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In the decade to the start of 1973 the UK’s gross domestic product climbed at a compound annual rate of 3.3 per cent, whereas in the subsequent decade the comparable figure was 1.2 per cent. So the pace of expansion in national output dropped by over 60 per cent. On the productivity front, output per head in the whole economy advanced at a compound annual rate of 3.0 per cent in the decade before Common Market accession and by 1.5 per cent in the decade afterwards. Trade is no more help for the Common Market’s supporters. Joining the Common Market was supposed to give a special boost to exports, since British companies would acquire new rights to sell tariff-free products in the neighbouring vast European market. In reality, the growth of the UK’s exports of goods and services in real terms was 6.2 per cent a year in the decade to 1973 and only half of that, 3.1 per cent a year, in the following decade. The weakness in exports was pervasive and included exports to European states. Astonishingly, the growth rate of UK exports to the Common Market countries declined in the decade after becoming a member.

Do cynics about government propaganda need to labour their point? There is a large, obvious and disturbing gap between the British government’s statements about the Common Market in a document delivered to every household in 1975 and what actually happened to the relevant macroeconomic variables in the next few years. Common Market membership was puffed up as an economic elixir which would promote living standards, trade and investment, but on the key metrics it had no such effects. The UK’s growth performance was plainly worse — much worse — after Common Market entry than before.

Let it immediately be conceded that the above discussion does not prove a direct cause-and-effect relationship between Common Market accession in 1973 and the deterioration in the UK’s economic fortunes from then until the early 1980s. It is possible that the deterioration had other causes, such as the abuse of power by trade union leaders, and foolish policies of industrial subsidisation and intervention under the 1974-79 Labour government. All the same, the statistical information just presented puts the advocates of Common Market membership on the defensive. An opponent of European integration could, with some justice, slam the leaflet sent through millions of letter-boxes as a pack of lies.

The political campaigning of the early 1970s had been foreshadowed in a scholarly debate among economists. Most economists believe in free trade between nations, adhering to one or another version of a case developed by Adam Smith and David Ricardo 200 or more years ago. In 1950 Jacob Viner published The Customs Union Issue, the first book on the theory of customs union. This was a new intellectual departure made topical by the early hints that leading European nations might want to create their own trade club. Viner was a member of the Chicago School of Economics, which regarded free trade as the first-best choice for all nations. Customs unions were viewed with suspicion, as they erected a common external tariff, and to that extent were discriminatory and unsatisfactory. Viner and other influential economists, including Harry Johnson, Richard Lipsey and James Meade, all of undoubted liberal-internationalist leanings, deemed a customs union as “second-best” compared with free trade.
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