Thursday, 21 July 2011

Dodgy Digby scaremongering over failure of the eurozone

Wealthy champagne socialist and europhile, Lord Digby Jones, has warned that the UK should do whatever it takes to save the euro.

I make this shit up as I go along you know?
He claims that 40% of UK exports are to the EU and asks if the eurozone collapses, who would we trade with? The answer to that question is pretty simple really: we would continue to do the majority of our trade with the rest of the world as we currently do.

The 40% figure is a dodgy statistic made up by the British government to con people into believing that our economy relies on the EU.  They do this through a mixture of counting goods that are shipped to Rotterdam to be transferred onto a bigger ship to be sent elsewhere as exports to the EU and literally making things up.  The real figure is closer to 25% and declining year on year.  We import on average around £3.9bn more per month than we export to the EU.  That's about £47bn per year more that we spend in the EU than the EU spends in the UK.

So if the eurozone collapses and the euro bombs, what does that mean for us in the UK?  It means we won't be able to sell as much to the EU because a weak euro would reduce their spending power - we sell in pounds and their euro wouldn't be worth as many pence as it is now.  But it also means that when you buy something that's being sold in euro and you pay in pounds, you get more for your money because your pound will be worth a lot more than their euro.  And as we buy much more from EU countries than we sell to them, the cheaper imports will benefit the economy more than if the eurozone kept its current spending power.

Three quarters of our trade is done with the rest of the world - primarily the US, China and the Commonwealth. The world's second largest economy, India, is in the Commonwealth.  Mineral rich countries like Australia, Canada, New Zealand, Papua New Guinea and other pacific nations are in the Commonwealth.  The dominant producers of commodities like sugar and cocoa in the Caribbean are in the Commonwealth.  Outside of the EU we can have free trade with the Commonwealth.  Inside of the EU we can only trade with the Commonwealth on the EU's terms.  UKIP policy is to establish a Commonwealth Free Trade Area to compliment the European Free Trade Area that we would also join which is closer to what the country voted for in the EEC referendum in the 70s.  And if you think that there's a chance the EU would refuse to allow the UK to join EFTA out of spite, remember that we buy more off them - they need us more than we need them, they can't afford to lose the UK market.