EU Debate: Can you separate economics from politics?

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EU Debate: Can you separate economics from politics?

The question of whether to remain or leave the EU is undoubtedly one of the most serious constitutional questions of this generation. To help me make my decision and aid my preparation for the various events that Model Westminster is either running or contributing to, I’ve been reading a few books that are both neutral and advocates of either the in or out position. For example, I’m currently reading Daniel Hannon’s book ‘Why vote leave’. For those of you who have not come across his name before, Hannon is a Member of the European Parliament and with a long history of Euroscepticism, he is a strong advocate for leaving the EU.

In truth, I’m finding that untangling the question and coming to a clear view to be quite challenging and complicated – I guess I’m currently one of the undecided. As such, I’ve been working on trying to simplify the decision by exploring the ways that the campaigns have been framing the debate and I thought that would make a good blog series.

This blog will cover one way that the debate has been framed, which is the position that Hannan advocates for. He wants the UK to vote no, ditch economic and political union and go for a relationship with the EU that simply provides for access to the common market. He wants to separate economic and political interaction with the EU.

So I’ve been thinking a lot about whether you can really separate politics from economics and I guess that after reading Hannan’s book, that would be my questions for him. But what do I mean by that? Well, when I think of a clear and simple way to explain how politics & economics interact, I often think of the example of natural disasters. For example, if an area suffers from a hurricane or flood, the demand for emergency provisions and fuel rises – leading to a rise in price of these goods as demand outstrips supply. From a purely economic perspective, a rise in the price of a highly demanded good is a good thing. This is because a rise in price will attract additional suppliers, through the profit motive, to the area where the goods are most needed. However, the rise in price, can make those goods prohibitively expensive for a lot of people who may have suffered as a result of the natural disaster and are not in a position to pay the higher prices. Their only mechanism to influence this market outcome will be through politics and petitioning for the regulation of prices.

So what does all that have to do with the EU? Well, the above example is an extreme one, and the everyday interactions of politics and economics are far more nuanced. But I think it illustrates the idea well enough. One of the central ideas behind the EU is the common market, which Hannan would still like the UK to participate in. But Markets produce winners & losers and those that lose out, often do so through no fault of their own and use politics to influence and regulate market outcomes.

The decisions taken by the EU influence the shape, feel and outcomes of the common market through how it’s regulated. I guess my question is can the UK benefit fully from the common market without access to the political institutions that often shape that market? So what do you think? Join the debate!

In my next column I’ll look at another way to frame the question by looking at sovereignty and accountability.

By Grant Fisher, Director of Model Westminster

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