The data defies analysis

Britain's Trade and Economic Structure
May 14, 1999

The effect on the British economy of entry into the European "Common Market" has been one of the imponderables of applied economics in the United Kingdom since the 1960s. Certain aspects, such as the effect of the common agricultural policy are relatively easy to assess - and clearly costly. Other aspects, such as the gains from free trade, are rather harder to estimate. Much attention in the 1970s focused specifically on the consequences for the balance of payments. Although they tended to find a detrimental effect, these estimates do not in any way provide an assessment of the effects of specialisation and a fuller exploitation of economies of scale, which is where the benefit is expected. A more problematic issue is the alleged "benefit and stimulus" of the harsher competitive environment that Euroenthusiasts proclaim as among the major benefits of integration.

Judging by the book's title, Lynden Moore has set herself quite a task. She sets about it with chapters on the relevant economic theory and the development of the major industrial sectors, and in her areas of long-standing strength she offers a useful treatment of the issues.

The economic theory of customs unions is clear and thorough. Similarly, discussing textiles and agriculture, her considerable knowledge shines through. However, the discussion of issues such as the institutional structure of the European Union is of less interest. There are important issues in European integration, but a book like this cannot address them, and I am not sure why one would want to try.

In the end, the idea of giving a clear and reliable assessment of the effect of membership on the British economy is, of course, impossible. Membership itself came at the same time as the Barber boom, the first oil shock and the floating of the major currencies against the dollar. Since then, North Sea oil and the Thatcher decade have hardly had negligible effects themselves. So to identify the effects specifically of free trade in Europe on the trade and structure of the British economy is, for all practical purposes, impossible. The fact that the author prefers to attend to the development of policy and legislation affecting the key economic sectors, and to providing a large amount of data on their development is therefore understandable and largely desirable. The difficulty is that one can so rarely see in the data the effect of the EU and the author often seems more interested in presenting a broader picture of developments, often without reference to Europe.

What might have been done is to make the economic theory (or even the discussion of EU institutions) motivate the discussion of industry. No reader whose interest is in understanding trade and industry, or in considering Britain's position in Europe, wishes to be confronted by chapters on theory that provide no benefit in understanding the rest.

Most of the issues in European economics, including those we face in the future, will continue to be debated, and we do need books like this that organise and present a mass of data on a range of industries, but we also need thinking about these issues to be guided by economic analysis made accessible.

James Forder is a fellow, Balliol College, Oxford.

Britain's Trade and Economic Structure: The Impact of the European Union

Author - Lynden Moore
ISBN - 0 415 16920 8 and 16921 6
Publisher - Routledge
Price - £55.00 and £17.99
Pages - 395

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