Berlin would block any anti-UK discrimination by the Eurozone
Jonathan Lindsell, 6 June 2013
Latest figures show that the Eurozone would be economically masochistic to punish the UK if a ‘Brexit’ occurred. A new study by the think tank Global Britain analyses balance of payments figures released by the European Central Bank (ECB) in May which reveal three crucial points:
– The Eurozone’s biggest export market worldwide is the UK (15% of Eurozone exports)
– The Eurozone’s biggest supplier worldwide is the UK (14% of Eurozone imports)
– The Eurozone’s biggest trade surplus worldwide is with the UK (+ €63 billion in 2012)
Because the Eurozone exports more to the UK than it imports, it has more to lose from a deteriorating trade relationship. Any trade barriers raised against the UK would be damaging to continental economies. This would be especially harmful if the UK responded in kind, creating a ‘trade war’ like that brewing with China over wind turbines.
The author, director Ian Milne, discusses the likelihood of a ‘two-tier’ EU with Germany at the helm of the Eurozone. He argues that German “prosperity depends crucially on a healthy Eurozone” which would be harmed by any punitive tariff moves against an independent UK. This harm, combined with the power of German business interests, regions (Länder) and the Constitutional Court (Bundesverfassunsgericht), would make any anti-UK moves politically and legally unfeasible.
Milne points out that any Eurozone anti-UK tariffs would be illegal under World Trade Organisation (WTO) rules. He asks why the EU would damage its own economy and legal standing to punish the UK for leaving the EU, when Europe has been trading with China, Japan and the USA for decades without any preferential trade agreements.
The analysis reinforces earlier Civitas studies which show Britain’s trade would be unharmed in any Brexit scenario (pp.12-13) and that the German automobile industry would lobby for free trade with Britain.
More Civitas work on Britain’s relationship with the EU can be accessed here.