Saturday , May 25 2024

The Eurozone Trojan Horse

The UK has a trade deficit with the Eurozone of about 90 billion euros per annum.  The Eurozone has a trade surplus with the world in general of about 200 billion euros pa so the UK supplies almost half of the Eurozone trade surplus.

When pundits praise the Eurozone for its trade surplus they should spare a thought for the British. Trade deficits subtract directly from a country’s GDP figures and the trade deficit with the Eurozone lowers UK GDP by 4% (Trade deficits are used in the calculation of GDP).  The Eurozone is not a loose group of 19 countries but a near complete economic union that has a single economy so nowadays the EU consists of two major blocs, like two countries: The Eurozone and the UK.  Seven of the eight countries outside these blocs in the EU are aligned with the Eurozone.

The reason that the trade figures with the Eurozone are so bad is that Eurozone companies operate without restraint in the UK. The UK has no deal with the EU to prevent the Eurozone from wholly replacing British goods and services produced in Britain with Eurozone produced goods and services. Eurozone companies can buy up British competitors and if they desire source all their stock from the Eurozone.

Why isn’t the UK being protected from this Eurozone invasion?  We are protected from other foreign takeovers, for instance the EU insists that at least 55% of the parts for cars made in Korean owned factories in the EU are sourced from the EU (Guardian) and the EU has similar trade deals with other countries outside the EU.  The EU is not alone in protecting its industry, all countries that care for their citizens conclude trade deals that protect domestic industries. The UK has no such deal to protect itself from the Eurozone.

The fact that the EU insists that foreign owned industries do not operate as Trojan Horses for imports and have strict limitations on how far they can usurp local industry should make us all ask “why doesn’t our government protect us from the Eurozone?”.

It is conventional to blame British industry for the high level of Eurozone imports but that is a lazy error.  Much of these Eurozone imports are purchased by Eurozone owned UK companies in the form of parts and stock etc.  Increasingly “British” industry is not British but a trojan horse for Eurozone imports. If we buy a “British” car we are as likely as not buying German parts for what is sold as a “UK” manufactured Mini car or French parts for a “UK” manufactured Peugeot.

The figures for foreign parts in cars manufactured in the UK are “almost two thirds of parts in British-built cars come from abroad, with the proportion as high as three quarters in vehicles such as the Vauxhall Astra. In some cases, parts are said to zig-zag across the Channel as many as 30 times during the production process.” (Sunday Times Driving).  However, these figures are probably higher than 66% for Eurozone companies because many of the “UK” parts suppliers are actually foreign owned and import parts for their parts and some cars are made by US and Japanese companies that are forced (by the EU) to use a large proportion of UK parts.  In principle Eurozone companies could use almost no UK components in the cars that they make in the UK and in practice probably use more than 70% Eurozone sourced parts.

See Note 3

This pattern of Eurozone owned companies being Trojan Horses for Eurozone imports applies across all industries from Aldi to EDF.  Each of the Eurozone owned UK companies also acts as a distribution centre for Eurozone made goods and services.  It is the primary reason for the appalling UK-EU Trade Deficit:

The solution? Brexit plus trade deals that specify a minimum UK parts/domestic percentage.  In the long run, return British industry to British ownership.

If we stay in the EU/Single Market then the long term outlook for the UK economy is bleak.  The effects of the Eurozone ownership of UK industry are cumulative and become serious once the original capital injections to acquire industries have been spent.  The UK will end up as a low wage region of the EU if Brexit is overturned or the final deal involves being a member of the Single Market.

Haven’t heard about this in the broadcast media?  Are modern journalists of so little integrity that they are using this weapon of news suppression against their country to further their own agenda?

See also: What will happen if Brexit is Abandoned?

The EU will eventually concentrate most wealth within the red ellipse:

There are only three UK Corporations, Tesco, HSBC, BP,  in the top 20 EU Corporations.  The EU Corporations are sucking the life out of the UK economy, reducing it to a low productivity region of the EU.

Note 1: several other factors amplify the harm done by Trojan Horse imports, in particular the acquisition of parts using Euro payments/transfers within Eurozone owned companies operating in the UK maintains the pound at an artificially high level.

Note 2: Some of the Eurozone companies that acquire UK companies are actually state controlled (PSA Peugeot, EDF etc) and their activities are direct economic warfare against the UK economy, designed to boost French etc. exports and hence GDP at the expense of the British.

Note 3: UK Broadcasters (BBC, ITN etc) vigorously support the rights of Eurozone companies to have freedom to import into the UK. On 7/1/2017 for instance they ran news items suggesting that Eurozone companies should be treated on an equal footing with UK companies for VAT. This is, of course, a violation of the BBC Charter because there is never any discussion of the corrosive effect of Eurozone imports on UK GDP, production, pay and capital deployment. The BBC operates by Suppression of News to avoid charges of direct bias.

This post was originally published by the author on his personal blog:

About John Sydenham

Dr John Sydenham has worked in International Pharmaceuticals and for one of the "big four" International Consultancies. He ran a successful company for 15 years and after selling the company devotes his time to travel, science, black labradors and freedom.

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  1. Isaac Anderson

    What an article John, well written and showing a position too few know about. Congrats – you’ve raised your own high standards again!

  2. Steve Chittenden

    Engine manufacturing is the most valuable part of making a car, and the most high-tech.
    JLR, Bentley, BMW, Ford, Nissan, Toyota and Honda all make engines (in UK)
    (UK has) more engine manufacturing plants than any European country bar Germany. UK production lines putting out 1.7 engines for every car in 2013 (2.55 million engines vs 1.5 million cars, according to the SMMT).
    Jay Nagley Porche Cars GB market analyst. :

    • Yes, Ford and Toyota are forced by the EU to use local products. Engines are important but the figures of over 66% of the value of production being externally sourced in Vauxhalls, Peugots, Nissans and other Eurozone owned car companies is the crucial figure. In contrast Non-EU companies are forced by EU law to use local parts.

      Its not just cars. Other whole industrial sectors such as the UK electricity industry are largely Eurozone owned. It is inevitable in a Single Market for the peripheral regions to be, overall, denuded of real production and commercial enterprise. The whole of Scottish politics is about the same problem where it occurs within the UK.