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Financial Flows (Eu)

Volume 406: debated on Thursday 12 June 2003

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If the Treasury will conduct an analysis identifying the (a) direct and (b) indirect financial flows in and out of the United Kingdom arising from EU membership; and if he will make a statement. [118660]

The UK conducts the majority of its trade—50 per cent.—with the EU. It also receives 55 per cent. of its inward foreign direct investment from the EU, and invests 40 per cent. of its outward foreign direct investment there. In addition, 61 per cent. of the UK's inward mergers and acquisitions activity, and 54 per cent. of its outward mergers and acquisition activity, are also with the EU.

I am grateful for that answer, but it does not cover indirect fund flows from and into the UK. In a recent parliamentary answer, the Foreign Office confirmed that no such analysis, including of indirect fund flows, has been undertaken since around 1992. Will the Chancellor ensure that such an analysis is now made? Is he aware that a recent analysis by the US Treasury suggested that the net cost to the UK of EU membership was of the order of $40 billion a year—almost equivalent to a doubling of the state pension. Clearly, that finding cannot be true. No Opposition Member believes that there can be any question of withdrawal from the EU, but it is not about time that our own Treasury conducted an analysis of indirect and direct costs, so that we can know how much we benefit from the EU?

I have looked at the American authorities' analysis and I shall do so in more detail now that the hon. Gentleman has drawn my attention to it again. He says that no analysis has been conducted since 1992. He might have been more successful in persuading the previous Government to conduct it between 1992 and 1997.

The hon. Gentleman really cannot tell us that he does not want to take Britain out of the European Union. I shall read from his article in The Birmingham Post. He wrote:
"I believe that 20 or 30 years from now, far from debating the euro, we might well be out of the European Union altogether and into something far more prosperous and constructive."

If my right hon. Friend performs that analysis, will he be sure to track how much inward investment we have received, especially in manufacturing, since we became been a member of the EU? Most of the figures I have seen show the beneficial effects of membership in terms of jobs, investment and productivity.

My hon. Friend chairs the Select Committee on Education and Skills and throughout his parliamentary career has taken an interest in all matters industrial, so he knows that since 1972, when 40 per cent. of our trade was with the EU, the figure has risen to 55 per cent. It was on that basis that the figure of 3 million jobs was first used, if I remember aright, by the Confederation of British Industry about 10 years ago, and has been updated ever since. It would be difficult for any Member to deny that there has been increased trade within the EU as a result of what has happened over the past 30 years or that that is very important to the future of every region of our country. My hon. Friend is right to remind people that those who want to take us out of the European Union are making a terrible mistake.

Unlike the Chancellor, who was elected to the House on a pledge to leave the European Community, I have always been, and remain, an unwavering supporter of British membership, so I should welcome a study of the kind advocated by my hon. Friend the Member for Lichfield (Michael Fabricant). Such a study would show that, over recent years, it has been to the benefit of this country to be a member of the EC but that as the Chancellor has shown recently, it would have been to our disadvantage to have been in the euro. Will the Chancellor confirm that there can be benefits from being in Europe yet outside the euro?

I have just said that we would have been wrong to take the advice of the Liberal party and to join the euro in 1999. When the Liberals look at our detailed studies, they will see that their 1999 proposal was wrong. Equally, however, we would be wrong to rule out membership of the euro entirely. The Conservative party is making a historic mistake. The Conservatives have turned their back on their previous position—to review membership during a Parliament and then to leave it for two Parliaments—and they are now against it altogether. I am afraid that they are in danger of moving from being not just against the euro but against Europe altogether, although I accept that the right hon. Gentleman is not.