ANDREW NEIL: Why would we want to rejoin the EU when citizens of America's poorest states earn more than the French... and the Italians can't even afford pasta?
A future generation will take Britain back into the European Union, opined Tony Blair this week. I wouldn’t rule it out.
The polls show buyers’ remorse among many who voted to leave (a clear majority say they would now vote to rejoin) and even the most committed Brexiteers struggle to list what benefits leaving has brought us.
But even our Europhile former prime minister doesn’t expect it to happen any time soon and those who pine for a return, say sometime in the 2030s, ignore a rather important question: will the EU be worth rejoining?
In the never-ending and debilitating debate between Leavers and Remainers, which still plays too large a part in our national discourse, one rather fundamental fact is always overlooked: for Europe, the history of the first two decades of the 21st century has been one of relentless economic, political and military decline, with no evidence that the EU’s governing elites know how to stop it, much less reverse it.
Advocates of a renewal of our membership also fail to point out that the terms of rejoining would be nowhere near as good as what we had before leaving.
A future generation will take Britain back into the European Union , opined Tony Blair this week. I wouldn’t rule it out, writes Andrew Neil (pictured)
There would be no rebate this time on our multi-billion-euro membership fees, for example, but we would be expected to sign up in principle to swapping sterling for the euro. That will make folks think twice about rejoining, whatever the polls currently say.
Those who call for a halfway-house arrangement until we’re ‘ready’ to rejoin — by going back now into the EU’s single market and customs union — can’t explain why it would make sense to become a rule-taker, as (unlike when we were members) we would have no say whatsoever on the Brussels rules we’d be expected to obey.
But these considerations pale into insignificance compared with a much bigger question: will the EU even be worth joining in ten years’ time?
Consider how much the EU has already declined relative to the United States. Fifteen years ago, according to the IMF, the GDP of the Eurozone was just under $14 trillion, while the U.S. economy was marginally bigger.
Today, the Eurozone’s GDP is just under $15 trillion, a modest rise by any standards. But the U.S.’s GDP has roared ahead to $25 trillion, making its economy 60 per cent bigger than the Eurozone. That’s a lot of relative economic decline for the Euro area in just a decade and a half.
The failure of Europe to keep pace with America has taken its toll on living standards. The average EU country is now poorer per head than every state in America bar Idaho and Mississippi.
The latter, the poorest state in the Union, is often referred to as America’s Third World but — with an average per capita annual income of $50,000 — the citizens of Mississippi are better off than their counterparts in France.
The continued economic dominance of America as the world’s richest, most productive and innovative major economy is as remarkable as the EU’s relentless decline in all these departments.
In 1990 America accounted for 25 per cent of global GDP, the EU a little above that. Today, America still accounts for 25 per cent of global GDP but the EU’s share has consistently slipped. It is now just over 14 per cent and falling.
There used to be a global consensus that China would overtake America as the world’s largest economy during this decade. Goldman Sachs, which is reliably wrong on such matters, once confidently predicted that this would happen by 2026. Now it suggests 2035, if then. Other forecasters think it won’t have happened even by the middle of the century.
America has outperformed the EU on every economic indicator that matters. Since 1990 the U.S. working age population has risen from 127 million to 175 million, a rise of almost 40 per cent, while Europe’s has gone from 94 million to 102 million, a rise of only 9 per cent.
For Europe, the history of the first two decades of the 21st century has been one of relentless economic, political and military decline
Not only are there more American workers, they are also more efficient. U.S. labour productivity has risen by 67 per cent since 1990, Europe’s by 55 per cent.
They also work more hours. The average American worker puts in 1,800 hours a year and gets three weeks holiday (four if they’re lucky). The average European worker does 200 hours fewer and gets six weeks holiday (or more).
Of course, Europhiles will argue that Europe’s more relaxed lifestyle is superior to America’s relentless work ethic. I understand the point; we all want to take August off at the beach.
But, over time, Europe’s emphasis on lifestyle and doing less work (a growing trend across the continent) takes its toll in terms of generating the wealth needed to pay for the world’s most generous welfare states — and it means folks have less money to spend.
That is already apparent in the Eurozone, where consumer spending has fallen by 1 per cent since 2019 in real terms, whereas it has risen 9 per cent in America on the back of a strong labour market and rising pay packets.
Real wages have fallen 3 per cent in Germany these past four years, and 3.5 per cent in Italy and Spain, but are up 6 per cent in America, according to the Organisation for Economic Cooperation and Development (OECD).
This squeeze on spending power is taking its toll. The Wall Street Journal reported this week that the French were cutting back on red wine, the Spanish on olive oil, the Germans on meat and milk — and the Italians were complaining they couldn’t afford pasta (which is the very definition of an Italian crisis — and, sure enough, the economy minister convened a crisis meeting).
If current trends continue, by the middle of the next decade the gap between America and Europe in terms of economic output and per capita incomes will be as big as today’s gap between Japan and Ecuador.
This is not the projection of some Right-wing U.S. think tank but the considered judgment of the Brussels-based European Centre for International Political Economy. It is a depressing prospect, which illustrates why rejoining the EU might not be as easy a sell as its boosters assume.
Of course, America has plenty of problems of its own: huge inequalities, epidemics of gun violence and opioid addiction (which together explain America’s low life expectancy), filthy, declining city centres and crumbling infrastructure in a culture too often prepared to tolerate public squalor alongside private affluence.
But, unlike Europe, it is not in economic decline and not likely to be any time soon. The world’s five biggest corporate spenders on research and development are all American. Together they spent $200 billion last year, leaving Europe in the dust.
That’s why your laptop and smartphone are American inventions, as is the AI chatbot you will increasingly use.
America dominates the digital economy of the 21st century as it ended up dominating the industrial economies of the 20th century. Europe is an also-ran.
That is not about to change, either. Eleven of the world’s 15 best universities are American. The EU does not have one institution in the top 15. Indeed, it has only one in the top 30.
Nine out of ten of America’s richest billionaires made all their money out of companies they built from scratch. Five out of ten of Europe’s richest inherited their wealth.
There is little comfort for Europe in the latest indicators. The U.S. economy grew at an annual rate of 2.4 per cent in the second quarter of this year. The German economy, the biggest in Europe, stagnated, after declining in the last quarter of 2022 and the first quarter of this year. German economists talk gloomily of a ‘prolonged slowdown’.
The IMF forecasts Germany will be ‘the worst performing major economy in 2023’. When the same body attached that label to Britain, I recall Remainers, BBC presenters and Labour politicians shouting it from the rooftops. I suspect they’ll keep schtum this time round.
No doubt Brexiteers are lapping up this article, so far. But here’s the rub. When it comes to our own dear Blighty, we are in the slow lane with the rest of Europe, not in the fast lane with America. Brexit has made little discernible difference. We remain hogtied to European decline.
I see nothing being proposed by the Sunak/Hunt government that will change that. Indeed, its high tax/big government approach to politics, coupled with a penchant for interfering in too many areas where it should mind its own business, is more likely to align us with European sclerosis for the foreseeable future.
Labour is unlikely to do any better. In fact, there is a distinct possibility, because it barely understands any of this, that it will do even worse.
If, as the polls strongly suggest, the Tories will soon be in opposition — and so will have more time on their hands to do some serious and original thinking — can I suggest that top of their list of rethinks should be a plan for how post-Brexit Britain can be more like America and less like Europe in terms of economic dynamism and innovation.
If they can’t come up with a fresh, radical agenda to achieve that, then frankly, they shouldn’t bother trying for a comeback.
