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26 May 2016

What kind of EU: Economics

What kind of EU: Economics

Ahead of the EU referendum on 23 June the Evangelical Alliance is publishing a series of pieces exploring key issues relating to membership of the EU and how Christians might approach the vote. 

As an organisation we take no view on whether the UK should remain or leave the EU and the pieces represent the personal opinions of the authors. Articles have already considered identityfreedom, and democracy, and next week the final piece will examine the missionary context of Europe. 

"It's the economy, stupid."

The famous quote from Bill Clinton during the 1992 presidential campaign could easily sum up the current Brexit debate. The economy has dominated the debate over the past couple of months, with only discussions about immigration and internal Conservative party battles rivalling it for attention. Whether it is claims of the £350 million per week we allegedly send to the EU or allegations that 3 million jobs 'depend on membership', economic factors have drowned out all else in the considerations presented to the British public ahead of June's vote.

At one level this is understandable as according to received political wisdom if you win the economy argument you win the vote. It's also very apparent that these issues really do matter as we consider whether to leave or to remain within the EU. It does matter whether your job is secure or the mortgage rates that might affect my family increase. And of course from a Christian perspective economic stability creates the opportunities for eradication of poverty and the safety net of a welfare system we all rely on at different stages of life.

But as Christians our loyalty is not to an economic kingdom but rather to the kingdom of God and so this article will try to consider the deeper values that should underpin our engagement with EU debate. We'll start by looking at some of the key issues in the debate before considering some biblical principles and then at some specific economic policy factors, all while attempting to share kingdom principles and without telling you how to vote,

The facts and figures behind the debate

If you weren't careful it would be easy to think the economy was the only factor in how we should vote in June. Bombarded by statistics in competing narratives of jobs and trade, pounds and pence, it is sometimes hard to know where to turn. We want to challenge the rationale behind the pre-eminent place of economic discussions, but for now let's consider some of the mind boggling numbers in relation to the relationship between the UK and the EU.

The EU is by far the UK's biggest trading partner. Accounting for 45 per cent of exports and 53 per cent of imports together this amounted to a whopping £519 billion in 2014. Taken as comparison exports to the United States were £88 billion and £18.7 billion to China compared to the £230 billion exported to the EU during 2014.

In terms of trade the UK's relationship with the rest of the EU has been estimated to sustain around 3 million jobs in the UK. It's important to qualify that this figure is for trade with the EU area, and, as the House of Commons' briefing paper notes, includes all jobs linked down through a supply chain, so some jobs would not directly or necessarily be lost by withdrawal of EU membership. The Remain campaign have recently claimed that leaving the EU would lead to an economic shock that could lead to the loss of 800,000 jobs over two years, however these claims have been greeted with considerable skepticism.

The UK is a net contributor to the EU budget and has been almost every year since joining in 1973, with contributions estimated at between £8 billion and 10 billion per annum. This figure takes into account the UK's membership fees, the UK rebate on these fees and the money the UK receives from the EU in programme expenditure, for example to farmers through the Common Agricultural Policy.

It's clear that a purely economic consensus on EU membership is going to be hard – hence the competing claims on both sides – and if all you were to consider were economic factors your vote will largely depend on whose figures you believe.  But if that is the case perhaps we are asking the wrong question. Perhaps we too are being sucked into the rational self-interest that so dominates our political conversations in a consumerist culture. For example, research has suggested that if voters were convinced that they would be £25 better off per year either remaining or leaving the EU, their vote would be swayed.

What is the economy for?

An important question at this stage to ask is, "What is the economy for?" That there could even be a purpose beyond the making of money for our economy is so countercultural it is almost unheard of in current political debate.

It wasn't always like this, both generally and for the EU. In Ben Ryan's Theos essay he points to the roots of the European project as being constituted by mainly Christian politicians who saw European trading co-operation as the means to promote peace, solidarity and better working conditions for the peoples of Europe. Whether or not you agree with their aims, or with the EU, it was clear that this was trading with a purpose, that economic growth was subservient to greater moral purpose.

God's economy

More importantly, it is clear that this is a biblical perspective as well. From Jesus' statement that 'you cannot serve both God and money' (Matthew 6:24) right back to the law and the prophets it's clear that economy is subservient to society in its moral purposes as given by God. Before returning to the specifics of the EU debate it is worth considering what a Christian understanding of a good economy actually is to help us frame our thinking.

A Christian understanding of the economy is one based on shared relationships and promotion of the common good. It is based on the premise that there is a purpose for economic activity beyond that activity itself and that purpose is found in promoting the wellbeing and relationships both between people and God, and between people themselves. The Jubilee Centre have frequently promoted a relational approach to economics. Throughout the Bible wealth creation is never encouraged for its own sake and indeed there is a special responsibility for those who are rich to care for the most vulnerable in society. It is a model based on mutual benefit and not 'getting one over' on the competition, employee or employer.  It is a model that promotes relationship, community and family, and above all is incompatible with selfishness and greed.

It is an economy where ethical values are at the heart of financial, legal, political and business worlds. Where the value of business is recognised holistically alongside the value of those who work in the business and are served by the business.  It is an economy where industrial relations should be strong because both sides look for constructive solutions to disputes, where the workforce supports the business and the management make the wellbeing of their workforce their priority.  In short it is a more relational and more selfless society.

With that background we have a deeper framework to engage with the current debates. As we consider issues of trade, employment, free movement, migration and debt which are all key economic issues in the EU debate, we may consider how policies may better reflect the values of the kingdom of God and whether the UK's membership of the EU is a help or hindrance to achieving them.

Economic growth and debt

Economic prosperity is not everything when it comes to casting our vote, but it is still a factor.  It allows a context for public services and welfare to be funded and at a personal level allows job security and the chance to give more to the work of the Church. Will staying in the EU enable the economic stability that will build a better society and promote the common good or is this better found by leaving the EU?

Related to this, the EU, in common with the UK, is burdened by debt. This not only enslaves people individually causing huge harm but also directly causes challenges to economic prosperity and society, most starkly seen in Greece. Would leaving the EU enable the UK – and the EU – to tackle our debts effectively or would this be better done by remaining in?

Trade, free movement and migration

The EU was built on trade and the common market has been one of the greatest success stories of the EU connecting over 500 million people in a market worth €13 trillion. Connected to this is the principle of free movement which has been a cornerstone of the European project giving individuals the right to access employment and travel across European borders.

The EU encourages investment across borders, and creates jobs in neighbouring countries with greater ease. This freedom of capital and trade has certainly provided significant benefits for businesses operating across borders, and consequently for many reliant on such businesses for employment, goods and services. However, this can work the other way round with companies employing overseas instead of in the UK, and investment flowing out of one country instead of into it. Likewise, while the opportunity to move freely and work across the EU provides opportunities, it also could increase competition for jobs in the UK.

In addition, movement across borders also includes access to services, and the provision of more generous services in one country could create a strain on those services, and the finances to provide them.

It is not just the availability of employment that is affected by our membership of the EU; various developments of workers' rights, for example around working hours, maternity leave, and holiday, have been promoted and initiated from the EU. However, in many areas, such as maternity leave and holiday pay, the UK's provision exceeds the minimum required by European law so these are unlikely to change. Other areas of employment regulations, such as redundancy consultations and protection of jobs when firms are taken over or activities outsourced. Does the EU, on balance, help employment – both quantity and quality – or hamper it?

Conclusion

The EU has become primarily an economic project, and while economic purposes were present from the outset in the trading community, there was a vision for Europe which stood above those considerations and motivated them. What has emerged is an EU that has had its core moral purpose hollowed out, which sought economic prosperity and wellbeing, and has attempted to retain the fruits without the foundation.

For the future of the EU, whether the UK remains in membership or not, there needs to be a rediscovery of the values that undergirded the original objectives. And for the UK, whether it remains in the EU or not, it needs to build economic policy on a broader vision of the common good rather than what leads to the best looking economic figures.

Questions

  1. What are the foundational principles that economic policy should be built on?
  2. What is the purpose of the economy, and in particular the pursuit of economic growth?
  3. How can Christian teaching inform our understanding of economic policy?
  4. Does the EU help or hinder the development of a moral economic vision?

Prayer points

  1. Pray for economic policy makers to look beyond short term economic considerations when taking decisions affecting employment, welfare and business.
  2. Pray for wisdom in understanding the impact of economic decisions, and in particular how the EU affects these decisions.
  3. Pray for action that reflects and promotes the common good in our economic system.

Take a look at our  May/June special issue of idea focusing on Europe, and more information about the EU referendum can be found here.