Monday, 5 January 2015

A UKIP election victory would add £30 a week to your household bills

The UKIP proposition is simple. Pull out of the EU and stop immigration. Their argument goes along the lines of this. If we didn't have to give the EU billions of pounds a year we'd be financially better off and if we didn't have lots of immigrants coming into the country we wouldn't have any unemployment, because British workers would do the work.

What is beyond my comprehension is why no one seems capable of putting into simple terms why this wouldn't work for the UK economy. Now it may well be that there are people who are willing to completely sacrifice our prosperity because they hate foreigners. I don't really believe that they are anything other than a tiny minority. I happen to believe that the problem the Pro EU side have in making their case is that it is dominated by people who are unable to speak in anything other than jargon. Nigel Farage, despite being a toff who spends his life hobbing with the knobs, puts across the image of being a man of the people. We know he likes a pint and a cigarette. He was recently in Mill Hill at the Rising Sun pub having a tasty slap up meal, with his well off friends. Oddly enough, this man of the people chose the nicest and most exclusive joint in Mill Hill for his trip. Don't get me wrong, I love the Rising Sun and often eat there when I want to show the good side of Mill Hill to people. But if Farage really was a man of the people as he makes out, surely he'd have had a pint in the Bridge and egg and chips at Jennys? But that is the nature of the UKIP proposition, it is all smoke and mirrors.

What anyone who is considering voting UKIP needs to consider is what the effects of their policies would be. To understand this, you need to understand what drives the wealth of the UK. Ask yourself what the UK is good at? What UK products and companies are world beaters. A 'man of the people' such as Nigel Farage would surey recognise the Premier League as an extraordinary product and a global success. Clubs such as Manchester City, United, Liverpool, Arsenal and Chelsea have huge global viewing figures for their games. This brings huge amounts of revenue into the UK.  The Premier League is a unique cash cow for the UK economy. What is interesting is that the likes of Farage were predicting the demise of football as a commercial business a couple of decades ago when the European Court upheld the Bosman ruling. Strangely enough, rather than seeing an end of transfers, they are now at ridiculous levels. However you look at it though, no one claims that the free movement of labour in the EU has been bad for business for the likes of City, United and Chelsea. What would you rather watch? The likes of David Silva, Ronaldo and Mata or the kick and rush hoofing game we so loved in the 1970's?  Would Nigel Farage's rules on immigrants apply to footballers? It's not like there aren't millions of footballers who'd love to play for these clubs, they just can't do the job as well.

So you may ask, what have millionaire superstar footballers got to do with my household bills going up by £30 a week? The free movement of footballers does not affect the cost of a kilo of turmips in my shopping basket? Well everything and nothing. You see, rather like the foriegn footballers, who are employed by Premiership clubs because they are the most suitable people to do the job, that kilo of turnips were most likely harvested, washed and packed by foreign labourers. Like it or not, they are employed because this is quite arduous work and it is low paid. The current UK unemployment rate is 6%. This is remarkably low.  If it wasn't for immigrant labour, then those turnips would either not get picked at all or the producers would have to pay a significant amount more to UK workers, to tempt them to do the job. The laws of economics state that when there is high unemployment wages go down and when it is low, wages go up. The UK farming industry can only produce crops at the current costs due to migrant labour. Stop this and the costs would rocket or production would stop and we'd have to become even more reliant on imports.

Every food item produced in the UK in your weekly shopping basket relies to some degree on migrant labour. A ban on this would reduce production, forcing up the costs of everything else. It is not only the food prodcuers that would see higher costs. Next time you go shopping, have a look and see how many people working in your local shops are immigrants. See how many people working in the petrol stations, driving your bus or train or collecting your ticket. Take all of these people out of the workforce and what would happen?

This takes us back to what we do well. London is an international hub for finance and commerce. Can anyone realisitically argue that making it harder to do business with Europe will help the City to retain its position as an international hub? We got a mini preview of what would happen in the Scottish Independence referendum, when several large banks announced contingency plans to move their head offices to London. Many international companies, with European operations based in London are very likely to review  this arrangement if the UK pulls out of the EU. Business hates uncertainty and no one really knows what would happen.

I was speaking to a friend who works as an economist and he said that in his opinion, in the short term we'd see a rise of up to £30 in our weekly household costs as the effects of a labour shortage hit us. In the long term he could see a situation where London lost its place as a major international hub, as multinationals chose to locate within the EU zone.

Of course, once the UK population started to feel the effects of UKIP policies in their pockets, things would change. Rules would be relaxed to allow migrant workers back in. Deals would be done to have access to EU markets. The trouble is that none of this would be on our terms, it would all be dictated to us, because we wouldn't have  a seat at the table making policy.

When you look at the UK economy, which is growing at an unprecendentaed rate and George Osborne is counting on to deliver an election victory, you have to ask the question "If the system isn't broke, why are UKIP so keen to get the spanners out?". It seems to me that with the rest of Europe in recession and stagnating, it is actually the other EU countries that have the problem. Is it really good for Poland and Romania that their brightest, best educated and most capable young people are jumping on Easyjet to the UK? Whilst the Daily Mail tries to portray the infux of Eastern Europeans as beggers, robbers and scroungers, most are extremely hard working people. Of course some are problematical, but they are a tiny minority. The UK is a success story and the constant infusions of talented people are one of the major reasons. If we were to vote UKIP we'd be risking killing the goose that laid the golden egg. Sadly UKIP live in a logic free zone, where facts, figures and economics don't matter.

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