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[...] For a start, it is technically dubious to refer to the UK as the world’s fifth-largest economy. That applies only if you convert national income in sterling to dollars at current exchange rates. But of course, £100 goes further in Mumbai than in Manchester, so if you measure the quantity of goods and services produced in any economy, Britain is currently the ninth-largest.
That still ranks the UK as large and successful, but with less economic activity than the poorer but more populous India, Russia, Brazil and Indonesia.
That technical challenge might be easy to ignore but if you live by dodgy statistics you must also suffer the consequences if they move against you. Sterling only has to fall 8 per cent in value against the euro, from €1.26 today to €1.14, for France to overtake the UK as the world’s fifth-largest economy in 2016 on prevailing exchange rates.
Most economists expect a larger depreciation if the UK votes for leave, raising the unfortunate irony that Brexit will see France, as then the world’s fifth-largest economy, laying down terms to its now smaller neighbour.
More important than the technicalities is that the Brexiter argument is a non sequitur. If it was automatic that economic size brought trade deals, there would be one between the US and China, undoubtedly the world’s two largest economies.
Yet instead of trade pacts, this week saw the spectacle of Donald Trump telling voters in Indiana that the US could not continue “to allow China to rape our country”.
Look at the top 10 economies in the world and you see few ratified trade deals except for the ones European nations have forged by being members of the EU. Nothing else appears to link size of economy to negotiated trade deals.
If accuracy and logic are not important to you, surely Britain’s historical success will enable it to continue thriving outside the EU. Perhaps, but the real lesson from history is that EU membership has not stood in the way of Britain becoming more successful. [...]
That EU effect is more than the most optimistic predictions of the 1970s.
Britain’s period of EU membership has been a great success story, built on its mix of social and liberal economic traditions, with an outward facing culture and deep economic ties with continental Europe.
Erecting unnecessary trade barriers, pulling up the drawbridge to European migrants and giving succour to the most reactionary forces across the continent would threaten the relative prosperity Britain has gained over the past 43 years. [...]
Full article on Financial Times (subscription required)