Michael Gove, Boris Johnson, and Gisela Stuart have today written to David Cameron and George Osborne about the Risks of Remain.
In the letter they highlight:
- The Eurozone’s economic crisis is fueling the rise in migration.
- These problems will only get worse when countries in the pipeline to join the EU become members in the near future.
- Eurozone countries can vote together to prop up the broken system, they can impose their will and force us to accept laws that are not in our interests.
- The UK has been forced in the past to pay unexpected bills at the demand of the European Commission.
- The EU has failed to agree trade deals with the most important economies in the world.
- The European Commission has been unable to provide evidence of significant gains from the Single Market.
- Despite the promise of a ‘complete opt-out’ from the Charter of Fundamental Rights’, no meaningful change was secured in the recent renegotiation.
- The European Commission has delayed publishing the new budget until after our referendum which will increase the UK’s contributions if we vote ‘In’.
The full letter:
Dear Prime Minister and Chancellor,
GETTING THE FACTS CLEAR ON THE ECONOMIC RISKS OF REMAINING IN THE EU
We all recognise that there are real risks facing our economy if we remain in the EU. Every citizen needs to be aware of these in coming to a balanced decision about how to vote on 23 June.
We would be grateful if you could confirm a series of facts about the serious crisis in the Eurozone’s economy and the failure of EU institutions to reform, failings which will deeply affect British interests if we remain in the EU. Agreement on these facts will enable us all to have a fully informed debate.
We already agree on some basic principles. In particular, we all agree that the Eurozone economies and EU institutions need far greater reform than the EU’s leaders agreed to in the recent renegotiation.
You made the case for real reform in your 2013 Bloomberg speech which outlined many of the problems with the EU’s current structures. You argued persuasively for ‘fundamental, far-reaching change’ but the EU has not changed its fundamental structures. The other EU states rejected the Government’s reform agenda.
As you explained in the Bloomberg speech, the Eurozone suffers from severe economic and institutional problems. It is blighted by low growth and high and rising debts and taxes. Unemployment and youth unemployment are high - at their worst level since the 1930s - in some parts of southern Europe youth unemployment is over 50%. The Eurozone also suffers from the costs incurred by a rapidly ageing population and large unfunded pension liabilities.
The Eurozone countries are trapped in a low-growth system in which debts are rising remorselessly. This adds to pressures on taxpayers and creates a vicious cycle . The Eurozone’s economic policies since the financial crisis have helped Germany and made Greece less competitive. The wealthy in the Eurozone have grown wealthier and the poor poorer - the precise reverse of what is needed to address the economic problems of Europe.
The Eurozone institutions remain broken and have been unable to cope with the euro’s crisis. Despite writing a promise of ‘no bail-outs’ into the EU Treaties, there have been massive bail-outs. The so-called Stability and Growth Pact was abandoned by Germany and France as well as Greece and Italy and no substitute has been found. The Eurozone banking system remains in crisis and lacks clarity about who is in charge of what. The European Central Bank is under attack from the Bundesbank and German Government.
Because of this interaction between economic and institutional crisis, Greece and other southern European countries face years or decades of austerity and mass unemployment. This Eurozone crisis is a disaster for millions of Europeans and it is also a danger to Britain.
We fear the situation in the future can only get worse. The nations of the EU are not creating new technologies and new industries in the way other countries are. The EU lacks the networked relationship between great universities, entrepreneurs and venture capital that generate economic breakthroughs. That is why there have been no EU equivalents of Apple, Uber, Amazon, Netflix, Google or Facebook. Indeed the EU’s whole regulatory structure works against innovation. The EU now has slower growth than any other continent apart from Antarctica. Unless the EU reforms, it will continue to decline with damaging consequences for all its members.
Given the public’s desire for the facts ahead of the referendum, we would like you to confirm the following facts:
- The Eurozone’s economic crisis is fueling the rise in migration. Millions of people in southern Europe, particularly young people, are giving up hope of their countries escaping recession. Unsurprisingly, migrants from those countries are disproportionately coming to Britain. Given the Eurozone crisis, we can only expect this to continue for many years. If we stay, we are tying ourselves to a broken Eurozone economy while simultaneously accepting unlimited migration of people trying to escape that broken economy. The only way to restore democratic control of immigration policy is to vote to leave on 23 June.
- These problems will only get worse when countries in the pipeline to join the EU become members in the near future. British taxpayers are already paying nearly £2 billion for Albania, Macedonia, Montenegro, Serbia and Turkey to join the EU. The European Commission recently announced an acceleration of these plans and is already extending visa-free travel to the border with Syria and Iraq. This is dangerous. The Government’s claim that Britain has a veto is meaningless if it is simultaneously trying to ‘accelerate’ this process.
- The Eurozone now has a permanent structural majority in the EU’s voting system. We only have 12% percent of the votes (at most 8% in some circumstances). When the Eurozone countries vote together to prop up the broken system, they can impose their will and force us to accept laws that are not in our interests. The recent renegotiation did nothing to change this situation. This has left us dangerously and permanently exposed to being forced to hand over more money and accept damaging new laws.
- We have been forced in the past to pay unexpected bills at the demand of the European Commission. For example, in 2015 the Eurozone announced it would use the European Financial Stabilisation Mechanism to pay bridging finance to Greece. As the Chancellor said, this was a ‘flagrant breach’ of an earlier agreement that this fund would not be used for the purpose of bailing out the Eurozone. In October 2014, the European Commission announced that the Government would have to pay an additional £1.7 billion into the EU budget.
The Government said it would not pay. It then paid nearly £1 billion to Brussels. As with failures on immigration, this was damaging to public trust. As the Eurozone crisis deepens we may be forced to contribute to new bailouts under article 122(2) of the Treaty on the Functioning of the European Union, or by some other legal route. The public cannot trust EU or Government promises that we won’t be paying for Eurozone bailouts given the history and how we can be outvoted.
- The EU has failed to agree trade deals with the most important economies in the world. We have much stronger historic links with countries like America and India than any other EU member does. Outside the EU, we would regain our independent voice at the World Trade Organization, control our own trade policy, and be responsible for our own trade agreements.
- Countries across the world enjoy trade with the EU without being part of the EU. Trade does not require this country to give away permanent control of issues as diverse as immigration and the regulation of cancer drugs.
- Even the European Commission has been unable to provide evidence of significant gains from the Single Market. It claims EU GDP is 2.13% higher than it would have been without the Single Market project, less than half of what it forecast would be the gains in 1988. This sum is dwarfed by estimates of the cost of the Single Market made by both the Treasury and by Peter Mandelson.
- The Single Market includes many complex regulations on procurement and competition policy. A vote to stay means permanent EU control over crucial aspects of how public services work including the rules on hospital building, privatisation, and procurement. We all saw how the 2012 disaster over rail franchises cost taxpayers over £50 million and delayed the project. Many of these EU rules help a small number of big companies but cost the taxpayer billions and pose a growing threat to the NHS.
- Despite the plan to get a ‘complete opt-out’ from the Charter of Fundamental Rights and the statement earlier this year that the Charter should not be ‘in force in Britain’, no meaningful change was secured in the recent renegotiation. This means that the ECJ can use the Charter to take control of many vital economic policies. It has already used the Charter to increase the price of insurance. This sort of problem can only multiply as the ECJ exercises its new powers.
- There is already an official plan and timetable for the Eurozone’s next wave of centralising power in Brussels, described in the Five Presidents’ Report. This official EU plan involves the use of the ‘Single Market’ legislative system, in which the Eurozone has a permanent voting majority, to force through the next transfer of powers to EU institutions. The next stage involves yet another Treaty and the creation of a central government raising European-wide direct taxes. The Government’s recent renegotiation represents a commitment by Britain under international law not to block this process. Our veto on further centralisation was one of our strongest cards. It has been given away. This represents another severe danger to our economy.
- Although some very large banks and multinational companies profit from the EU system, the situation is very different for small and medium sized businesses, the backbone of the economy. By 2:1 SMEs think the EU is bad for their business. About 70 percent of businesses think that Britain should take back the power to make our own trade deals and have done so for over a decade. This is only possible outside the EU. British companies know that we can trade with Europe without giving away permanent control of regulation.
- The Treasury published analysis claiming that each household would be ‘permanently poorer’ by £4,300 per year by 2030 if we take back control. This figure was calculated by dividing a putative future reduction in GDP growth by the current number of households. This figure is bogus because it assumes 3 million more persons will come to the UK by 2030, a figure that could be considerably lower if we took back control over our borders, which would boost per capita income. It is economically indefensible to calculate changes in disposable income by dividing total GDP in 2030 by the current number of households. The analysis also didn’t consider any of the benefits of leaving the EU. And of course the Chairman of the IN campaign said wages will ‘go up’ if we leave.
- The Commission has delayed publishing the new budget until after our referendum. We already know the official bill for our membership is due to rise to £20.65 billion per year by 2020-2021. Our ‘rebate’ cannot be counted on - as the Chancellor has said, ‘It is not a unilateral decision of the British Treasury or the British Government to just say, “This is our rebate. We are entitled to it. Pay up”. The way this works and has always worked is there is a negotiation with the European Commission’. It could be abolished altogetherin five years time. A vote to stay is a vote to keep sending more and more money to a dysfunctional bureaucracy that has no proper democratic oversight.
- Our official bill does not, of course, include many other costs of the ‘Single Market’, such as the multibillion tax refunds we are having to make to big business because of decisions of the European Court setting aside our tax legislation. HMRC estimates payouts could be as high as £43 billion by 2021, a huge sum of money that would be better spent on schools and hospitals. A vote to remain is a vote to keep paying these sums, no matter how large and no matter how badly public services are damaged. The European Court will continue to prioritise the rights of big companies, not our public services.
- We have a large trade deficit with the EU. It is in everyone’s interests to do a free trade deal. There is a free trade zone from Iceland to Turkey. This will not end just because Britain decides to take back control and be a normal self-governing democracy.
Overall, EU membership helps some people and some businesses but they are disproportionately those with power and money. The reality of the ‘Single Market’ has not even closely matched what we were promised a quarter of a century ago. EU membership makes it impossible to control immigration and this is putting enormous strain on public services and is corrosive of trust in politics. Sadly the European Union and its euro project have become an engine for job destruction and there is no prospect for reform unless Britain votes to leave and forces a new agenda on Europe’s elites.
We all want greater cooperation in Europe. It is clear to us that the best way to further European prosperity and international cooperation is for us to vote leave on 23 June.
Michael Gove, MP for Surrey Heath
Boris Johnson, MP for Uxbridge and South Ruislip
Gisela Stuart, MP for Birmingham Edgbaston