To Brexit, or not to Brexit…


San Fulgencio
March 8, 2016

Dear Editor,
I found the letter from Roy Eaton (CBN, March 4) difficult to understand. From the little sense that I could make of his words, I gathered that Mr Eaton is in favour of a British exit from the EU. He may be right that those campaigning to remain within the EU are ‘scaremongering’ but, if my interpretation of his final two paragraphs is correct, he does more than his fair share of scaremongering himself.
I think his comments also demonstrate that he does not understand the nature and function of tariffs. National governments impose these upon imports to discourage the purchase of foreign goods. Quite often, they are accompanied by reduced taxes on home manufacturers to stimulate the economy. In other words, raising tariffs on British goods and services is exactly what the EU will do if and when Britain is no longer a member.
His comment about the car industry is a non sequitur. Of course, the EU will not raise tariffs on its own goods! Theoretically, export tariffs could be used to depress an economy thought to be in danger of overheating, a condition so rare as to be to all intents and purposes irrelevant. In any case, I believe that there is no volume car manufacturer remaining in British hands. Retaliatory import tariffs raised by Britain on this sector could be easily overcome by foreign companies both increasing and/or transferring manufacturing capacity to Britain itself. We live in a ‘global village’.
I presume the book by Mervyn King to which Mr Eaton refers is The End of Alchemy (Little, Brown, 2016), extracts from which are currently appearing in The Daily Telegraph. In a complex book subtitled Money, Banking and the Future of the Global Economy, Baron King is not concerned with a simple exit from the EU by the United Kingdom.
As part of his thesis, King offers a far more radical economic analysis of Europe, arguing that the Eurozone is failing and on the brink of collapse. He suggests that Germany could be forced to protect itself by returning to the Mark, thereby precipitating the demise of the EU as a whole. Should his analysis prove correct, the resulting fallout will render the parochial British referendum academic.
The British Government estimates that, in the event of a vote to leave the EU, it will take over six years – longer than World War II – for the UK to extricate itself from Europe. Imagine how long will be required to dismantle the whole edifice of the European experiment! Wouldn’t that be fun?
Combine this with the situation in the Middle East, the pathetic European response to the consequent migrant crisis, the resurgence of a belligerent Russia, the possibility of Donald Trump in the White House… It seems that the Chinese curse, that one should live in ‘interesting times’, may soon come to pass.

Yours sincerely
Joe Pilkington

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