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6 August 2016

Brexit means Brexit? Not for Cornwall – it’s only kept up with the rest of Britain thanks to EU funding

Ben Chu
2 August 2016
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The lesson of the EU referendum is to be wary of populist politicians who tell you that the source of all your economic frustrations is some malign external force

It seems to be dawning on some people in Cornwall that in voting to leave the EU, they voted to lose the EU funding of which they were a significant beneficiary Shutterstock

Let’s be honest, Remainers badly needed a reason to smile after the Brexit referendum result. And the people of Cornwall provided one.

Despite voting overwhelmingly to quit the EU, Cornwall – a significant beneficiary of European Union funds over the past couple of decades – immediately demanded a Westminster guarantee of their European money. The day after the vote, Cornwall county council called for “urgent confirmation” of this cash from ministers, citing promises from the official Leave campaign that they would be no worse off if Britain voted to leave.

Surprisingly, no such confirmation has yet been issued by Theresa May. Perhaps the Cornish should take it up with the Leave campaign leaders such as Boris Johnson, Michael Gove and Gisela Stuart.

Or maybe they seek an urgent meeting with their local MPs, five out of six of whom recommended a Leave vote. Surely they’ll be good for the money? Or maybe not. For Cornwall council has also now insisted it will keep its lobbying office in Brussels – even after Britain leaves the EU. Brexit means Brexit? Not for Cornwall, apparently.

Remainers, let it be stressed, cannot be accused of schadenfreude since, of course, they share the schaden of leaving the EU. Call it a wry sense of satisfaction that those who helped saw off the European branch are now also feeling the sudden jerk of gravity.

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What more is there to be said about Cornwall’s newfound Brexit anxieties? Be wary of aggregate statistics is one obvious lesson.

It’s quite true that Britain, in aggregate, is a net contributor to the EU Budget. And it’s a card that Leave played relentlessly with their (inflated) “£350m a week” contribution figure – money that we would supposedly “get back” if we voted to leave. But research shows lower income regions of the UK such as Cornwall, Walesand the North East (which also delivered a majority vote for Brexit) get more out of Europe than they put in.

These regions also get more out of London and the South East of England in public spending and welfare transfers than they pay in taxes into the national exchequer. It will be interesting to see how receptive more prosperous parts of the UK are to their demands for these transfers to be increased still further to compensate for the loss of EU funds, especially if the overall economy suffers in the next few years because of the vote.

Second, be wary of simplistic slogans about sovereign “control”. It’s pretty clear Cornwall Council does not feel any greater level of control over its economic destiny in the wake of the Brexit vote. Nor, for that matter, do large swathes of British industry – from car manufacturers, to steel plants, to farmers – who are waiting to see whether they will retain access to the EU single market. Many jobs depend on the prosperity of these industries.

In a world of significant global trade and large-scale capital flows, national borders are not an irrelevance, as some claim. But the power of these national divisions to protect jobs and living standards in any given country is often grossly exaggerated. Sometimes, the best way for national governments to maximise that power to deliver positive economic outcomes for their populations is to pool a degree of sovereignty in (imperfect) transnational institutions such as the EU.

A final lesson is to be wary of those populist politicians who tell you that the source of all your economic frustrations is some malign external force, whether immigrants or a distant Brussels bureaucracy.

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The irony of the Cornish majority anti-EU is that the county was a very good example of the direct economic benefits of EU membership. EU investments in the Eden Project, built on the site of an old China clay pit, boosted the county’s appeal as a tourist destination. There’s been much talk of the Brexit vote representing a cry of distress from the “left behind” of Britain. But the EU was in fact helping those left-behind regions stay in touch with the rest of Britain.

And why? The answer, not that you would know it from the right-wing press’s absurd caricature of the EU, is the free market. The EU’s Commission’s regional development investments, such as those that have benefited Cornwall, are designed to support economic activity and productivity growth all around the bloc with a view to making the single market bigger.

Many of those investments in recent years have benefited communities in the Eastern European recession states such as Latvia, Bulgaria and Poland, just as they previously aided new member states such as Ireland, Spain and Greece. Yet those investments have also, indirectly, benefited UK exporters and their employees by expanding the single market – just as big American loans for European reconstruction in the wake of the Second World War restored the US’s conflict-ravaged customers to health and enabled them to afford more US exports.

It would be silly to suggest all this economic progress will instantly unravel because of Brexit. But the best evidence we have suggests such gains will be harder to achieve in future. And for places such as Cornwall, possibly considerably harder.

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