economic growth:

• the Eurozone – bottom at 1.49%,
• the former Soviet Union aligned states [Commonwealth of Independent States] next at 1.81%
• third worst is the EU at 1.89%.

[Data for 2017 to 2018 were estimated by the IMF].

The only reason the former Soviet Union states [CIS] were so low in the world league with the EU and Eurozone was the dissolution of the Soviet Union. That changed substantially. Independently sourced figures I quoted in my 2019 article recorded the CIS having a 1.2% 10 year average economic growth to 2017 compared to the Eurozone of 0.4%. This leaves us with the extraordinary fact that the EU over four decades could not even beat the Soviet Union and its successors for economic growth. Extremely poor CIS economic growth dragged down the average economic growth of the CIS over the period from 1992. During 1993 to 1996 the economies contracted dramatically, impacting the longer term average GDP growth. There were large annual contractions in GDP of -9.57%, -13.86%, -5.34% and -3.57% respectively.

Taking this into account only makes the Eurozone and EU performance – which also means all of us in the UK – look far far worse.

Obviously, attempting to cover such a long period since the end of 1979 one needs to consider relevant world events, but the figures still provide a comparison to world economic growth performance. And it is going to source.

The Eurozone started with the euro’s launch on 1 January 1999. It was then an ‘invisible’ currency, only used for accounting purposes and electronic payments for the first three years. The big change came on 1 January 2002 in 12 EU countries with the biggest cash changeover in history. The Eurozone grew over time as other EU states joined that currency system. So one must bear in mind the world has been changing when looking at the figures.

The Economy of Antarctica

Aligning the EU with Antarctica for economic performance was an inspired comparison and makes the point with a clarity which no other can. If you want to compare rock bottom EU economic performance with the rest of the world, showing only Antartica has worse is the way to do it.

Antarctica, the fifth largest continent is the most desolate and cold place world-wide. Over 97% of its 5.5 million square miles are frozen assets – ice-covered all year. Populated by an estimated 8 million penguins: their main domestic product [aside from chicks] is gross – penguin poo. The remainder of the continent’s economy is considered to include fishing, tourism [around 60,000 tourists per annum] and scientific research [about 4000 researchers during the warmer months].

The IMF Data

‘IMF’ is an acronym for actor Tom Cruise’s fictional Impossible Mission Force. Here however it is a less glamorous acronym for the International Monetary Fund [IMF]. The IMF’s reams of boring but important data for 1980 to 2018 is based upon an objective indication of Gross Domestic Product and its growth for the nations and regions concerned.

WHERE-EVER YOU STAND THE VIEW IS SIMILAR

As I wrote in 2019, no doubt Rejoiners [then Remainers] will endeavour to criticise and undermine the figures presented here. However, by keeping faithful to the original data and avoiding “adjustments” it is likely to be more difficult to argue with. They will of course try no doubt. At least Sunny Day Economics and cherry-picking can be shown up for what it is.

In my 2019 article I quoted from a 2017 Global Finance Magazine [GFM] published comparative world economic growth figures. As I wrote then, the magazine is not polemical. It aims to help corporate leaders chart the course of global business and finance, so it needs to publish reliable information. GFM chose particular regions and country groups to make economic growth comparisons. GFM used the IMF regions and country groups data for its comparisons. Two sets of figures covered a twelve year period – the more relevant figures covered 10 years – 2008-2017 – that long enough not to be considered Sunny Day Economics data.

Whatever one’s perspective and whatever counter-arguments might be deployed, the plain and stark fact, whichever way one looks at this is, the EU [which includes the Eurozone] on these IMF sourced figures has the worst historic economic growth in the world and for the GFM analysis of the 10 year period the Eurozone is worst of all at 0.4%. That is far from the world benchmark of a 3.2% ten year average growth, which sits in the middle of the best and the worst economic growth regions in the world. It is 8 times that of the Eurozone and 4.5 times better than the EU.

And the EU and Eurozone have consistently been bottom on average annual economic growth since 1980 with the temporary exception of the Commonweath of Independent States on their sudden emergence following the dissolution of the Soviet Union.

GFM ECONOMIC GROWTH FIGURES – EU v THE WORLD

Emerging Economies

In 2019 I explained that it is likely to be misleading to compare developing economies with the EU. Economies of developing nations can experience greater annual GDP growth and faster historical economic growth than the more mature advanced economies of developed nations over the same periods. This seemed to be reflected in the GFM world economic growth figures for regions experiencing the greatest historic economic growth over 10 years.

• Emerging and developing Asia was top over 10 years with 7.2% average annual GDP growth;
• Emerging markets and developing economies were joint second at 5% with the ASEAN-5;
• surprisingly, Sub-Saharan Africa was fourth at 4.7%.
• Middle East, North Africa, Afghanistan, and Pakistan were fifth at 3.5%;
• Middle East and North Africa taken alone next at 3.4%;
• Emerging and developing Europe was seventh at 2.7%.

Advanced Economies

As I noted in 2019, when we compare Advanced Economies [but excluding the G7 and Eurozone], at 2.4% average 10 year economic growth the performance of the EU and Eurozone are substantially worse [0.7 and 0.4% respectively].

The better comparison with the EU and Eurozone is probably with the “Advanced economies excluding the EU and Eurozone” – which is still six times better growth than the Eurozone and 3.5 times that of the EU.

“Advanced economies” at 1.10% is still substantially better despite the inclusion in that figure of the average economic growth of the ailing EU and Eurozone.

• Latin America and the Caribbean are also still better coming in at 2.2%;
• the Commonwealth of Independent States [ie. former Soviet Union aligned states] is at 1.2%;

OTHER LESSONS?

The Leave proposition was always correct.

What can we say about the top performing countries for growth in the world even if we cannot fairly compare their impressive growth figures as fast developing economies with more mature developed nations?

We can say this: those countries’ economies have been growing in many cases over decades with a cumulative growth record which tells us something. The people in those nations have more money to spend now than they had twenty or thirty years ago. A country like Bangladesh with annual growth in the region of 5-6% over many years will be far wealthier now than 30 years ago.

So we should be trading with them more now we can.

And we should also consider the IMF “Other Advanced economies” which can be more easily be compared to the EU and Eurozone and which have had substantially better historic economic growth. They will also have more money to spend: countries like Australia, New Zealand, Singapore, Israel and Korea. To those one must add the G7 powerhouse of the USA and also Canada.

And when people in other countries have more money to spend, does the UK have products and services they could need or want? Are there greater opportunities for trade now world-wide than 10, 20, 30 and 40 years ago? And if so, are we better off out of the EU?

We should also be trading with them more now we can.

THE LEAVE ARGUMENT MAKES SENSE – EU TRADE OR WORLD TRADE?

When put in a perspective as my 2019 article, backed by empirical evidence, one can start to see the sense of it. This fills in some of the detail providing more clarity for what many Leavers knew intuitively.

We can summarise the EU’s economic growth record as the worst in the world. It is not even keeping up anywhere near other advanced economies. There are 500 million people in the EU and many member states are not wealthy and net recipients of the EU budget contributions.[eg. like Bulgaria]

The Rest of the World is estimated to comprise just over 7 billion people and many more countries than the EU including many developed economies. The opportunities for trade must logically be far greater than those presented by the vastly smaller EU trading block. Perhaps this might be behind the recent claims that Angela Merkel allegedly expressed concerns about Brexit making the UK a competitor. And if that is what the EU is about, suppressing competition from the UK, is that alone reason to be out? What does Merkel know that others do not about the potential economic consequences for Germany of the UK leaving the EU?

One might ask whether the EU is the kind of anchor which instead of stabilising the economies of member states, destabilises by dragging their economies down? What view should citizens of the PIIGS take? Portugal, Ireland, Italy, Greece and Spain are the economic basket cases of Europe needing bailouts with invented EU money conjured up like a magic trick literally overnight to stave off a collapse of the Euro, as Donald Tusk described in an interview about the crisis and the EU’s management of it. Tusk seems to be genuine honourable committed passionate and sound, so no personal criticism of the man is intended here.

And when one looks further one thing is noticeable about the EU debate. That is how Europhiles become very quiet and do not engage in discussion to argue about the wider economic, social and political instability across the EU member states which has followed the unhelpful EU policy of austerity. To avoid discussion they keep silent, hoping to push or provoking debate onto other issues. They need to be challenged and all need to know and master a knowledge and understanding of the manifold failings of the EU to do so. It is no easy task because there are so many.

THE REAL BREXIT QUESTION

And we come to the real question about Brexit. It is not “are we better off in than out” or vice versa.

The real Brexit question is not being debated nor has it been, nor are the public being informed. Europhiles and Rejoiners alike also tend not to engage in the debate about all the things that are wrong with the EU – pushing the subject onto other issues instead.

What is wrong with the EU goes beyond economic growth and the destabilising effect the EU has had across Europe since its formation around thirty years ago.

And what looms large in any picture of peace in Europe is not how the EEC nor how the EU has helped maintain peace. There has been an exponential rise in prosperity since the end of World War II. That rise in prosperity would have happened with or without the EEC and EU. It has been seen across the entire world. Simply put, people in the developed EU economies have been too busy making money since 1945 to want to go to war with each other.

But once we see economic, political and social instability, especially if there is recession and economic decline, then there could be instability which might see a return to conflict between nations in Europe. The relatively recent Balkan wars are a demonstration of what can happen – that was war in Europe – whether anyone likes to see it as that or not – and there were war crimes trials – which we have known before then.

Now we have a war between Russia and Ukraine.

Never forget that some of the ordinary people walking down the street in your town in your road where your live are capable of doing what was done in the Balkan war and before. We are all fallible and subject to the same psychological pressures whether we like to admit that or not. Some are more fallible and more subject than others. The message is not to blame people but to recognise the reality. The ultimate question is whether the “European Project” is ever capable of ensuring peace in Europe. Frankly, it is creating instability socially, politically and economically. And in this writer’s view it is not the driver of peace – peace since 1945 is built on prosperity and enjoying all that brings.

Is economic growth – or at least political and social stability – more important than the EU? And regardless of what happens to the world in the coming decades.

It is all well and good speaking of our friends and partners, but historically Europe has been mired in conflicts over centuries. Those conflicts have not gone away. What social, political or economic changes might return the continent to greater or wider conflict? One cannot pretend it is impossible. Indeed we see it happening now – albeit and inappropriately not all is reported in our newspapers or on our television screens, including it seems events in the UK.

And are France and Germany and other EU states friends? Do not be misled by the mellowing of rhetoric since the Brexit Referendum and the Withdrawal agreement. The EU has mellowed most likely because of what some might interpret as posturing and statements aimed at the UK were counterproductive, persuading former Remainers to want to support leaving. And they need the UK’s money.

And if the EU becomes the centre of the EU “Empire” as some claim it has been described by its proponents, and if it then has military forces under its control, what use might be made of them in dealing with dissent and conflicts internal to or between the EU states and the EU?

How easy would it be to suspend the rule of law in the EU in the event of a widespread collapse of social order or dissent against the ruling class?

These are merely questions. They are not predictions but they are issues any sovereign state concerned for the prosperity and security of its nation should contemplate, no matter how remote the concerns might be thought.

So economic growth is one small part of the picture – but it is an integrated picture. Growth and prosperity would have happened regardless of the EEC and EU and they are what have held the European project together – despite the questionable competence of the EU institutions and politicians. A diminishing of growth and prosperity is today seeing a less stable cohesive union of European states. Gilet Jaune in France were being reported temporarily but what else is happening in the EU which is not?

‘The European Project is Making People Poorer’

Have we in the UK been getting steadily poorer year-on-year over 46 years in the ……. READ MORE …..

https://www.brugesgroup.com/blog/the-european-project-is-making-people