Britain in Europe; weighing the counterfactuals

By Jack Peat, Editor of The London Economic 

The London Economic

The London Economic reports from ‘The City in Europe’ debate at the Guildhall.

Debates on Europe generate more heat than light, the Right Honourable Lord Mayor of London Roger Gifford said in his opening remarks of ‘The City in Europe’ debate at Guildhall.

His sentiments – usually bang on the money – were tonight both half right and half wrong. The panel of experts and an audience of in-tune guests were insightfully well informed on the current structures of Europe and Britain’s place within it, creating lively arguments that often drew to pragmatic conclusions.

But as business secretary Vince Cable foresaw in his opening remarks, the area in which the debate would offer fruitless results was on the counterfactuals. Economist Vicky Pryce warned of the catastrophic consequences of abandoning the free market and WPP chief exec Sir Martin Sorrell used TNS stats prepared before the debate to back the argument up.

On the other end of the spectrum entrepreneur Luke Johnson, Tory back-bencher Jesse Norman and Labour MP Gisela Stuart argued that the city would remain great whether tied to or free of Europe, but neither side managed argue beyond the evidence in hand, which is where we need the most light to be shone.

The argument against the city Europe

Arguments against Europe are easily pigeonholed into nationalist sentiment, although that’s hardly surprising when Jesse Norman postulates that all France and Germany need to run a healthy Europe is a dose of “Anglo Saxon free market zest”. We Brits were once an empire once, you know!

Thankfully not all speakers had arrived in chainmail tasked with keeping Great Britain great. Luke Johnson, who counts many of our highstreet restaurants among his own entrepreneurial ventures, took the classic approach that heavy regulation is hampering Europe as high-growth regions prosper elsewhere. Britain, built as a trading federation, is thus losing ground as markets are restrained by protectionism which favours some of the larger nations, but certainly not us.

For the most part, arguments against Europe were more arguments for more renegotiation of our place within Europe. Although Norman eventually backed down to admitting he would vote against Britain’s place in Europe if Cameron was unsuccessful in renegotiating the terms of our membership, other speakers were less keen to take such a hard line.

The argument for the city Europe

Arguments for the city in Europe are best made by weighing the role the continent  is currently playing. Up steps Sir Martin of WPP Group with enough facts to sway anyone with half a brain towards the conclusion that, as things stand, Europe is a central component of business in Britain.

Of course, that isn’t to say that things can’t change, but there’s no escaping the fact that financial services companies and law firms base headquarters in London for market access to Europe and make up a large proportion of British GDP. You can’t deny that foreign direct investment (FDI) and exports are both heavily reliant on Europe, and you’d be arrogant to ignore the fact both Japan and America have forewarned they will  reconsider their relationship with Britain if the island floats away from the continent, rather than closer to it.

Counterfactuals

“In a world where Rhinoceroses are domesticated pets, who wins the Second World War?” – Counterfactuals, The Big Bang Theory

In a world where Britain isn’t part of the European free market economy, how does the capital city of London survive? Such a question would fit well into a game devised by Sheldon Cooper and Amy Farrah Fowler in The Big Bang Theory, where they postulate alternative universes and how history might have re-written itself if, for example, a beaver were king.

It was a point that Dr Vince Cable was keen to raise. Yes, there are high growth economic regions outside of Europe and yes Turkey is performing better on the edge of the EU rather than within it. But how would Britain be better off outside of Europe in renegotiating these terms? Why would the BRICS countries do business with us if we were outside rather than in the EU? How does exiting from Europe make it easier to invest in these countries?

The general public, according to polls, are more concerned about the economy than our place within Europe. As the economic situation improves people are drifting back in favour of the EU, but until then, Europe remains at the bottom of a list of priorities. That’s not to say we shouldn’t be having the debate, but an eventuality as drastic as exclusion from Europe should never be on the agenda, especially when we are clueless of the counterfactuals.

Both the proponents and the opposition  agreed that Europe could work better and there are many parts that need changing for it to become a fully functioning body.  But the key thing to take home is that we are better positioned to change things from the inside then imposing our self from an isolated place on the peripheries.

Postulating the future of Britain in or out of Europe is a tricky proposition indeed. What’s for sure is that In the game of counterfactuals,  it is far better being in the conversation than waiting powerlessly on the outskirts to see what happens.

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