09 May 2016

Chatham House: Britain, the EU and the Sovereignty Myth

• The British economy has prospered in the EU. The UK boasts higher economic growth and lower unemployment than most major developed economies. It attracts the most foreign direct investment in the EU, and is ranked among the most open places to do business in the developed world. British economic weaknesses, such as low growth in productivity, are self-inflicted.
   
• However, a successful economy and free-movement rules have led to high levels of immigration from the EU. Overall, this has been positive for the UK economy, but it has exacerbated preexisting pressures on public services, may have restricted wage growth in some sectors, and is a source of widespread public concern.
   
• Is it time, therefore, to return economic and political sovereign power entirely to Westminster? The risks of doing so are extensive. For example, the UK would be excluded from the process of EU rule-writing, making it a less attractive location for foreign investment. The UK is unlikely to strike better trade deals alone than it has currently through the EU. And the UK would have no say in the design of more open EU markets for digital, financial and other services. Leaving would also have a destabilizing effect on the rest of the EU, which will remain Britain’s largest market.
  
  Full paper

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