BRITISH ENTRY Cost Estimates ‘Too Wide For Judgment’

Press, Volume CIX, Issue 32219, 11 February 1970, Page 14

BRITISH ENTRY Cost Estimates ‘Too Wide For Judgment’

(N.Z.PA.-Reuter—Copyright) LONDON, February 10.

The British Government today acknowledged in a White Paper that Common Market membership would involve a substantial and continuing cost on the country’s balance of payments, but it nevertheless came down strongly in support of continued negotiations for entry.

The 46-page docu-i ment, drawn up jointly over three months by; several Government departments, listed a cautious and heavily-quali-fied balance sheet of estimated costs. Its conclusion: “Failure to go ahead would mean that Britain would be missing another historic opportunity. . . . The world would lose a contribution to its peace and prosperity which neither Britain nor the European Community could make separately.” With its careful balancing of probabilities, the White Paper is expected to offer ammunition to opponents and supporters of the idea of Britain joining the European Economic Community. The Prime Minister (Mr Harold Wilson) will make a statement in the House of Commons this afternoon on l the document, which bears the title, “Britain and the; European Communities: Ani Economic Assessment” 1

,1 A full-scale debate is ex- , • pected to be held in about two weeks, after parliamen'itarians have digested the • wide range of figures and . their implications. Food Prices The White Paper sets the total over-all cost to Britain’s . balance of payments between I wide limits—from about £loom to £UOOm but, in the 1 same breath, it says that this ■ is “far too wide to afford any . basis for judgment." t It estimates that the maximum increase in retail food ! prices if Britain joins the l Community will be in the > range of 18 per cent to 26 ( per cent, involving an increase of 4 per cent to 5 per cent in the cost-of-living index. 1 This is lower than many cri- ! tics have forecast r The report estimates 1 Britain’s yearly contribution • to the budget of the Euro- ; ' pean Community at between £lsom and £67om. r! It says Britain might i receive back between £som f and £loom a year through the I;common agricultural policy >: The rise in the cost of living will be over a period of i; years, the document says, and its full effect will be

fel* only after a transitional period. Throughout the White Paper stresses that the calculated costs of entry may be misleading, since it would be inconceivable that all the elements in the calculations would work in the same direction, favourable or , other wise.

i The document also em- : phasises that the real over- ■ all cost of entry is likely to be well within the extremes of the wide range suggested, even excluding the effect of what are described as ‘the dynamic benefits” of membership. These are defined as the , changes in the underlying . conditions of supply and demand arising from opportunities for rationalisation, largescale investment and rapid technological improvements. Related To G.N.P. The document also quotes Ithe Confederation of British Industry, representing organised business, as saying that the benefits of membership—“which, in their very nature, cannot be calculated" —should in the long run exceed the balance of payments cost. That cost is then related in the White Paper to the probable increase in the rate iof growth of Britain’s gross, national product. The estimates of cost, the document says, would involve, at most, an additional claim on the annual rate of growth over a period of a few years of considerably less than 1 per cent of the G.N.P. The crucial question, the White Paper adds, is whether the national product could be expected to grow more quicklv inside the market than out

“If it can. and if the additional growth is greater than ithe cost of membership, then I there would be net economic advantages to us in incurring i that cost.” the document says, adding: “But no calculations 1 could provide a precise (mathematical answer to the i question.” It stresses that the more (favourable long-term econoImic considerations of entry are even lesss open to statistical calculation than the 'short-term adverse effects.