The elections for the European parliament have dominated the headlines over the past week following the rapid ascent of the United Kingdom Independence Party (UKIP) to the point where it claimed the biggest percentage of the UK vote, at 27 per cent, representing the first time neither the Conservative nor Labour party have come out on top in a national poll for more than a century.
Coupled with equally notable gains for far right, anti-EU and separatist parties in a number of other European countries and regions, some commentators billed the elections as a ‘political earthquake’, which could change the way the EU operates and even pose a threat to its existence at all. While this may ultimately prove to be hyperbole, there is certain to be a reaction amongst the established political forces, which is likely to bolster the euro-sceptics therein.
While this could be dismissed as just another turn in the ever moving political cycle, it would be folly to not sit up and take notice when public opinion appears to be hardening against greater European integration. But for businesses in Wales who trade heavily in the EU there is probably less to worry about at the moment than there is for pro-EU politicians.
True, we may see a referendum on the UK’s continued participation in the EU within three years, dependent on the outcome of next year’s general election. But even accounting for the most extreme outcome of this potential plebiscite, intra-European trading is so well established that it is unlikely we would witness a significant change in the short term at least.
After all, easier trading between European countries was the basis for the origins of the European Union anywayand all but the most hardened anti-Europeans accept that the strength of the UK’s trading relations with its European neighbours must remain even if our membership of the economic bloc is downgraded or withdrawn. Indeed, the UKIP leader Nigel Farage recently argued that a UK exit from the EU need not actually threaten jobs, which are directly linked to trade with Europe, although it remains to be seen what trade barriers would be erected should the UK withdraw, making such arguments purely hypothetical for now.
What is for certain is that a huge number of UK jobs rely on European trade. According to the most recent figures available, for 2011, around 4.2m jobs in the UK were linked to trade with the EU, which is estimated to be worth £211bn annually to the UK economy. For Wales, with its relatively small agricultural and fishing sectors, EU membership is more about outward trade rather than inward subsidies, although European funding has helped support moves to attract foreign manufacturers and producers to set up and remain in Wales. In the final quarter of 2013, exports to EU countries rose by 10.7 per cent, compared with 11.6 per cent growth in exports to non-EU countries, and EU countries accounted for five of the top 10 export destinations over 2013, worth £6.6bn out of a total of £14.8bn.
With the EU economy showing signs of hauling itself out of the pit of despair it has occupied for the past five years, it would be safe to assume that European trade is likely to pick up quicker in the coming years too and, although Welsh businesses have expanded their sales into emerging markets rather rapidly, especially in power generation and associated services, the importance of EU trade cannot be underestimated.
The latest ‘political earthquake’ may concern politicians, and it may ultimately lead to changes in the UK’s relationship with the EU, which could lead to net benefits for the UK. But, from a business perspective, no matter what the politicians get up to, links with Europe will remain vitally important routes to what is a substantial market on our doorstep, and they are unlikely to be broken in a hurry.
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