The British Question

Predicting the British General Election Result and the next few years

A humorous but apt Danish proverb is that “Prediction is difficult, especially when dealing with the future.” As the politicians finally stop pushing the merits of their policies and the British voters reflect on which way to cast their vote on 07 May 2015 general election, I will hazard some predictions about the likely general election result, as well as the political priorities that are likely to be pursued in the next few years in Britain. Most if not all of the predictions will probably come back to haunt me, but here goes nothing…

And the winner is…

My main prediction is that the Conservatives will win more seats than any other political party, even if the polls suggest that the election might be a close call. I also predict that the Conservatives will gain an overall majority, rather than a hung parliament. The main reasons for this prediction are all to do with Labour, rather than the Conservatives or their policy initiatives:

  • Labour is going to be decimated in Scotland and the other political parties will have almost no influence there. The clear winner is going to be the Scottish National Party (SNP) and with this development, the dynamics of Westminster-based politics will change dramatically, especially for the Labour Party.
  • The British public, including many traditional Labour voters, remain extremely sceptical about the final Blair / Brown years, which they blame a lot of the issues confronting society, not least being drawn into recent wars, immigration trends and the state of the economy. Many voters will switch to the SNP in Scotland and the Conservatives and/or UKIP in England.
  • Large segments of the general public neither relate to nor trust either Ed Miliband or any of the current crop of Labour leaders. In this respect, I cannot help but experience a sense of déjà vu in respect to the Michael Foot / Neil Kinnock era which bodes ill for the Labour Party.

The Conservatives will profit from the above and will form the next government. This is particularly the case because the UKIP vote, though significantly understated in the opinion polls, nevertheless does not seem to be as much of a threat to the Conservatives as previously anticipated. This is as much to do with the current electoral system as UKIP’s almost wilful self-destruction through incompetence combined with persistent gaffes by its candidates that undermine the message that it is neither anti-immigration nor racist. Despite it all, UKIP retains strong support in parts of England.

My other two predictions concern the issue of austerity and its implications on British society, as well as the future of Britain in the European Union.

EU Referendum: plus ça change…

Regarding the in-out EU referendum scheduled for 2017, the Conservative Party will finally have to break cover and clarify whether it belongs to the yes or no camp. If the Conservatives are able to form a majority Government, as the traditional party of business, it will ultimately side with remaining in the EU, whatever the pressures of UKIP or the antics of its noisy Eurosceptic wing. After all, the Conservative policy of offering an EU referendum in 2017 was a strategic move calculated to defang UKIP and yet placate the more rabid anti-EU Tories; it was not a decision to leave the EU per se.

Their shambolic position on the EU reflects the fact that David Cameron and other senior members of the Conservative Party, on balance, favour remaining in the EU.  The political price to be paid for campaigning to remain in the EU is that this will prove to be the second and final term of office for David Cameron as the Prime Minister and possibly as an MP. The SNP, LibDems and Labour will campaign in favour of remaining in the EU. Moreover, the business sector will make its views in an increasingly vocal and forcible manner and the wider pro-EU voice will be more pronounced than has been the case hitherto. Unlike the present time where few speak up, others, such as art, culture and sport personalities will do likewise as a means of counteracting what will remain, in the main, a strongly anti-EU media.

Should a coalition Government arise, the LibDems would have to perform much better than anticipated to have a chance of running the country. The other possible coalition partner to the Conservatives, despite protestations to the contrary, is UKIP. If the latter coalition government were to emerge, the political price to be paid to UKIP will be a Conservatives campaign to leave the EU and to hold the in/out referendum in 2016, rather than 2017. A combination of the Conservatives and UKIP running to leave the EU would be a disaster for Britain (as well as the remaining EU countries already battered by the travails of Greece and holding the Eurozone together), which would be very hard to counteract, especially with the majority of the British media supporting their position. Britain would come to regret the likely outcome in the medium to long-term.

Under any scenario involving a referendum, the EU will have to show flexibility and do whatever it takes in to facilitate the UK remaining in the EU. As I have previously argued, there will not be fundamental EU treaty amendments for the sake of keeping Britain in the EU boat, such as a reform of the freedom of movement or the other three fundamental freedoms of movement, namely of capital, services (which is extremely underdeveloped) and goods. However, the EC and the EU will be more flexible in areas such as benefit entitlement in the EU area, which in any case is almost entirely determined by nation states, rather than EU directives and regulations.

If the referendum were to be held today, I believe the outcome would be an outright rejection  of the EU. The great majority of British media is extremely anti-EU and anti-immigration and would contribute to a no vote. However, there could be up to two years for business, society and voters to reflect on the not insignificant advantages of being part of the EU, as well as the potential consequences of Britain going it alone in an increasingly globalised world. A re-orientation towards the old and new Commonwealth and North America is no longer adequate to guarantee current, let alone future prosperity. An emphasis on trade at the exclusion of everything else that the EU brings simply does not cut the mustard in the modern era, where problems such as environmental issues and tax agreements require regional or global responses, rather than national ones. Turning our back on 27 other next door neighbours around us in Europe is simply not sustainable in an economic, social, political or any other sense.

I retain great faith in the capacity of the British public to eventually do the right thing. The following Winston Churchill quotation springs readily to mind: “The Americans will always do the right thing… after they’ve exhausted all the alternatives.” Substitute “Brits” for “Americans” and you get the gist of what I mean. The outcome of the EU referendum will be a narrow “yes” majority to remain in the EU. The alternative does not bear thinking about.

Austerity ad nauseam

The last prediction is that the squeeze on the public sector is set to continue for the next few years and it will further transform Britain and its welfare state, resulting in a more divided and fragmented society. There will be a repeat of the pattern set in the previous Parliament, namely a dramatic public expenditure squeeze in the first two years, followed by a gradual let-up as the term of office peters out and politicians look to be re-elected.

The Conservative Party does not deny that further cuts in the order of GBP 12 billion  in social expenditure are in the pipeline, even if it is rather coy about how exactly this will be achieved. If the last Parliament was anything to go by, the brunt of the cuts will continue to be borne by the more vulnerable members of society, while corporations and the wealthy are spared.

There will continue to be a lot of talk about benefit scroungers (British and EU) to justify the cuts which will fall disproportionately on the working poor and non-working segments of British society. The austerity agenda continues to offer handy political cover for a significant reduction in the size of the state and the social and welfare infrastructure, including local government. This is set to continue, spreading more deeply to areas such as police, judiciary, military, etc. since the other options have been largely exhausted. The alternative would be to put the squeeze (e.g. means testing benefits of various sorts, higher taxes, etc.) on the middle classes, the retired and the wealthy; this will not happen if the Conservatives hope to be re-elected thereafter.

In the meantime, some of the things that Britons are most concerned about such a shelter (sufficient, affordable and good quality housing), health (NHS, access and quality) and education (primary, secondary and tertiary) will continue to experience gradual deterioration. These are simply not great priorities for the Conservatives. Their traditional supporters are capable of by-passing any current or future shortcomings in state provision and directly accessing the highest quality services that money can provide, though the phenomenon of the “squeezed middle” will ensure that political capital and financial resources will still be devoted to these fundamental themes.

Instead, the (EU and non-EU) migrants will continue to act as the lightning rod for people’s frustration with a slowly crumbling system, while those that have been running these very systems for decades or generations are largely spared the British citzens’ ire. After all, if housing is unaffordable and private renting is insecure, the normal response in a modern wealthy country would be to stimulate significant additional supply and/or ensure that appropriate protections are enacted. This will not happen. If there are not enough school places or hospital beds, then public investment should deliver greater supply while still maintaining standards. This is highly unlikely to happen either. Yet it is Westminster that is responsible for recognising, responding to and securing these changes over the medium term, not individual citizens looking to access these services, regardless of their nationality, race or creed.

We shall know the result of the general election soon enough. I sincerely hope that most of the above predictions prove to be wrong, in which case I will gladly eat my hat.

Ricardo Pinto, AngloDeutsch™ Blog, www.AngloDeutsch.EU


Europe is a litmus test: Britain and a possible EU Referendum

As expected, a key battleground of the British General Election due on 07 May 2015 concerns whether Britain should remain in or out of European Union (EU). The position of the main political parties is now clear namely that Labour, the LibDems and the SNP are all fighting the election on the basis that they wish to remain in the EU, whereas the Conservatives are fighting on the basis that if re-elected, they wish to hold a referendum in 2017 on whether to stay in or leave the EU. The Ukip party´s position is to leave the EU as soon as possible, preferably before 2017.  The manifesto positions are summarised here.

I have written about this the possible Referendum in 2017 before (British Voters and EUroscepticsm: much ado about nothing?), namely that it does not actually rank highly in the the average British voter´s list of priorities.  When the Ipsos MORI poll of January 2015 asked British voters about their top concerns, four issues predominated: healthcare (almost half of voters), economy (one-third) followed by asylum and immigration (one-quarter) and education/schools (one-fifth). Europe/EU as an issue is on par with unemployment, which at present is very low in the UK. Indeed, less than 10% of potential voters consider it to be of importance in their list of priorities. The same post also examined the full list of British voter priorities and concluded that they had very little to do with the EU, since they the vast majority of them, with the exception of EU immigration are largely or entirely the responsibility of the British government. In other words, voting for the Conservatives in order to have a referendum resulting in leaving the EU would change precious little in relation to the state of the NHS, the economy, the education system, the housing system and much else besides. The responsibly for these rests squarely with the British government, not with the EU.

There is, in my view, little or no point to quote research and studies regarding the economic and other consequences of leaving the EU. The fact is that both sides of the debate use the assumptions that best suit the conclusions that they they wish to arrive at. Ultimately, each voter will have to weigh up the pros and cons of staying and leaving the EU. The British voter had to do so in 1975 and chose to join the EU. I shall trust them to arrive at an appropriate conclusion in 2017, should the Conservatives regain power after the General Election.

I would note, however, that the Ukip has been simplifying the pros and cons of leaving the EU and, as I have previously discussed, have made strenuous efforts to conflate the issue of migration, use of the NHS, etc. with the EU which also underplaying the consequences of leaving the EU as soon as possible. By contrast the Conservatives have understood perfectly the consequences of leaving the EU but have simply pandered to their Eurosceptical wing while at the same time seeking to stop the hemorrhage of support in their traditional voters which have, until recent months, been increasingly warming to the dubious charms of the Ukip party.

The Labour party, unlike the LibDems and the SNP, initially gave the impression of sitting on the fence on this issue but have ultimately decided to stay in the EU, while reforming the EU budget and ensuring EU migration does not lead to workers’ wages being undercut.

On 07 April 2015, a leading British political figure waded into the debate and, for a change, it was not to denounce the EU, EU immigration, benefit scroungers and all the rest of the anti-EU rhetoric that has become common place in recent British politics. The person in question has this to say about the possible EU referendum, should the Conservatives be returned to power following the General Election:

“For me Europe is an important litmus test. I believe passionately that leaving Europe would leave Britain diminished in the world, do significant damage to our economy and, less obviously but just as important to our future, would go against the very qualities that mark us out still as a great global nation. It would be a momentous decision….

A decision to exit Europe would say a lot about us [United Kingdom] and none of it good: that an adventurous country has become a timid one; that one with global ambitions has opted to be a parochial bystander; that a country known for its openness to the world shuts the open door nearest to it; that a nation which has built its history on confidence towards others defines itself by resentment to others; that, with all the challenges of the world crowding in upon us, demanding strong and clear leadership, instead of saying ‘here’s where the world should go’, we say ‘count us out’. “

At last, a notable politician has the courage to stand up and be counted in relation to the importance of the EU to the UK and vice versa. The speech by this politician has been prominently reported but alas has also been widely dismissed for the simple reason that it was said by none other than Mr Tony Blair (Europe – a very good reason to vote Labour, 07 April 2015).

This is a terrible pity. Tony Blair has gone from being the darling of the left and the person that brought about Cool Britannia to achieving political pariah status in the years since he resigned in favour of Gordon Brown. The main reason for this is that he was he was blown off course by 9/11 and committed British troops to Afghanistan in 2001 and Iraq in 2003. Of course, many seem to find his ability to amass a personal fortune since leaving public office galling, though it is entirely his right to do so and simply mirrors what other ex-Prime Ministers have done.

Personally, I believe that because of the so-called special relationship with the USA, almost any other British Prime Minister would have made the very same decisions that he did at the time and that, just like Margaret Thatcher before him, not only has he defined British politics since 1997 but his legacy continues to do so today.

I admire his capacity to communicate and I respect his political courage for making this speech on the UK and Europe.

 Ricardo Pinto, AngloDeutsch™ Blog, www.AngloDeutsch.EU


British Voters and EUroscepticsm: much ado about nothing?

A Historic Turning Point Coming Up?

British voters are weighing up their options, but a strong element of anti-EU sentiment can be detected. The General Election scheduled for 05 May 2015 may well be turn out to be historic. If the Conservative Party wins, it is committed to holding a straight in/out referendum in 2017 about whether Britain is to remain in the EU or not. Previous posts have discussed the role of the eurosceptic Conservative wing and the role played by the Ukip party in the hardening Conservative and Labour Party stance in relation to the EU and EU-related immigration. Previous posts have also discussed a growing anti-Euro and anti-Islam sentiment in Germany, though it is materially different and not as pervasive as in the UK. No obvious anti-EU sentiment can be detected, which is why this post focuses mainly on Britain.

A reading of opinion polls illustrates that the balance of British public opinion, which has never exactly been EUphoric since joining in 1973, appears to be turning stringently EUrosceptic. The common assumption among quite a few politicians and a large segment of the media seems to be that life would become instantly better if only Britain would jettison membership of the EU, regain “control over its borders”, thus stopping “uncontrolled” migration along with excessive “interference” from Brussels in British affairs. But is this really the case? How much would actually change overnight, as far as the voters’ priorities are concerned?

Voter Priorities (2010-2015)

With the British general election not so far away, it is worth asking: just how much would actually change in people’s lives if the UK were to leave EU in terms of immediately improving life in Britain, based on the issues that matter to voters? To address this thought experiment, I have used the latest Ipsos MORI poll which asks about the top concerns of British voters.

British voter priorities 2010-2015

In January 2015 four issues predominated in terms what is important to voters, namely healthcare (almost half), economy (one-third) followed by asylum and immigration (27%) and education/schools (20%). Europe/EU as an issue is on par with unemployment, which at present is a pretty low rate in the UK (less than 10% note it as being important). A further five issues are of some importance in terms of voting intentions (benefits, taxation, housing, foreign affairs and pensions).

Table 1 shows some change since 2010, but the top four priorities have been fairly consistent. What is noticeable, however, is that whereas economy and education have not changed, both health and immigration have risen significantly in importance to British voters since 2010. Perhaps surprisingly, housing is increasing in importance but remains a secondary priority for British voters.

Voter Priorities and UK vs. EU Responsibilities

On the basis of the voter’s priorities, it is worth asking the question: what exactly are the responsibilities of the British Government and what is affected by the EU? On the basis of this question, it is possible to assess what might change for Britons.

UK EU competencies

Below I discuss these issues briefly, focusing first on the top four voter priorities:

  • Health: The Department of Health is entirely responsible for the NHS in terms of budget, priorities, reforms, etc. The main EU influence is in enabling the citizens of the EU-28 to be fully covered when they go to other EU countries without the need for additional health insurance for work, holidays, study, etc. It also allows people to choose where they wish to be treated, if the services are better or waiting lists are shorter. Health Tourism is an issue concerning non-EU citizens, rather than for EU ones. Nothing dramatic would change tomorrow, if the UK were to leave the EU in terms of quality of care, waiting lists, response rates or any of the other key issues of concern to the British voter. If anything, choice is likely to be reduced and extra costs incurred when British citizens travel to the EU. In terms of EU residents living in the UK and their use of the health service, not much would change. If they are working, they are also paying for the NHS through their National Insurance contributions. Otherwise, they would have to insure themselves privately and still have access to health in Britain. The exception would be if the UK chooses to deport, something that is barely imaginable. Verdict: no change. There are no magical solutions to the problems of the health service in Britain. The trends are neither recent nor connected with membership of the EU.
  • Economy: the UK is entirely in charge of its macro- and micro-economic destiny, since it is not part of the euro and thus not affected by the eurozone rules. The UK can affect its interest rates and implement quantitative easing to its heart’s content. The Stability and Growth Pact does have requirements, such as no budget deficits greater than 3% of GDP, no public debt exceeding 60% of GDP without diminishing by 5% per year on average over 3 years. Verdict: nothing would change. The UK and many other countries have greatly exceeded these limits at a time of serious economic and financial concerns. Britain is 100% in charge of its destiny, unlike Greece, Spain, etc. The Chancellor has already set in train further drastic reductions in public expenditure in the next period of Government. There is nothing about the programme of austerity that the British Government can pin on the EU, which is probably why this has not been tried, unlike for example Greece.
  • Asylum/immigration: as I have previously discussed, there are three elements here. Firstly, the UK is entirely in charge of its asylum policy and can choose who to let in and who to keep out. The same applies to non-EU immigration, which Britain is entirely in charge of. These elements comprised over 68% of immigration (together with Britons returning to the UK). The EU cannot and does not interfere with this but the balance (32%) is EU migrants. Many international companies are based in Britain that require access to the global pool of human resources to maintain their standards and profitability. On balance, basing a decision to leave the EU because of the freedom of movement of people principle and perceptions of “uncontrolled immigration” in the last decade does not appear to be justified. The unemployment rate remains at 5.8% (compared with 6.5% in Germany and 11.4% in the EU), despite a long period of intense economic and financial crisis. A critical issue that affects voter sentiment is net wages, which is determined by the companies located in Britain, as well as the public employers. If Britain were to stop EU and any other form of immigration (it is doubtful that employers would welcome this) the perceived pressures on health, housing and social services would not change since most EU immigrants would presumably remain. The exception is if such a police were to be combined with (forced) repatriation, which is unimaginable at the present time. If so, in theory Britain would have to make allowance for the 1.3 million Britons in other EU countries to return from EU countries to the UK. Verdict: possible short-term gain but likely long-term loss. The change would affect 32% of Immigration (2012 data) at the very most, but asylum and immigration would not end. There would only be perceptible changes, if a policy of terminating EU immigration were to be combined with deportation. I cannot imagine the average British voter wanting this or the consequences of enforcing such a policy.
  • Education/schools: this is entirely the responsibility of the UK and the pressures have been decades in the making. The issue that the EU has concentrated on is harmonizing qualifications and certification to ensure greater scope for freedom of movement of workers. This is advantageous for Britons as well as for others. Verdict: no change. The children of EU migrants make-up a small percentage of all children in schools across the country. If their parents are working here, they are entitled to study in Britain unless the Government and the British electorate wishes to evoke the deportation route.

So in terms of the most important issues to UK voters, there is not a huge amount of immediate gain from Brexit, based on the top four voter priorities. I am not even going to discuss the possible losses which would be the consequence of gaining control over EU immigration. Britain is already in charge of two of the three key elements of immigration, which makes up the majority of immigration. It is an island, which gives it more protection than others in the era of globalisation. The fear that there is uncontrolled immigration from the EU is overdone. When the economic downturn started, many EU migrants simply left the UK of their own accord and the migratory pattern turned towards Germany instead, the only EU country experiencing strong economic growth. When the UK economy started growing again in mid-2014, the immigration trend started reversing (though probably influenced by the A2 countries,namely Romania and Bulgaria). In any case, if the unemployment rate is 5.8% and decreasing, it is worth asking the question: who is employing the EU migrants and benefiting from their contribution to the economy, to tax inflows and to company profits? Might the answer be Britons and Britain? If the real issue is decreasing net wages and benefits in Britain, the question is who is gaining from this development? Might the answer be certain segments of British society?

Below I address the remaining voter priorities:

  • Europe/EU: The issue which the EU insist on is that the freedom of movement of people (as well as goods, services, capital) be maintained, allowing all EU citizens to travel for tourism, study, work and retirement purposes. Many, if not most Britons, enjoy some or all of these freedoms in one way or another. 1.3 million Briton live in other EU countries, and a large number travel, work, study, invest (e.g. second homes and pension funds) or retire in EU countries. This is something which is currently taken for granted at present. I believe the loss will be felt much more rapidly and keenly than most British voters may realise.
  • Unemployment: leaving the EU might result in less European migrants, but it would not put an end to EU immigration or lead to zero unemployment. British-based enterprises compete globally for many skills essential to maintain productivity and innovation. I doubt that there would be a significant reduction in qualified labour coming from the EU.It is not certain that the agricultural, tourism, hospitality, etc. businesses would be able to satisfy their needs simply from UK-based sources. There might be a reduction in less qualified labour and thus in unemployment but this is unlikely to be more one or two percentage points and will lead to other pressures. Verdict: possible short term gain but likely long term loss.
  • Benefits: very few EU migrants claim benefits. Immigrants were 45% less likely to receive state benefits or tax credits than UK natives during 2000-2011. They are also less likely to live in social housing than the UK born population. EU migrants of working age who are not students, not in employment and receive some kind of state benefit, amount to 39,000 or less than 1% of all foreign nationals in the UK and 1% of all EU nationals in the UK.  Recent analysis of 23 out of 27 EU countries shows that there are at least 30,000 Britons claiming unemployment benefit in countries around the EU. In other words 2.5% of Britons in other EU countries are claiming unemployment benefits, roughly the same as EU nationals doing the same in Britain. The numbers are tiny: the political and media coverage of this issue is completely disproportionate. If this is the case, an even smaller sub-set of them are living in Britain for benefit tourism/abuse purposes. Verdict: no change (but one less emotive topic for certain parts of the media and politicians to bang their biased drum about).
  • Taxation: the UK is in entirely in charge of all its taxes, including Corporate Income Tax, Income Tax, Capital Gains Tax and VAT. Verdict: no change.
  • Housing: The UK is entirely in charge of its housing policy, construction, planning system, etc. There would be fewer EU immigrants, which might affect the housing situation in terms of rent levels and house prices. However, this would only be a marginal effect since the trend in housing supply, demand and pricing is a long term trend of over 30 years and any nationality is able to buy property in Britain. I have already referred to the fact that fewer recent immigrants claim benefits and live in social housing than the UK born population. Verdict: no change. I have written the first of my blog posts comparing the British and German housing systems to illustrate aspects of this point.
  • Foreign affairs: in terms of foreign affairs this role is, to some extent, coordinated with the High Representative of the Union for Foreign Affairs and Security Policy for specific issues. In the main, each EU nation does its own thing and Britain is no different.
  • Pensions: the UK is entirely in charge of the retirement age, contributions, qualifying years, minimum state pension pensions, etc. The EU facilitates freedom of movement of people and capital, so develops rules to ensure that if people work in different countries, that their contributions are acknowledged and count towards their overall pension entitlement. Furthermore, it seeks to ensure, under the same two freedoms, that Britons and others can receive their state pension in any of the EU-28 countries without suffering from arbitrary reductions, cancellations, fees, etc. Since many Britons enjoy their retirement in the sun and have bought second homes in other EU countries (rather more than is the case in terms of EU nationals buying properties in the UK), it would appear that to be well worth remaining in the EU.

EUroscepticism: much ado about nothing?

Ultimately, it is up for each voter to assess their personal gain or loss from staying in or leaving the EU. Based on the analysis above, the anti-EU sentiment is much ado about nothing, as far as the most important issues to voters are concerned, except for the freedom of movement of people. The EU has helped to secure so many rights and opportunities across all 28 nations that it is hard to imagine life without them. It is not simply that not much would change overnight. A moment of reflection on what would be rolled back as a result of leaving the EU, should show just how much we perceive as being normal and do not even actively consider. The fact is that we usually do not miss that which we take for granted… until it is no longer there.

Ricardo Pinto, AngloDeutsch™ Blog, www.AngloDeutsch.EU

 

 

 

 

 

 


Freedom of Movement of People and Recent Immigration Trends in Britain and Germany

There is a great deal of discussion about immigration in Britain and Germany and the extent to which this is driven by the EU’s freedom of movement principle. In the case of the Britain, this is resulting in increasingly Eurosceptic public discourse due to perceived uncontrolled immigration and border, resulting in questions about whether to stay in the EU or  not. In the case of Germany, the concerns revolve around benefit abuse, especially the recent EU member countries such as Romania and Bulgaria, which acquired freedom of movement rights in 2014. This post examines EU and non-EU migration trends, including those from old, recent (A8) and new (A2) countries.

Recent Immigration has been at a Historical High

First things first: it must be noted that the net migration figures in Britain in the last decade are unparalleled. During the period until 1982, the UK actually experienced a net outflow of people. This means that more Britons, on balance, chose to leave Britain and were obviously received by other countries. Until 1997 there was an average net annual inflow of 50,000. With the accession to the European Union (EU) of the A8 countries (e.g. Poland, Slovakia, etc.) and, crucially, with the UK decision to allow people from these countries to work in Britain well in advance of being required to do so under the transition rules of the EU, this rose to a peak of 244,000 in 2004. It has been decreasing since then and reached 177,000 in 2012. The latest data suggest that net migration is increasing once again (209,000 in 2013), probably because of the influence of Romanian and Bulgarian immigration, combined with the fact that Britain’s economy is growing once again. Since these have much smaller populations that the A8 countries, this is not likely to last long. Broadly the same trend was evident in Germany but see below for variations, particularly in recent years where net migration has taken-off.

 Asylum seekers

In a previous post, we defined the key types of immigrant; asylum seekers are basically a sub-set of immigrants. According to Eurostat data, in 2013 there were 434,450 applications made to all EU-28 countries. The largest volume of applications was to Germany (126,705 or 29.1% of all applications in the EU), France (66,265) and Sweden (54,270). The UK received the fourth largest volume of applications (29,875) but this was noticeably less than the several other EU countries (6.8%). Given the size of its population and economy, the UK received a relatively modest number of applications during a humanitarian crisis which is considered to be the worst since WWII and is concentrated on Afghanistan, Syria, and Somalia. Nevertheless, the Office of national Statistics estimates that asylum seekers accounted for around 4.5% of UK immigration. The German equivalent is bound to be higher since it approves about 30% of the applications. But the fact is that the public perception of the volumes of asylum seekers is out of kilter with reality as discussed in a separate post.

Let us be clear about this part of the immigration debate: the Conservative-led Government does not propose turn asylum seekers away and, as an aside, neither does Ukip at the present time. The same applies to the German Government as well as AfD (and as far as I know PEGIDA) in Germany. This is only as it should be in humane, modern societies. It should be stressed that although there are international conventions governing this issue, each country makes its own decisions and determines which applicants to accept or not. Neither is this an area which the EU is involved in.

Net migration

The net migration is the difference between immigration (arrivals) and emigration (departures) since all countries exhibit a degree of turnover in their population. Ultimately, in terms of social and economic, cultural and other pressures that may build-up in a country, net migration is that really matters. Given our focus on UK and Germany, Table 1 shows two contrasting trends. Germany has been experiencing a very sharp increase in net migration during the period 2009-2012, a trend which has continued up to today. In 2014, the net migration in Britain reached 260,000 and 470,000 in Germany. We have seen in the previous posts, the public perception of asylum seekers and immigration in Germany contrasts somewhat with that of the UK. This is not to imply or suggest that immigration is not an issue in public discourse in Germany – far from it. However, in terms of public perception and public discourse, it is relatively equable, except in the case of the PEGIDA movement, which is specifically targeted at Muslims (see the recent a post on this issue), though there is a chance that it will implode following the resignation of, for the lack of a better expression, its colourful ex-leader. Generally though, the contrast with UK is evident. Yet the statistics show that new migration in the same period had been declining in the UK until 2014, undoubtedly influenced by Conservative party’s target of “tens of thousands” (i.e. up to 100,000) immigrants per annum, whereas it is increasing steeply in Germany. The German population rose to 81.1 million people in 2014, the fourth annual increase in a row, boosted by the highest level of net migration in more than two decades.

Table 1: Net migration in Britain and Germany (2009-2012)

  2009 2010 2011 2012
Germany 59,634 151,599 240,377 352,174
United Kingdom 229,000 256,000 205,000 177,000

Source: Table 7c: Net migration in European Union countries, 2002-2012, House of Commons Library, 2014

There be Foreigners in EU Countries: Freedom of Movement at work

Looking at the total figures, the countries with the largest number of foreign-national residents in 2013 were Germany (7.7 million), Spain (5.1 million), UK (4.9 million), Italy (4.4 million), and France (4.1 million). The countries with largest number of foreign-born residents were Germany (10.2 million), UK (7.8 million), France (7.5 million) and Spain (6.2 million). These figures include very large numbers of Britons (1.3 million), Germans (1.4 million) and other EU nationals living in other EU countries, not least in Spain and France. EU migrants accounted for 35% of the total migrant stock in the EU countries as a whole in 2010 living, studying, working and retiring in elsewhere than in their own country. This is, after all, one of the wonderful things that are taken for granted in the EU, right?

Of  Natives and Foreigners

Another interesting dimension is the proportion of migrants relative to the overall population. The table below illustrates that, overall, the UK and Germany had very similar levels of foreign-born inhabitants (12.3% and 12.4% respectively) as a percentage of the overall population. The latest figures are around the 14% mark for both countries.

Table 2: Foreign-national and foreign-born populations of DE and UK (at 1 Jan 2013)

  Foreign National, Number Foreign National % of total population Foreign Born, Number Foreign Born % of total population Total, Number Density of Foreign Born (x per 1000)
Germany 7,696,413 9,4 10,201,192 12,4 82,020,578 123
United Kingdom 4,929,710 7,7 7,828,376 12,3 63,896,077 124

Source: Table 10: Foreign-national and foreign-born populations of EU countries, at 1 Jan 2013, House of Commons Library, 2014

It should be noted that the percentage of foreign-born populations in the UK and Germany are in fact relatively modest compared with many EU countries such as Luxemburg (42.4%) and Cyprus (23.2%), both outliers, well as others such as Belgium (15.7%), Ireland (16%), Austria (16.1%), Sweden (15.4%), etc. The percentages do not appear to be out of line with similarly developed and advanced countries. Indeed, given Britain’s extensive colonial past, unlike Germany, Ireland, etc., suggests that the percentage could have been higher still. What is out of line though is the public perception of how many foreigners there are in the UK (47% more than is really the case), Germany (24%), something which is repeated in other European countries (see a previous post on the perceptions and reality of immigration). This misalignment in public perceptions and reality is even more pronounced when it comes to estimates of Muslims: UK (76% more than is really the case) and Germany (69%).

 EU and non-EU immigration

Another important dimension is the origin of the immigrants. Eurostat data demonstrate that in the case of Germany, a notable proportion of the immigrants (14.7%) are actually citizens returning to their own country. However, half are citizens from other EU countries, with the balance (34.8%) being non-EU citizens. The distribution is somewhat different in the case of the UK (16.1%, 31.4% and 52.2% respectively). In other words, Germany has mainly EU and own nationals as immigrants, whereas the UK has a similar proportion of nationals returning home, but a much larger proportion of non-EU immigrants. This may be explained by the greater influence of the old and new Commonwealth on the migratory patterns of the UK, as well as the economic malaise of the country in 2012. However, it should be made clear (see definitions post) that the UK is fully in charge of its own borders and of its own immigration policy when it comes to UK and non-EU nationals. The latter is not the responsibility of the EU.

The EU-related immigration (31.6% of the total) is the key element that the UK not in charge of because of the principle of freedom of movement of people, one of the four basic freedoms of the EU. Based on the data from 2012, the bulk of the immigration issue, as far as the UK is concerned, was not the EU and its freedom of movement, contrary to what one might conclude from the current political debate and the media reporting in the UK. The contrast with Germany, which does receive more than half of its immigrants from other EU countries, could not be greater. The German Chancellor and the President have gone out of their way to make it clear that asylum seekers and immigrants generally, including Muslims, are a part of the country. They have also made it clear on numerous occasions that the EU’s freedom of movement principle is not up for renegotiation.

Table 3: Immigration by Citizenship in DE and UK (2012)

Citizens of own country % Other EU countries % Non EU Countries % Total
Germany 87,245 14.7 298,541 50.4 206,389 34.8 592,175
United Kingdom 80,196 16.1 157,554 31.6 260,290 52.2 498,040

Source: http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=migr_imm2ctz&lang=en

The EU Accession Countries

The EU freedom of movement principle affected about a third of the immigration flows, whereas half were subject to immigration controls in Britain. Furthermore, the recent Accession countries that have been subject of such extensive debate in the media and political circles (the so-called A8 or Eastern European countries that acceded to the EU in 2004, including Poland, Slovakia, etc.) actually made-up 12% of all immigrants in 2012.

The above point reinforces the extent to which the immigration debate in the UK is distorted, though A8 immigration was certainly important during 2004 – 2010. Based on the data available relating to 2012, half of the immigration flows are entirely controlled by the UK and are subject to border controls. This has little to do with the recent Accession or “new” EU countries. Presumably the public is not particularly interested in reducing immigration from the “old” EU (15) countries such as France, Italy and Germany (i.e. 17.1% of the total). In terms of the recent members that are now eligible to work throughout the EU, namely Bulgaria and Romania (the so-called A2), 2014 started with a trickle of immigrants, but this increased steadily, so that net immigration is on the up. Consequently, the EU immigration debate has increasingly focused on the A2 countries where, in addition to the numbers involved, the implicit debate is often about the Roma communities from those countries.

Let us be clear about one thing: it is not the EU’s freedom of movement principle that has historically contributed the largest percentages of immigrants to the UK, except for a short period of time (2004 – 2010). This period coincided with a concerted effort on the part of the UK to actively court people from the A8 countries to migrate to the UK. The UK had made a political and economic decision that A8 immigrants were needed to sustain the economic boom and associated prosperity of Britain at the time. These decision cannot be used to subsequently blamed either the EU (after all, the transition arrangements were in place and the UK chose not to make use of them) or the people who heeded these official overtures from the duly elected British government of the time. Nothing can change these facts. The real immigration story, if there is one, is, has always been and will continue to be the old/new Commonwealth (ca. 26%) and the Other Foreign countries (another ca. 26%), as illustrated in the Table below.

Table 4: Immigration to the UK by Nationality, 2009-2012

2009 2010 2011 2012 % 2012
British 96 93 78 80 16.1
European Union 167 176 174 158 31.7
EU 15 82 76 83 85 (17.1)
EU A8 68 86 77 60 (12.0)
EU Other 17 14 14 13 (2.6)
Non EU 303 322 314 260 52.2
Old Commonwealth 30 31 29 31 (6.2)
New Commonwealth 141 156 151 98 (19.7)
Other Foreign 132 135 135 131 (26.3)
Total 567 591 566 498 100

Source: Table 2a: Immigration to the UK by nationality, 2000-2012, House of Commons Library, 2014

EU15: Austria, Belgium, Denmark, Finland, France, Germany, Greece, the Irish Republic, Italy, Luxembourg, Netherlands, Portugal, Spain and Sweden; A8: Eastern European countries that joined the EU in 2004, namely Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia; EU other: includes all other EU 27 countries (Croatia joined the EU later); Old Commonwealth: Australia, Canada, New Zealand and South Africa; and New Commonwealth: all Commonwealth countries not part of the Old Commonwealth, including those of the Indian sub-continent and African Commonwealth countries other than South Africa.

It would be great if we would refrain from denying the importance and value in economic, cultural and social terms of the EU’s principle of freedom of movement (of people, goods capital and services) to all European citizens. This applies particularly to Britons and Germans, who are themselves far from averse from making full use of the freedom of movement to study, work, retire and invest (e.g. second / retirement homes) elsewhere in the EU. For its part, the German government has always nailed its colours firmly to the mast, as have all other EU nations: freedom of movement is the foundation of the EU and is simply not up for discussion. To put it crudely, Britain can either like it or lump it, otherwise it has to leave the EU.

To make a decision about leaving the EU on the basis of a “swamping” by EU citizens or in response to “benefit tourism” (I a plan a separate post in the so-called abuse of benefits) and other vague anti-EU sentiment may make for good short-term domestic politics in a pre-election period but it is not logical or in Britain’s long term interest. I agree that there are criticisms to be levelled at the EU and that there is a legitimate debate to be had about the role of the nation-state and the principle of subsidiarity but the EU immigration debate is being used excessively to castigate the EU.

Conclusions

I am only too aware of the quotation: “There are three kinds of lies: lies, damned lies and statistics.” I do not expect all readers to be swayed let alone persuaded by the statistics that I have presented above, not least because some of them are quite dated as per the December 2014 House of Commons Library report used. I am sure that others can and probably will make an even more convincing case that Britain continues to be “swamped” by immigrants, that the key problems are the EU and the freedom of movement and that the sooner the UK takes full control over its borders and immigration policies, the better the UK will be much the better for it. So I only ask for consideration to be given to the following issues:

  • The numbers of asylum seekers has declined to pretty small numbers in the UK but an opposite trend is taking hold in Germany, especially because of the Syrian crisis. The numbers accepted by Britain are relatively small but larger in Germany. There is broad consensus about the importance of receiving asylum seekers as long as they are not bogus.
  • The UK had a major surge of net immigration during 2004-2010 and much of this was from the new EU member countries. The UK did not have to let in immigrants from the A8 countries at the time but chose to actively court them to come, live and work in the UK so as to satisfy its overheating labour market and prolong its economic boom at the time. The flows have declined dramatically since 2010, as has overall net migration to the UK but are increasing again, not least because the British economy is growing once again and Britons are employing the immigrants.
  • There is now significantly less immigration from the A8 countries such as Poland, so the debate has moved on to the A2 countries, namely the Bulgarians (population of 7 million) and Romanians (population of 22 million) and implicitly the Roma community (population of 10-12 million in the whole of Europe). The debate on welfare tourism and EU’s freedom of movement will continue in the UK and Germany, though in the latter case it focuses on specifically on benefit fraud/abuse.
  • The majority of immigrants to the UK in 2012 were either UK nationals or non-EU immigrants from the Commonwealth (68.3%) and beyond. This is an issue which the British government is entirely responsible for and exclusively in charge of its own borders. It is not an EC/EU issue.
  • Unlike the UK, the number of net migrants is peaking in Germany, contributing to population growth in the last four years. There is a lively debate about immigration and the PEGIDA movement has been growing. However, there is nowhere near the same degree of emotive talk on immigration, of being swamped, of uncontrolled immigration and so on, despite having almost identical levels of foreign-born population and absorbing increasing levels of immigration.

At the end of the day, the issue is not so much about numbers but about perceptions, emotions, geographical concentrations, etc. There are very real stresses and strains in society at large in Britain and Germany and immigration is a contributor to them. The politicians and media are tapping into those voter concerns but merely debating the symptoms of those concerns by focusing almost exclusively on the ills of the EU, the freedom of movement of people (but not capital, of course) and EU immigration. Would life suddenly be that much better in terms of housing, education, health, wages, employment, benefits, taxes, social services, environment, transportation, etc. as a result of leaving the EU (see the related post on the British Question)? Since the EU has either limited or no responsibility at all for almost all these I very much doubt it. The real causes of the stresses and strains, greatly exacerbated by austerity in Britain and long-term real reductions in net incomes in Germany, will be the topic of future blog posts. I believe that the real causes are to be found much closer to home than either politicians or much of the media care to acknowledge, especially in the build-up to a General Election.

Ricardo Pinto, AngloDeutsch™ Blog, www.AngloDeutsch.EU


The British Question: shall we stay or shall we leave the EU?

Since joining the European Union (or EEC at the time) in 1973, the United Kingdom has had an ambivalent attitude to being a member of the European Union (EU). The British general election due in May 2015 will determine whether Britain will hold a referendum over whether to stay or leave the EU. The skirmishes over the “British Question” or “Brexit”, in other words, whether Britain is to remain a part of the EU or not started long before the General Election.

EU Red Lines for Britain Staying

When Mr Jean-Claude Juncker sought to become the President of the European Commission (EC) his election manifesto had five priorities, the first four of which were:
• Creating jobs and growth.
• A European energy Union (diversify our energy sources, and reduce the energy dependency).
• A balanced trade agreement with the USA.
• Reform of the monetary union with a greater focus on social aspects (governance in the Eurozone beyond the ECB, reform of support to Eurozone countries in financial difficulties to take into account of the social impacts and strengthen the Eurozone’s voice in the IMF).

So far so good – nothing unexpected there. However, it is Mr Jean-Claude Juncker’s fifth priority (reproduced below with the original emphasis) that was a little bit unexpected and gave rise to the title of this post.

A fifth and last priority for me as Commission President will be to give an answer to the British question. No reasonable politician can ignore the fact that, during the next five years, we will have to find solutions for the political concerns of the United Kingdom. We have to do this if we want to keep the UK within the European Union – which I would like to do as Commission President. As Commission President, I will work for a fair deal with Britain. A deal that accepts the specificities of the UK in the EU, while allowing the Eurozone to integrate further. The UK will need to understand that in the Eurozone, we need more Europe, not less. On the other hand, the other EU countries will have to accept that the UK will never participate in the euro, even if we may regret this. We have to accept that the UK will not become a member of the Schengen area. And I am also ready to accept that the UK will stay outside new EU institutions such as the European Public Prosecutor’s Office, meant to improve the fight against fraud in the EU, but clearly rejected by the House of Commons and the House of Lords. We have to respect such clear positions of the British Parliament, based on the British “opt out” Protocol. David Cameron has recently written down a number of further key demands in an article published in the Daily Telegraph. As Commission President, I will be ready to talk to him about these demands in a fair and reasonable manner. My red line in such talks would be the integrity of the single market and its four freedoms; and the possibility to have more Europe within the Eurozone to strengthen the single currency shared so far by 18 and soon by 19 Member States. But I have the impression that this is as important for Britain as it will be for the next President of the Commission.

 

This was a remarkably explicit statement from a man seeking high political office at a point in time when he was far from certain of being successful in his bid to lead the EC. This uncertainty was largely due to a high-profile initiative on the part of the British government, led by the Prime Minister himself, to ensure that Mr Juncker did not become the President of the EC. Yet Mr Juncker won resoundingly, despite colourful rumours floating around about his alleged drinking habits.

There was a steely underlying determination to recognise but not pander to UK demands: the four freedoms of movement (of capital, people, goods and services) are non-negotiable, the UK can continue to opt out, but the Eurozone will continue its march towards further integration, so as to strengthen the Euro. But it is interesting to note the absence of a broad commitment towards “an ever-closer union”, 1957 Treaty of Rome, except in the context of the Eurozone countries.

Six months into his mandate as President of the EU, Mr Juncker has underlined his views of the British Question. On the 18 January 2015, he publicly floated the idea of a British exit (or Brexit) from the EU for the first time. Mr Juncker not only compared Britain’s membership of the EU to a “doomed love affair” but also suggested that it might be time to call it a day. He rounded off his comments by warning David Cameron that he will not be “grovelling” for the UK to stay in the EU during future negotiations. What was previously a personal “red line” prior to his election to the most influential of the EU’s Presidential posts, has now become the official EU one.

British Red Lines for leaving the EU

An answer to the British Question it is due now, in the run-up to the British General Election on 05 May 2015. Britain has been largely ambivalent towards the EU, tending to focus on the economy and trade issues and, for a period of time when it suited its economy and voters, enlargement of the EU. Due to a combination of the Eurosceptic wing within the Conservative Party and the growing influence of the Ukip, should they win the election, the Conservative Party has pledged to allow the voters a referendum on whether to stay in or leave the EU unless the current terms of membership are renegotiated. There is, of course, the possibility that the Conservatives will not win but the ambivalence towards the EU is more than likely to remain. Mr Juncker’s red lines are presumably of importance, regardless of whether the Conservatives win the general election or not.

The Conservative attempts at EU reform which would satisfy its Eurosceptic wing and win back Ukip defectors included renegotiated of the terms of EU membership, such as the principle of freedom of movement of people. The explicit aim was to find an acceptable half way house between “uncontrolled” and “no” immigration.

David Cameron has stressed that he favours staying in a reformed EU but that Britain will “rule nothing out” if the changes required are not made, some of which will necessitate EU treaty changes. There are several problems with this position, which the British Government is well aware of: treaty change requires the agreement of 28 member states, all member states are highly averse to such treaty changes because of the debacle of the aborted attempt to develop a EU constitution, several countries are required to hold referendums in relation to such changes and, quite simply, there is not enough time to undertake such changes before the UK referendum is due in 2017. Apart from anything else, why should other member states do anything unless and until there is a Conservative Government in power post May 2015? The insistence on EU treaty change appears to be a lot of hot air blown by the British government, which other politicians and the EU representatives are willing to play along with. There are obviously messages to be put out to the British voter between now and the general election.

For the British is it a serious matter: asylum and immigration are among the top four issues that are likely to determine the outcome of the general election. Consequently, the PM David Cameron has set out his own (latest) version of his “red lines” most recently in November 2014:

  • Workers from the EU: ban EU nationals from claiming in-work benefits or social housing in Britain for four years. No child benefits or tax credits paid for children living outside the UK.
  • Unemployed EU migrants: deport jobless migrants if they do not get work for six months.
  • Other: veto EU enlargement unless the new country impose controls on the movement of their workers until their economies reach UK levels, restrict EU migrants bringing in family members from outside the EU, longer bans on rough sleepers, beggars and fraudsters returning to the UK and tougher rules on deporting foreign criminals.

Notice that there is no mention of EU treaty changes, change to the principle of freedom of movement or renegotiation of the current terms of EU membership. The British Red Lines are highly specific and, to my mind, do not amount to a radical change in the British position within the EU. For the British government it seems as it the British Question or whether to remain in the EU or not simply boils down to these issues.

Early skirmishes over the red lines

The British Question is already being addressed by the two most influential people, namely Mrs Angela Merkel and Mr Jean-Claude Juncker. The German Chancellor Angela Merkel has made the position of the German government clear. In the same way as Mr Juncker and any other leader of the other 27 EU members, in her 07 January 2015 visit to the UK she said at the joint press conference with Mr Cameron: “We have no doubt about the principle of freedom of movement being in any way questioned.” Taking his cue from those words, in a speech on 18 January 2015, Mr Juncker said: “When one mentions the end of the free circulation of workers, there can be no debate, dialogue or compromise.” Not much wiggle room for Mr Cameron there. He added that: “We can fight against abuses, but the EU won’t change the treaties to satisfy the whim of certain politicians.” No other EU nation state has questioned the freedom of movement principle. Mr Juncker also added a dimension which is rather pertinent to Britain’s economy, dominated as it is by the financial industry: “if you question the free movement of workers, Great Britain has to know that one day the free movement of capital will also be called into question.” Do I detect an attempt by the EU to outflank Britain?

The Conservative Party if left with a weak hand: despite the threat to pull out of the EU if it does not get its way; its bluff is being called. Britain is on to a loser in terms of both treaty change and/or reform of the freedom of movement principle. The British government knows it, hence the reasons for the watered down version of Mr Cameron’s red lines above.

The only chink of light for the British government is in relation to cracking down on welfare abuse by EU migrants (but many doubt the extent to which this is widespread abuse). But even here, Britain is not being handed carte blanche. The possibility of tackling EU migration abuses been conceded by the German Chancellor, whose country is holding a similar debate connected with the end of the transition arrangements for Bulgaria and Romania: “We are looking at the legal (aspect) and we are looking at legislation here … abuse needs to be fought against so that freedom of movement can prevail.” But there is a sting in the tail for Britain – Mrs Merkel added: “One has to take a very close look at the social security systems of individual member states … and to what extent they have to be adjusted. And that’s something we need to address”. It hardly amounts to a ringing endorsement of reforms that might involve EU treaty changes before a possible 2017 referendum. It sounds as if the emphasis is placed on individual nation states (Britain and Germany?) getting their own house in order in terms of their welfare benefit eligibility rules and regulations.

It is still early days in the battle of the red lines over the British Question, though some of the early skirmishes have already been decisive. The latest British position appears to be mainly designed for domestic consumption in the run up to the General Election. However, the red lines are of importance, so I plan to address them in future posts.

Ricardo Pinto, 21 January 2015, www.AngloDeutsch.eu