Fred Dyson came out as a Leaver with this interview in the Telegraph. I have great respect for him as an inventor and business man but there are some very strange things in the interview – charitably they were a result of the interviewer not understanding what he was saying. Below are quotes from the interview with my comments in blue italics below. You can always check the original interview to see if my comments are fair.
“When the Remain campaign tells us no one will trade with us if we leave the EU, sorry, it’s absolute cobblers. Our trade imbalance with Europe is running at nine billion a month and rising. If this trend continues, that is £100bn a year.”
He is exaggerating slightly (actual goods deficit in April 2016 was EU: £7.9 billion). While we had a deficit in goods we had a surplus in services. This is much smaller than the goods deficit (about a fifth) but has grown much faster over the last 10 years (the goods deficit doubled in the period 2005 to 2015, the services surplus with the EU grew thirteen times).
However, that just means we like their stuff more than they like ours. We have had a persistent current account deficit since the mid-1980s and we still have one of the most successful economies in the OECD.
He jabs at a graph. “If, as David Cameron suggested, they imposed a tariff of 10 per cent on us, we will do the same in return. We buy more from Europe than they buy from us, so we would be the net beneficiary and based on these numbers it would bring £10bn into the UK annually. Added to our net EU contribution, it would make us around £18.5bn better off each year if we left the EU,” he concludes with quiet triumph.
This is daft. If we impose a tariff that is like imposing a sales tax. It is possible that the exporter in the country of origin would reduce its price to compensate and then our government would gain (not the consumer). Much more likely is that the exporter in the country of origin would maintain its price and it would be the UK consumer that pays the tariff in the form of a higher price.
But the main advantage of the single market is not the lack of tariffs – it is removal of the non-tariff barriers –consistent standards on environment, workers rights, safety etc so you don’t have to meet 28 different sets of standards. We could continue to conform to them of course but that would be allowing ourselves to be controlled by the EU without having any say. Any UK exporter to the UK would be lumbered with proving that it conformed to those standards.
“Anyway,” he hurries on, strangely not taking the hint, “the EU would be committing commercial suicide to impose a tariff because we import £100bn [of goods] and we only send £10bn there – I didn’t want to get too graphy, but here are a few graphs.” He’s not kidding. The man is nothing if not meticulous.
Not that meticulous! It is not clear what time scale this chart is referring to but clearly we don’t import 10 times as many goods as we export to the EU. Anyhow this is a complete fallacy. To take an extreme example, I have a substantial trade deficit with Waitrose – I buy many times more from Waitrose than it buys from me. It would hardly be commercial suicide for Waitrose if we stopped trading. What matters is the size of the trade between us compared to the overall size of our businesses. About 16% of exports of the rest of the EU go to us. About 44% of our exports go to the EU. In addition we are more dependent on international trade than the EU is.
Dyson exports far more to the rest of the world (81 per cent) than Europe (19 per cent). “We’re very pleased with the European market – we’re number one in Germany and France – but it’s small and the real growing and exciting markets are outside Europe.”
Good for him – he seems to doing just fine while we remain in the EU exporting to both EU and non-EU. There is an important difference between his German and French markets and say China. As long as he continues to produce a good product at a good price he will continue to sell in the EU. At any moment China can decide it wants a home-grown vacuum cleaner market and decide to introduce tariffs or more likely create rules he cannot comply with – it might even decide to dump subsidised low-cost vacuum cleaners on the UK market. If so, his only course of appeal is to the WTO – an lengthy and uncertain business (look what China is doing to the steel industry).
He says the much-trumpeted single market isn’t really a single market at all. “They have different languages which, for an exporter, means that everything from the box to the instruction manual has to be in a different language. The plugs are different. The laws are different. It’s not a single market. The only communality is that there’s no tariff, but the pound going up against the euro is far more damaging than any tariff. If the pound rises, £100 milion is quickly wiped off.”
He is right that the tariff is not the big issue but while there are still differences in each country there are a massive number of non-tariff barriers that have been removed – maybe they aren’t a big factor in the vacuum cleaner business.
The problem with the EU’s free movement of people is that it doesn’t bring Dyson the brilliant boffins he needs. “We’re not allowed to employ them, unless they’re from the EU. At the moment, if we want to hire a foreign engineer, it takes four and a half months to go through the Home Office procedure. It’s crazy.”
This is truly bizarre. If we leave the EU then he will have to go through whatever procedure the home office has in place for all foreign engineers. He has just given a compelling example of why freedom of movement is good for business.
He produces another staggering fact. “Sixty per cent of engineering undergraduates at British universities are from outside the EU, and 90 per cent of people doing research in science and engineering at British universities are from outside the EU. And we chuck them out!” He gives a trodden-puppy yelp.
Staggering because it is false! 67% of engineering and technology graduates are UK . I think what he meant to say was that 60% of non-UK engineering graduates are from outside the EU.
So hiring a low-paid barista from Bratislava is no problem, but a prized physicist from Taiwan is a logistical nightmare. The Government claims that, if a non-EU citizen gets a job within two months of finishing their research, then they can stay here for two years. “The point is that it’s completely mad not to welcome them,” he says, “why on earth would you chuck out researchers with that valuable technology which they then take back to China or Singapore and use it against us?
The EU does not place any constraints on our rules for hiring staff from outside the EU. It is entirely a UK government decision that it is a nightmare to hire a physicist from Taiwan. It is a EU decision that is really easy to hire either a physicist or a barista from Bratislava.
Softly spoken, Dyson’s Home Service Received Pronunciation tones become incensed when he talks about what he sees as our disloyalty to Commonwealth countries. “They fought for us in two world wars. So that particularly upsets me. We’re missing out on all those people who have helped us and with whom we have a great affinity, often a common language.
"Culturally, it’s all wrong. We’re not only excluding them from our country, we’re charging them import duty because we’re forced to by the EU. And the food’s cheaper, too.”
The prime ministers of India, Canada, Australia, and New Zealand have all said we should remain. I am not aware of any Commonwealth leader who has said we should leave.
His views on Brussels have been shaped by bitter experience. Dyson sits on several European committees. “And we’ve never once during 25 years ever got any clause or measure that we wanted into a European directive. Never once have we been able to block the slightest thing.”
He doesn’t say what committees he has been on or what he has been arguing for. See this video for an explanation of how very influential the UK is in the EU as one of the “big three”.
From then on it becomes a rant about how he has not been able to get what he wants from the EU. I think this may be behind the whole confusing interview. He has a hard time getting his way in some EU committees and this has coloured his view of the EU. Quite possible a justified complaint – who knows – but hardly sufficient reason for leaving.