Early summer and the sun shone warmly, but the gardens at Deans Place were still flooded.
|Medium term challenges
for the EU and the UK
Professor Alan Mayhew
Jean Monnet Professor – Sussex European Institute,
University of Sussex
There are five problem areas which merit being termed crises.
The Eurozone: Sovereign debt, Banking and Competitiveness. In the first decade of the Eurozone the partners of the dominant economy Germany borrowed at the same rates whilst their economies in structure and in financial strength were uncompetitive and could not sustain their debt. At the crisis point short term loans were provided through the European Central Bank and unpopular fiscal austerity was imposed in a Treaty on Stability, Coordination and Governance. Survival and essential growth have depended upon a very difficult achievement of solidarity in the face of national concerns and restive populations. The crisis is causing essential moves in the Eurozone economy to crisis management institutions, structural reform and fiscal and banking union. Progress on Banking Union has been made in regulation, supervision, resolution of failures and an iterim deposit guarantee scheme. Growth is gradually returning but with danger of deflation and another financial crash present.
The UK is absent from the debate concerning the Eurozone but is interested in the stability of its export sector to the extent of 50% in the Services sector and 48% in the manufacturing sector which go to Europe. The danger that Eurozone integration becomes the most powerful influence in the wider Union’s concerns requires the negotiation of some formal relationship between its interest and the interests of non-eurozone nations within the EU. For this the UK needs to be at the heart of the Union’s leadership, where it is not, and were the UK to leave the EU there is no guarantee of any special relationship.
Common Foreign and Security Policy: The EU can be effective in foreign policy when acting with one voice. Diversity of interests makes this unusual and difficult to achieve. The Ukraine Crisis response has been weak with Germany having substantial energy and commercial interests; Poland, Romania and the Baltic states having border fears; the UK and France having different policy priorities. The key achievement was to keep the EU together.
The UK has, with France, given leadership in foreign and security policy, using its own voice as that of the EU. It does not like the negotiation of a common policy. If it were to leave the EU it would lose much of its influence in foreign politics.
The Economy, Trade and Labour Markets: The Internal Market [500m population] is the key economic gain from political integration. Extending its sector coverage promotes growth. It has withstood the pressures of recession without significant protectionism. The services sector, and areas affected by modern technology and particularly the financial services area are patchily liberalised and are contested with considerable reserves of economic growth to be mobilised. The regulated professions are particularly difficult. There is constant progress on Trade agreements which are growth promoting. Where multi-lateral global trade agreements falter, the EU is promoting bi-laterals currently with the US (TTIP) Canada, ASEAN, Singapore, Malaysia, Vietnam, Japan and others. Employment policy is the competence of National governments but the Eurozone austerity measures bringing unemployment have caused a major loss of credibility for the EU amongst the populations affected.
The UK’s interest in the internal market is as 50% of its export trade. The services sector and particularly the financial services sector are major areas of UK expertise and further liberalisation of these sectors would be of benefit. The possibility that the UK could leave the EU is a damaging factor to prospects in these areas as it is to all sectors of the UK economy.
Migration: A fundamental principle of the Union – that of free movement of labour is challenged by populist agitation within national populations. This is stimulated by the problems of concentrations of arrivals in time and place, perceived cheapening of the employment market and payment of undeserved welfare. Serious research points to the benefits of migration within the EU both to source and to destination countries.
Migration from outside the EU, as experienced on the Mediterranean borders, is a more difficult problem with unskilled people of foreign culture and language to be assimilated.
The EU demographic, which is of an ageing and shrinking population, needs to attract active and talented migrants. EU control may be needed in the future with Climate Change a possible cause of mass migration.
Institutional Change: Increased integration within the Eurozone will transform the Union with pressures for institutional change to accommodate the interests of the two differently organised parts – inter-governmental and supra-national.
Policy-making in the Union is currently dominated by the European Council (Heads of State) emphasising an inter-governmental character.
Politicisation of the Commission’s executive officers is being suggested by the parties in the European Parliament – a retrograde step.
The UK has opted out of much of the discussion in the EU yet the EU has developed in its direction. English is the common language and liberal economic policies dominate. Unlike Thatcher the UK government has pulled out of serious negotiation in Brussels. This is very dangerous – the UK needs to negotiate the changes it needs from within.
Questions and answers followed:
Trade negotiations would be better conducted by the UK for itself ?
|No – one country with a market of 60 million people cannot match the terms which a market of 28 countries with 500 million people can achieve.|
Should the UK join the Euro? Where is the opposition to it coming from?
Synchronisation of economic policy and performance would be achievable but inbuilt resistance in part of the political body for emotional reasons refuses to contemplate joining any time soon if at all. Poland for example has the ambition to be heard in European Policy making and is an applicant to join. In the long term future the UK will join.
Will the ‘southern’ states ever embrace the work ethic of the Germans?
Stories of the ‘lazy’ south are exaggerated. The disfunctioning of economies through structural and political weakness can and is being addressed. Greece is improving its productivity and thus its competitiveness.
‘Grilling Kippers’: UKIP needs to be grilled with the view that dragging the UK out of Europe would destroy the future for young people.
Answering populists in argument, as Clegg has demonstrated, is a difficult business. It should be plain that in comparison to a small nation state the large states such as the US, China and Unions such as the European can more likely guarantee the solidarity of institutions for international cooperation in a globally integrated world that a multitude of competing bodies.
A referendum is a flawed instrument of democracy. Allowing the in/out referenda on Scotland and on the UK, are we sleepwalking to disaster?
Yes. Emotionally one wishes the Scots well but their aim is disastrous economically and politically. Emotions are too easily engaged illegitimately on the European question – one’s fear would be that during the 2015 election all parties would be forced to promise a referendum. A referendum result taking the UK out of the European Union would be a disaster.
|Changes to European institutions and practices ?|
Richard Ashworth MEP
Conservative MEP for the SE Region since 2004;
ECR Group Co-ordinator on Budgets Committee;
member Agriculture Committee;
member Policy Challenges Committee 2005-09;
lifelong professional farming interest and involvement;
former Chair of Plumpton College
|The European Union, the world’s largest wealthiest single market, has brought peace and stability to most of Europe, but now faces significant challenges, both in the UK and elsewhere. With 24 million unemployed, a large proportion of them young people, growth stagnating in many countries, and the|
|emergence of far right populist groups, it is clear that reform is needed, and the United Kingdom is well-placed to lead reform. But this can only be achieved from inside.|
|Youth unemployment in southern Europe has led to that generation feeling the EU is not working for them. The lack of balance in the media, with misinformation widespread, has skewed the debate. UKIP presents exit from the EU as a panacea for all ills in the UK though dissatisfaction with mainstream political parties nationally is a more powerful driver of UKIP support than exit from the EU. Their solution, to follow the example of countries like Norway, is disingenuous. Norway is a much smaller country with a population of 4.5 million compared to the UK’s 63 million. To access the single market Norway must apply all EU directives, while the UK retains an opt-out in many areas.|
|In 2011. Net cost of membership to the UK was £8.1 billion which is £128 per person|
|In 2011 Norway paid £524 million, which is £106 per person|
|In other words Norwegians, even though they are not EU members, pay 83% cost that we do.|
Another suggestion from UKIP is that the UK should concentrate on trade with Commonwealth countries, but the UK trades more with Ireland than with all the Commonwealth countries put together.
It is not only in economic affairs that membership of the EU advantages the UK. Influence in international affairs is also key. Other world leaders such as the Presidents of China and the United States have visited Brussels rather than London, and trade treaties with the EU, both multi-lateral as in the Transatlantic Trade and Investment Program (TTIP) and bilaterally, are in course of negotiation. Were the UK to exit the EU it would, for example, face a tariff of 12.4% on the export of cars to the USA.
The world is rapidly changing, and competitiveness with emerging markets is a real issue. At present only 30% of new products and inventions originate from the EU, and research and development is vital to improve this statistic. However R & D is expensive, and funding from the EU is crucial – the UK does twice as well in accessing this funding than other countries. With 8% of the world’s population, the EU is responsible for 25% of the world’s productivity. However it also provides 50% of welfare payments, something the emerging markets do not have to provide, and increasingly the EU cannot afford it.
Clearly the best interests of the UK lie in remaining inside the EU, and negotiating rather than demanding reform. Key issues are: the completion of the single market in areas such as energy; professional services; the digital economy (and already EU action on mobile phone charges are a success); progressing bilateral and multi-lateral trade treaties; furthering research and development and improving levels of education and skills; and working on matters of subsidiarity.
Liberal Democrat candidate in the next European Parliament elections in May; formerly a criminal barrister; key interests in EU trade, climate change and cross-border crime
|The facts of the case for the UK remaining in the EU are compelling. However for most people it is important to make an emotional connection, for example to present the history of Europe and the EU’s success in overcoming centuries of war and hostility.|
|The European Movement needs to construct a narrative, focussing on the core values shared by Europe, on the benefits of cooperation rather than isolation in many critical areas.|
Many current problems for us all do not stop at borders. Pollution is one example, with the EU efforts to ensure clean air, clean water, clean beaches, improving life for everyone. Climate change is a problem which cannot be tackled by an individual country and energy supply is another matter where cross-border cooperation will benefit us. Most people will be aware that organised crime is an increasing problem, becoming more ruthless and widespread, and cannot be tackled by one nation state. There is room for improvement here in accessing both people and evidence.
One issue which is always contentious is migration, and it is important to emphasise that within the EU this is a two-way street. There may be two million people from other EU countries living in the UK, but there are 2.2 million UK citizens living elsewhere in Europe. What would be the effect on them, on their jobs, lives, pensions, if the UK were to exit? Migration from outside the EU is another issue – joint EU policy would be most effective, and we should be working towards this.
A key issue raised by anti-European groups is often one of identity. However all of us recognise multiple identities. There is no problem, for example, in feeling oneself to be a Yorkshireman, English, British, and European, and it is clear that other Europeans have not lost their national culture and identity while still being citizens of Europe. There is no merging of the particular attributes of the Italian, Spanish, French, etc.
There is, however, the problem of British apathy towards EU matters, largely due to a lack of accurate reporting and media attention – the BBC has only one permanent correspondent in Brussels for example. MEPs also could be more proactive in communicating with their constituents. The European Movement has a significant role to play here, and is a welcome contributor to positive action locally and nationally.
Questions & Comments
A series of open meetings are planned, initially in Kent, to try to combat the influence of UKIP. The suggestion of preparing a positive narrative on EU membership was welcomed and different approaches should be prepared and tested.
Among other suggestions was the preparation of a car sticker with a positive message, such as I’m Proud of the EU.