Larry Elliott’s otherwise justified appeal for a leftwing vision to modernise Britain’s low-pay, low-investment economy (We overdo our respect for the EU. Britain can flourish outside, 22 November) assumes that the EU’s economic policies and failed eurozone rules are unchangeable, mainly due to Germany’s opposition to a balanced European fiscal union. He only foresees a wider “policy space” for a progressive Westminster government after Brexit, which he concedes will damage the UK economy (without mentioning the rising rightwing nationalist sentiment that would inevitably accompany it).
Yet Germany itself is now suffering the impact of populist nationalism, partly generated by its own earlier eurozone policies. In addition, a major EU crisis caused by Italy’s €2.3tn debt and fragile banks has already commenced, whatever comes out of its immediate row with Brussels over projected spending.
The scale of this challenge rules out repetition of the brutal treatment meted out to Greece and strengthens the case for a common banking union and capital market regulation, alongside the argument for a eurozone-wide budget. Indeed, much related progress could be made without major revision of existing EU laws and treaties. A forward-looking leftwing programme for the UK should duly resist Brexit, embrace these EU reforms and call for wider international policies for a new global money clearing system and urgent green growth strategy.
John Chowcat
Hythe, Kent
• Larry Elliott’s article may be a sop to those who seek intellectual rigour for the lexit case. But get beyond the selective reading of the EU’s economic history and it’s the same old exceptionalism that’s the hallmark of any Brexit advocate, be they from the left or right. In summary: Britain would be a rip-roaring success if we weren’t shackled to the European corpse. To believe that is to believe that the UK’s class inequality, shocking productivity, decimated manufacturing sector, weak industrial base and over-reliance on financial services – with all that entails for the health of our society at large – has been someone else’s doing. The freedom to reverse this direction of travel is not dependent on severing our customised preferential membership terms with the world’s biggest trading bloc on our doorstep; it’s dependent on having a domestic opposition able to articulate election-winning alternatives that aren’t just British nationalism wrapped up in a red flag.
Colin Montgomery
Edinburgh
• Larry Elliott is right that leaving the EU creates the “opportunity to do things differently”, and one of those things is VAT. Like many people, I have always seen a tax on earnings as being progressive and a tax on expenditure as being regressive. Before joining the then common market there was no VAT and, yes, there was purchase tax but that was essentially a luxury goods tax. Once we are outside the EU a progressive government could abolish VAT and replace the lost income by increasing the tax on higher earners as well as increasing corporation tax on company profits. It is also possible to withdraw the tax breaks on leveraged buyouts and get rid of all the tax havens under UK control. The abolition of VAT will mean that low wages and benefits go further and this will in turn reduce welfare spending.
Michael Gold
Romford, Essex
• Like his fellow members of the league of leftist leavers, Larry Elliott thinks that any word that starts with “Euro” is about the EU. Yet his entire column is about the single currency and the European Central Bank. He is right that the euro currency is run on monetarist/austerity lines. He is right that this approach overturned the old European economic community dirigiste resistance to what it called “the Anglo-Saxon model”. But he is wrong to say that Brexit means leaving these constraints because the UK isn’t part of the eurozone. Indeed that arch europhile, the Observer’s William Keegan, says that being in the EU and out of the euro is exactly having our cake and eating it.
Elliott’s vision of a Bank of England freed from EU rules and newly able to cut interest rates from the existing virtual zero, and a government now enabled to nationalise industries, as Macron successfully did to a shipyard earlier this year, reveals what a hollow and misguided idea socialism in one country is.
Nik Wood
London
• Larry Elliott resorts to hope rather than evidence. The thrust of his argument is that freed from the EU’s customs and regulatory systems, the UK economy could adjust interest rates, taxes and public spending to avoid further austerity and fund the infrastructural projects needed to modernise and grow the economy. He acknowledges that Brexit would result in a short-term hit to the (already weakened) economy but does not provide details – for example, another decade of slower economic growth?
In fact there is nothing in our membership of the EU that has prevented the adoption of such policies. We could have followed the German manufacturing model, instead we adopted a financial services industrial model and a smaller public sector. Mr Elliott offers no evidence as to why we might choose to reverse this policy outside the EU. On the contrary, all the signs are that there will be more of the same resulting in smaller manufacturing and food sectors. I would take Mr Elliott more seriously if he provided numbers showing how much of the EU trade we lose might be recovered from as yet unidentified third-country free trade agreements.
Sean Rickard
Newton Blossomville, Bedfordshire
• I was shocked to read in Larry Elliott’s article that he implies further tax cuts are to be welcomed in order to tackle the structural problems that have plagued the British economy.
This government has reduced income taxes for the wealthy and our corporation tax is one of the lowest in the developed world. What taxes is he suggesting need further reduction? Where is the increased government spending money to come from?
Christopher Nash
Henley on Thames, Oxfordshire
• An interesting and thoughtful article from Larry Elliott as usual, but I nearly fell off the chair when I got to the sentence: “It is time for the left to come up with its own vision that would deploy every available policy tool to modernise the economy, rebuild Britain’s industrial space and spread prosperity more widely.” He must surely know that this project is exactly what the Labour party is working on, as expressed in the leader’s speech to conference in September.
Hazel Davies
Newton-le-Willows, Merseyside
• While our politicians fixate over Brexit negotiations, the EU is flirting with a momentous integrationist step that will fundamentally alter its character. The French finance minister has called for the EU to “become an empire”, for complete federal “unification” to occur within the next 25 years, for the sovereignty of Europe to be cemented, and for future progress to be measured in weeks or months. This comes within days of the chancellor of Germany, the president of France and other senior European officials calling for the creation of a supranational European military. That force would, they suggested, be a peer competitor to the United States. Presumably it would also represent a means of alleviating mass youth unemployment in southern Europe.
Over the decades, there have been multiple failed attempts to construct a “European army”. This feels different. The true ambitions of federal integrationists are becoming apparent. Yet Britain seems afflicted by myopia. The history of the EU suggests that integrationists usually get what they want in the end. These developments need to be the subject of an urgent national conversation. The conversion of the EU into an imperium underpinned by a powerful military was always inherent in the logic of federalism, and would pose a fundamental danger to the defence of the United Kingdom.
Dr Robert Crowcroft
Historian, University of Edinburgh
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