Brexit is the only way to bring EU reforms

The association between unemployment and economic growth was put forward by Arthur Okun in the 1960s, capitalising upon centuries old economic though on the matter, and has been formally established as Okun’s.

In their 2012 book Okun's Law: A Meaningful Guide for Monetary Policy Wen and Chen say it:

…is intended to tell us how much of a country's gross domestic product (GDP) may be lost when the unemployment rate is above its natural rate." It explains that "the logic behind Okun's law is simple. Output depends on the amount of labor used in the production process, so there is a positive relationship between output and employment. Total employment equals the labor force minus the unemployed, so there is a negative relationship between output and unemployment (conditional on the labor force).

Ex US Federal Reserve Bank Chairman, Ben Bernanke, summarizes Okun's law’s basic concepts in a speech at the National Association for Business Economics Annual Conference, Arlington, Virginia, March 26, 2012.

That rule of thumb describes the observed relationship between changes in the unemployment rate and the growth rate of real gross domestic product (GDP). Okun noted that, because of ongoing increases in the size of the labor force and in the level of productivity, real GDP growth close to the rate of growth of its potential is normally required, just to hold the unemployment rate steady. To reduce the unemployment rate, therefore, the economy must grow at a pace above its potential.

More specifically, according to [the] currently accepted versions of Okun's law, to achieve a 1 percentage point decline in the unemployment rate in the course of a year, real GDP must grow approximately 2 percentage points faster than the rate of growth of potential GDP over that period. So, for illustration, if the potential rate of GDP growth is 2%, Okun's law says that GDP must grow at about a 4% rate for one year to achieve a 1 percentage point reduction in the rate of unemployment.

Clearly, the EU is underperforming in shoring-up economic growth through the lowering of European unemployment, which is currently running at a tragic 10.2% in the Euro Area.

Their focus in Brussels is upon ever-closer political union and not the unemployed, and this brings misery to tens of millions across Europe.  In my mind, it can only do this by reducing asymmetries and respecting the national sovereignty that Britain and other nations need to reclaim.

EU growth may be much higher that will benefit The EU, Britain and the World Economy if they recognised national sovereignty as well as ‘one size does not fit all’ and abandoned the single currency. Coupled with the asymmetries, there are huge imbalances in labour market efficiencies, pay and working conditions across the EU that need to be addressed in relation to both EU monetary and fiscal union. Unemployment is a direct result of the failed common currency and susceptibility to asymmetric shock like the Global Financial Crisis. The EU Commission saw nothing but blue sky for the Euro when it was first introduced over a decade ago. The unevenness or asymmetries have become greater, risking and slowing down economic recovery trajectories. Go to Athens. See the failed EU project. It’s happening in Portugal and Spain as well.

The Euro. This common currency is now anchoring future EU policy to saving face rather than lowering unemployment and raising economic growth. Kicking the can down the road is not the solution!

Thus, Brexit should be seen as a first step to reforming the EU that cannot be achieved through its chaotic undemocratic channels.  This hopefully will lead to other countries holding referendums, leaving and creating a looser affiliation of countries like that of the European Free Trade Area, working towards the good of the community. It’s a shame that it has come to this but Brexit will benefit all. It’s a win-win situation. Only then will the EU reform.

Even if Brexit does not happen, there is likely to be another Eurozone crisis and other countries may hold referendums and decide to leave. The UK referendum will be the catalyst for EU reform. The EU in its present form must reform or be completely dismantled.

In the meantime, the fanfare will continue for the foreseeable future. Hold on tight!