Wynne Godley asks if Britain will have to withdraw from Europe

The implications for Britain of EEC membership are rapidly becoming so perversely disadvantageous that either a major change in existing arrangements must be made or we shall have, somehow, to withdraw.

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[*] For a careful analysis see Fetherston, Moore and Rhodes in the forthcoming Cambridge Journal of Economics.

Vol. 1 No. 1 · 25 October 1979 » Wynne Godley » Wynne Godley asks if Britain will have to withdraw from Europe (print version)
pages 19-20 | 1720 words

Letters

From C.J.M. Hardie

SIR: Wynne Godley claims in your first issue that ‘if we were not members of the EEC we could avoid gratuitous transfers abroad, with a large direct benefit to the taxpayer’ (LRB, 25 October). It is quite true that if we stopped paying out money to Continental farmers, we could, in principle, cut our domestic taxes. But one of the main points in Mr Godley’s article is that farmers in Britain are going to be squeezed by the strength of sterling just as industrialists are, but that under EEC rules we cannot help them with subsidies. He cannot have it both ways. If we leave the EEC, we can give increased subsidies to our farmers. But to do that, we will have to use the money which we have saved by no longer subscribing to the Common Agricultural Policy. The taxpayer will simply have moved from subsidising French farmers to subsidising British ones. That may be a much more congenial duty, but it doesn’t look much like a ‘large direct benefit’.

C.J.M. Hardie
London EC2

From Wynne Godley

SIR: The answer to Mr Hardie (Letters, 6 December) is that for any given level of our own farmers’ real income the taxpayer would obtain a large direct benefit if Britain were not a member of the EEC. The point in the article to which Mr Hardie refers was that if sterling were to become very strong our own agriculture could, under EEC rules, be ruined, and we would have no power to prevent this, although we would still have to pay large net transfers to the EEC Budget. As non-members, the Government could always ruin British farmers if it chose to, but at least it would not have to subsidise foreign farmers while doing so. In practice I take it as axiomatic that the Government will, for a variety of reasons, wish to keep the British farming industry in existence, and that this is a very proper use of its tax revenue. My contention (to reiterate) has been that there is no justification for using tax revenue for the support of foreign agriculture as well.

Wynne Godley
Department of Applied Economics, University of Cambridge