THE BLOG

Why the State Bank of India Backs Brexit

15/06/2016 12:55

Countries outside the European Union will welcome us with open arms if we vote to leave the European Union. It's a fact that is difficult for the official Leave campaign, or for UKIP, for Labour Leave, or for Leave.EU, to get across.

Let's take India as a case study in what's going wrong in the European Union. Unlike the American government, who - acting against the views of 59% of the American people - has intervened in our referendum campaign, the Indian government has not. It respects the sovereign rights of our country to make our own decisions. That's a much more mature approach, but we can't use it as a political football in the way that Obama was used by the 'In' campaign (to the point of Obama becoming a puppet voice delivering a speech which appeared to have been written by Downing Street advisors).

The State Bank of India says that Brexit will benefit both India and the European Union economically. Now I don't accept that we'll be losing trade with the EU by leaving; it's in their interests as well as ours for our Single Market access to continue in one way or another. But interestingly their chief economic adviser said that "the U.K. may very well be compensated for the loss of market in the EU by gains in India".

The 'IN' campaign proudly maintain that the UK exports more to the Republic of Ireland than it does to India and China put together. That's not a fact to be proud of. We should hang our heads in shame that we've neglected an emerging market of over 1 billion people, whilst the EU squabbles over its own trade with India.

It wasn't always this way: the UK was once India's dominant trading partner, but it's gradually declined to the point that now the USA trades with India four times more than we do. Seventeen countries now trade more with India than we do, including Nigeria and the tiny Gulf state of Kuwait.

Our European Union membership specifically prevents the UK from negotiating a free trade deal with India. The EU acts as a barrier to external trade. Fundamentally it's a protectionist customs union. If you're in the club, or have a reciprocal agreement with the club, they'll look after you. The lack of any such arrangement with India has caused our trade with India to fall off a cliff. Could the British government have done more? Yes. But the bottom line is that a free trade deal - the one thing which would make a real difference - is off-limits to us unless we leave the EU.

The number of admissions of Indian students at British universities has halved in recent years. So whilst EU students get an incredibly good deal to come and study in the UK, non-EU students have problems. We give them no help and charge them huge fees. We're desperate for young, bright, up-and-coming engineers in this country but we deport Indian graduates in that field if they haven't found a well-paid job within just two months. Meanwhile, an EU student can come, take advantage of the UK's student loan scheme, return home and likely never pay off the debt that they owe to the United Kingdom.

The situation in India is mirrored amongst most Commonwealth countries, which incidentally cover a third of the world's population across 53 nation states. Just imagine the trade that we could do if only we were allowed to! Indeed, the Commonwealth covers four times as many people as the European Union. We should be looking towards America too; it is the world's biggest trading market (as one nation it overtook the entire declining European Union last year according to the IMF) and yet the EU is woefully mismanaging a proposed trade deal with them.

The world is preparing to trade with an independent Britain. We need to grasp the opportunity.

If only we were to look at the wider world, we'd see that the European Union isn't the future but the past, a 1950s solution to a 1950s problem. In 1980 the current 28 nations of the EU made up 30% of world GDP. Today it stands at 16.5% and declining fast. The EU is an utter irrelevance in modern times of super-fast broadband and conference calls, of long-haul flights and where most of the world speaks at least some English, we have a choice. We can either tie ourselves to the sinking ship of the 500 million people in the European Union, or we can be good friends and trading neighbours with those 500 million people - but open our eyes to the wider opportunities from the other 6.5 billion people in the world.

One mindset is insular; the other is global. Bereft of arguments, remain likes to call us little Englanders. The truth is that they're little Europeans.

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