EU – Economy of Brexit

This is part of the EU Fact File

Verdict: NEUTRAL – YES it CAN be proved that either leaving or joining the EU does NOT impact the ECONOMY

So both Brexit remain and leave campaigns struggle to prove what would happen if we either leave or stay in the EU?

Strangely enough – nobody has thought of looking at what happens when you join the EU.

Leaving the EU would then be the reverse effect of joining!

So if a country get a huge boost by joining if would make sense a similar bust would occur when leaving.

Lets look at some of the late comers in the EU – lets pick the bigger ones of the new EU countries:

  • Poland: joined 2004 with a population of about 38 million
  • Hungary: joined 2004 with a population of about 10 million
  • Romania: joined 2007 with a population of 20 million

You can add the smaller ones yourself but they would almost be zero as it goes to show the new EU countries had a very low development level per capita compared to the old EU countries.

To see if the population got richer you need to look at GDP PER CAPITA.

GDP TOTAL or % GROWTH is not used – as these numbers does not show if people are getting richer or poorer inside the country.

A country may show an overall GDP growth – but if this is caused by immigration then this may not result in anybody getting richer (except for the immigrants whilst in the country).

What we need to understand is – if we (human beings) are better of inside or outside of the EU – hence the use of GDP PER CAPITA.

I have added a couple of non-EU countries for comparison.

Feel free to add your own but remember they have to start off with a similar population and GDP starting point so you don’t compare apples and oranges.

You can play around with the graph on the Wold Bank website by clicking on the graph below.

The interesting period is before and after 2004/2007 where the new EU countries joined the EU:

image

Points to make of the above graph:

  • Poland and Hungary around year 2004 – did have growth – but not more than Romania, that had not joined yet
  • Romania around year 2007 – even after joining the trend followed other EU10 countries – no impact it seems
  • Malaysia having a population of 28 million – did similarly to the new EU countries and did better than Hungary with a similar economy
  • Switzerland and Norway did as well or better while not being in the EU even though these countries are already highly developed
  • United Kingdom and Germany did NOT do well at all – similar to other large EU countries (you can add these yourself!)

Some conclusions to be made:

  1. The new and undeveloped EU countries would have had a similar growth outside the EU (compared to Malaysia)
  2. The old and developed EU countries would have had a better growth outside the EU (compared to Switzerland and Norway)

Questions to be asked (maybe covered in a later article):

  1. Why do the IN campaign and other organisations believe we will be economically worse off my leaving the EU mind boggling?
  2. How much could the United Kingdom have grown if been outside the EU if we had followed countries like Switzerland and Norway?
  3. Would the United Kingdom get a better or worse deal than Switzerland and Norway if the UK left EU?

Good Articles (subscripted)

  1. None

References (superscripted)

  1. World Bank open data:http://beta.data.worldbank.org/

Change log:

  1. Created 4/6-2016