EU Membership: Economic Benefits

Debate between Oliver Colvile and Alison McGovern

Wednesday 15th June 2016 Commons Chamber

[Alison McGovern (Wirral South) (Lab)]

As part of Labour’s in campaign, I spoke to a woman on the phone last night. She was not sure how she was going to vote, and she did not know who to believe. She said that she just wanted the facts, so that is where I begin. We must be absolutely clear: globalisation is happening, and it is not going away. With democracy in eastern Europe and the opening up of China and India, capital, goods and people move freely across borders like never before, creating opportunities but also causing disruption. The globally connected economy means that problems in the American mortgage market can trigger a recession that spreads around the globe in hours.

That is the modern world. For us in Britain, each generation must answer this question: although we accept free trade because of the opportunities it offers, what rules are required to make the market fair? The global economy offers the UK huge potential. We have advanced service sectors, and our creative economy has boomed. Nowhere is that more obvious than in our capital, which is perhaps the most globalised city in the world, but go to Manchester or Liverpool and the story is the same.

We must be honest about globalisation. Although it creates opportunity for many, it causes others disruption and dislocation. Jobs are created, but jobs are also lost. Capital movement can grow the economy, but capital hiding—offshore and untaxed—hits our public services. How do we get maximum gains from this changing world, and how do we minimise the disadvantage? That is the real question to be answered by the EU referendum.

Amid all the misinformation in this debate, there is a deep dishonesty about the campaign to leave the European Union—or perhaps I should say the two campaigns, because there are two completely contradictory arguments up and running at the same time. On one hand, we are told that we must leave so that we can stop the disruptive effects of globalisation, close the borders, introduce protectionism and give British workers preferential treatment.

[Oliver Colvile]

Does the hon. Lady recognise that the Brexit campaign has also led people up to the top of the hill in relation to immigration and could be doing enormous damage to community relations?

[Alison McGovern]

I could not have put it better. Those who are feeling the sharp end of globalisation are presented with a particular suggestion about that as a solution, but as the hon. Gentleman says, it is nothing of the sort. It would sabotage the British economy, destroy even more jobs and reduce revenue for public services.

On the other hand, there is the other set of leavers—the people who think the problem with the EU is, as we heard earlier, that it shuts us off from globalisation. They say we should leave Europe and face the world, embrace non-EU immigration and let the market rip. Even if we ignore the difficulty of facing the world when we have no trade deals, that is not an attractive option. It would mean even more churn in the British economy, even more losers from globalisation and an even greater sense of dislocation.

Those are therefore two bad options and a false choice for Britain, but there is one even bigger deceit: the lie that we can have both those things at once. That is not true, because people are either up for free trade and taking part in the world, working with others to make markets work, or they want to shut Britain off from the world. By allowing that confusion, the leave campaign is misleading people. This dishonesty, which is put across as plain speaking, is about telling low-paid workers that there is an easy remedy for their woes when, in reality, the medicine will only make the patient sicker.

I agree with the Brexit lot on one thing: it is time for plain speaking. The truth is that the world economy has globalised, which brings big opportunities but also brings disruption and loss to many people. We will solve that not by running a siege economy or letting the market rip, but by staying in the single market and taking advantage of the opportunities that will come in the next few decades as we properly integrate services and energy into that market, which is where we stand to benefit. Given that the EU is the market for 47% of our exports, we should help eurozone countries make the economic reforms they need so that they can buy more of our goods, not just leave them to fail.

As we know, co-operation is key to how we maximise our success and central to minimising the negative effects of globalisation. It is only through co-operation in the EU that we will make sure there is no race to the bottom on working conditions. For a low-paid worker, Brexit will mean worse conditions and worse career progression. For a higher-paid worker, Brexit will mean fewer opportunities, less trade, worse pay progression and higher taxes. For a pensioner, Brexit will mean less money to invest in the pensions system. Even pro- Brexit economists acknowledge that there will be a short-term hit.

I have talked about the long term, but let me take a moment to consider the short term. Brexit will mean a recession, as if we needed another recession after the horrors of 2008. Unlike in 2008, however, we would not have a Government willing to work with others around the world to solve the crisis; we would have a recession under the most right-wing Government in living memory, and we would have a closed economy that would make all of us, but especially those with the least, poorer.

This is the question on the ballot paper next week. It is a choice between prosperity in the EU and austerity out of it; between influence in the EU and irrelevance out of it; and between facing up to the modern world economy and making it work for Britain, and pretending that we can solve our problems by quitting, which we will not. Let us vote remain.