March 16th, 2015
By Richard Corbett MEP
For what looks like a question of fact, this simple point has become a political hot potato. Eurosceptics are keen to inflate the figure as much as possible so they can claim that the UK is “being run from Brussels”: Nigel Farage famously claimed that the figure was “something like 75%”, before being forced to admit that that number was just his own invented estimate.
Of course, the question can be tricky to answer, because a lot depends on what counts as ‘a law’ and what counts as ‘European in origin’. So a few weeks ago, the House of Commons Library did research, doing their best to take into account these difficulties.
The figure they came up with was 13.2%: that’s the proportion of UK legislative acts passed in the last 15 years, both primary legislation and statutory instruments, that refer to the EU or flow from an EU-level agreement. They admitted that this figure was likely to be an overestimate, though, since they counted every single reference to Europe in any law — whether that be a full-blown implementation of a European agreement, or simply a passing mention of the EU in an entirely domestic law, for instance to define a term.
So far, so good. But, a few days ago, the eurosceptic pressure group Business for Britain stuck its oar in and proposed their own answer to the question in a pamphlet audaciously entitled ‘The Definitive Answer’. Their figure? 64.7%
We can look at the details of the research in a moment. But first, whichever side of the EU debate you’re on, please put aside your prejudices for a second and think about this objectively. Which of these two bodies would you say is the more reliable? On the one hand we have a non-partisan, highly respected House of Commons library, saying that a figure of 13.2% is likely generous. On the other hand, we have a eurosceptic pressure group putting forward a figure so high it’s suspiciously close to Farage’s inflated “estimate”. If you came into this with no preconceptions at all, whom would you trust?
Sure enough, a quick skim of BfB’s pamphlet immediately rings some alarm bells. Having liberally applied the word “definitive” throughout their press release, they admit on page 5 of the actual pamphlet:
“It is immensely difficult to accurately quantify the impact of EU legislation.”
Indeed, the approach BfB used so to get the 64.7% figure is far from uncontroversial. They take the House of Commons interpretation of ‘EU-influenced’, but quietly remove the caveats. Then they add to this every directly-adopted European regulation, on the pretext that these all represent “laws in force in Britain” even though they haven’t passed onto the statute books via Westminster.
This is bizarre. European regulations are typically focused, technical, and highly limited in scope. They apply to specific corners of the European market, such as olive growers and tobacco farms. Plenty of them are specific to the EU’s internal operations. Many are time-limited, meaning they expire every year and have to be renewed. In order to generate their 65% figure, BfB has had to count every renewal of every regulation as a full-blown ‘law that applies in the UK’.
I suppose you could factor in these kinds of regulations. But then you would have to do the same on the UK side, and count every local parking regulation, traffic control order, clause of the Anglican church’s ‘canon law’, and so on. After all, these are technically ‘laws that apply in the UK’, using BfB’s tendentious interpretation. I haven’t done the maths, but if you really want to see how many of these there are in Britain, legislation.gov.uk will tell you. To put it mildly, there are a lot. Somehow I don’t think the figures will come out looking very eurosceptic-friendly if we go down that road.
Finally, I want to try to inject a note of sanity into the debate, by suggesting that the question is an odd one to ask anyway.
Firstly, EU rules are not imposed on us by some alien power. We are Europe: we agree shared policies with our European neighbours on issues where we have overlapping or mutual interests. We make agreements at European level when we recognise that acting at national level would be less effective. And all new EU laws are approved by national ministers in the EU Council (accountable to their national parliaments) as well as by directly elected MEPs.
Secondly, what good, really, is crude law-counting? If the UK passed just one big law a year that implemented all our miscellaneous European agreements, would eurosceptics then be happy to say that only 0.1% of UK law was European in origin? No. What matters is not the number of individual legal titles, but the content of those titles.
Thirdly, it’s not like we wouldn’t bother making laws if we didn’t agree them at European level. We’d just make them in a different place, with less effect.
And finally: what really counts as a “law in force in Britain”? Forget the EU for a moment. Suppose you run a business in the UK and you want to sell windscreen wipers to Germany. Technically, only UK regulations apply. But of course there are also German regulations, and you had better follow those too, or else you can’t sell your products. Now suppose you want to expand your business to the Netherlands, or Portugal, or Poland. Again, none of the rules of those countries technically apply to your business in Britain. But from your point of view, they may as well do. When it comes to windscreen wipers, you are de facto governed from abroad, and there’s nothing you can do about it.
Now suppose 28 countries were able to get together and agree to replace their 28 different sets of windscreen wiper regulations with just one shared set. Suppose they set up a democratic system consisting of elected governments and elected parliamentarians to debate and agree that shared set. And suppose that shared set, once duly agreed, could enter into force across the entire European market in one go.
In that scenario, would we really complain that a UK windscreen wiper law had gone out the window and a European windscreen wiper law had come in, nudging that terrible percentage from 13.1 to 13.2? Or would we rather celebrate the fact that a regulatory burden had been lifted, and trade had just been made a little freer for everyone?
March 11th, 2015
By Will Cousins
The rebirth of the car industry is one of Britain’s great business stories. From the ashes of the long death of Rover, a new industry has emerged- making volume and luxury models, SUVs and sports, Formula One racers and vans. From Bridgend to Sunderland, and from Essex to Merseyside, 730,000 people are employed in the industry. It accounts for 4% of British GDP. Incredibly, Britain now produces more cars than France, despite the fact that our industry is entirely foreign owned.
The sector is dependent on EU membership. In 2013, 77% of British cars were exported, and 49% of them went to the EU. That adds up to £22.8bn. Some manufacturers are here purely because of the European market- 71% of cars manufactured in Nissan’s plant in Sunderland go to the EU, compared to just 19% sold in the home market. Access to the Single Market is vitally important for foreign manufacturers, as is the ability of the UK government to support them in the Brussels corridors of power.
If anyone should be listened to on this issue, it is the manufacturers themselves. Most recently, the President of Ford Europe told the Today programme that EU membership is “critical” for Britain. In the past couple of years, these sentiments have been expressed by the CEO of Nissan, the UK chief executive of Hyundai, the head of sales of BMW and the UK managing director of Honda.
The best point was made yesterday by, rather surprisingly, Matthew Elliott of Business for Britain, described by the New Statesman as the “in utero” Out campaign. He told the BBC’S Daily Politics show that: “it is fair to say that the car industry would face 10% tariffs”. This is the rate applied to Japanese manufacturers.
It should not have escaped anybody’s notice that Japanese manufacturers base themselves in Britain to avoid tariffs. By basing their manufacturing operations here, they can export to the rest of the EU unhindered. Were we to leave, they could not. Elliott said, in the same programme, that were a referendum on EU membership to be held today, he would vote to leave.
To blithely support leaving the EU in full knowledge of what it would mean for a vital strategic industry, for so many peoples’ livelihoods, and without having any plan for dealing with it, is extraordinary. Business is coming to realise that Britain’s anti-Europeans are not impartial rationalists; they want us out at any cost. If they show so little consideration towards such a big industry, why should smaller ones feel any confidence in what they are selling?
You can watch the clip here: Rudd and Elliott on European arguments
Posted in Economy | Comments Off
March 5th, 2015
By Will Cousins
In many modern car plants, such as those which have thrived across the UK in the last few years, a vehicle will roll off the production line every sixty seconds. Business leaders do not speak up for EU membership quite so regularly, but recently, that has seemed to change.
On Monday, the Ford Motor Company’s boss in Europe, Jim Farley, told listeners that “being part of the EU is critical for business.” One-third of Ford’s engines are manufactured in the UK- that’s two million a year. The company employs 14,000 people at manufacturing and research centres in Basildon, Bridgend, Dagenham and Halewood. Mr Farley said that he “really hopes” the UK does not leave the EU.
The reaction to his comments among eurosceptics has been instructive. On social media, they pounced on the fact that Mr Varley did not explicitly say that Ford would pull investment from the UK if we left the EU. If nothing else, this demonstrates how little confidence they have in their own case- the fact that a multinational has not raised the possibility of pulling out of the UK is regarded as a victory. Of course foreign car manufacturers would not up sticks and leave the moment Britain left. But the fact that they are so unequivocal about the benefits of membership is striking.
Volume car manufacturers, like Ford, are in Britain in order to sell to the EU. If eurosceptics do not understand this, they were clearly not listening to the talk given by industry expert Dr John Wormald, at a conference last month attended by many of the leading lights of the anti-European movement. Japanese cars face a 10% tariff when exported to the EU. Domestic European manufacturers, particularly in France and Italy, are having a difficult time. Would their governments really allow cars made in Britain to be sold across the EU, tariff-free, if the UK left the EU? Of course not. They would take the opportunity to eat our lunch.
It isn’t just the motor industry which is worried by the prospect of a Brexit. Siemens, the German engineering giant, employs 13,760 people in Britain. It is currently investing £310 million in a new plant in Hull, to manufacture offshore wind turbines. Surely no project could fit in better with the government’s intention to “rebalance” the economy, and stimulate a “march of the makers.” Manufacturing jobs, in the green energy sector, in the North of England- what more could you want?
That question might be academic if we leave the EU. The project’s director, Finbarr Dowling, told the Hull Daily Mail today companies like Siemens could “think again” about investing in the UK, were we to leave. His comments were unequivocal: “Look at the benefits we have of inward investment into this country. We are very much part of that European family and we want to continue like that. When I look out, all to the east is Europe, so we want to be able to export to Europe and we have a better chance of doing that if we are in the union.” This is far from the first time that Siemens UK has expressed its fears about the possibility of Brexit.
Let’s move from Hull to London, and from manufacturing to financial services. The Lord Mayor of London, Alan Yarrow, has spoken of London’s role as the financial capital of Europe. He put the key point very well in a speech on Monday: ““We have the leading international financial centre of the world: that cannot live on a hinterland of 65 million people. We are and will continue to be the financial centre for Europe because we’ve got 600 million people sitting on our doorstep.”
Banks outside the Single Market do not have the passport to provide financial services in the Eurozone. Outside the EU, the UK government would have no power to decide the direction of EU-wide financial regulation, as this recent House of Lords report made clear. Few people in the City can see the attraction of cutting ourselves off from our largest and most important export, and incentivising foreign banks to set up shop in Frankfurt or Paris instead of London.
Yarrow, pointing to a recent YouGov poll that showed a 10 percentage point lead for staying in, describes Brexit as “unlikely.” We agree with him, but businesspeople would be unwise to sit back and assume that it is impossible. On the economy, voters respect the opinions of business leaders. The best way to safeguard the exports and investment which create jobs and growth in Britain is to speak up, loud and clear, about the benefits for business of being in the European Union.
February 24th, 2015
By Will Cousins
Assuming the worst of your own circumstances, and imagining everybody else to have it better, is probably part of human nature. But it is not an effective attitude to take politically. Those who want Britain to leave the European Union have been casting around for an alternative- any alternative- to our current situation. But the truth is that the grass is no more lush and plentiful on the other side of the fence.
That is according to Vidar Helgesen, the Norwegian Minister for Europe. Mr Helgesen, a conservative politician, gave a speech organised by British Influence in which he said that Norway had to adopt most EU legislation, but was locked out of the decision making bodies. He said: “I have a hard time seeing the UK, with your global ambition, dedication and contributions, being comfortable with such an arrangement.”
Norway is not, of course, a failure- it is richer than any EU state with the exception of Luxembourg. On the face of it, copying the Norwegian model might seem attractive. But special factors are at play. Norway’s population of just five million have the good fortune to own Europe’s largest oil reserves. This advantage can hardly be copied. The truth is that their success has come despite their position outside the EU.
The European Single Market is a thing of immense value. It provides for totally free trade among a market of 500 million consumers, with a GDP of £10 trillion. Movement of goods, services, capital and people are all free. Regulations are standardised across the EU, so that businesses need only abide by one set of rules, whether they are exporting to Dublin or Dubrovnik. The worst position any country could be in would be just outside the EU, dependent on exporting to it, but suffering the great disadvantage of not being in the Single Market.
Norway, as a member of the European Economic Area (along with tiny Iceland, and tinier Liechtenstein), has access to the Single Market. But only EU states get to decide on the rules which govern that market. Norway is stuck in a position of regulation without representation, waiting for EU member states to decide something, and then having no choice but to implement it. It is true that the European Commission must “consult” Oslo. But no other EU institution need do so, meaning that Norwegian diplomats have trouble even following what goes on in Brussels, let alone influencing it. According to the Norwegian government itself, the country must adopt 75% of EU legislation.
But doesn’t Norway avoid having to pay billions to the EU, and retain some freedom of action? Up to a point. Norway pays subsidies to poorer regions of the EU, which add up to £78 a head every year. It has to pay for any European programmes in which it wants to take part, without having any power over how they are run. And while Oslo is free to negotiate its own free trade deals, the absence of the EU’s negotiating heft makes the terms distinctly unfavourable.
Any country that wants access to the Single Market must accept the principle of the free movement of people – indeed, Norway has more immigrants as a proportion of the population than Britain. Those eurosceptics who are motivated by concerns about migration should beware of a solution that means accepting the free movement of people, but having no control whatsoever over EU migration policy.
Eurosceptics, by and large, realise that glorious isolationism is not a practical policy. Believing the EU to be bad, they cast around instead for other multilateral alternatives, or for a new deal with the EU that somehow allows us to retain all of the benefits and none of the drawbacks. It should not surprise anybody to learn that this option is non-existent. Instead of gazing over the garden fence, Britain must recognise the benefits of EU membership, and fight to make it better still.
February 23rd, 2015
By Will Cousins
Anti-European rhetoric seeks to divide business. Large PLCs in London, they say, might be pro-European. But small businesses in the rest of the United Kingdom are drowning in/being throttled by “Brussels red tape,” and as such they want to leave the EU unless it is changed beyond all recognition. Fortunately, new evidence is coming to light which utterly refutes this argument.
Last week, a survey of 4,000 businesses by the North East Chamber of Commerce (NECC) was released. It showed an overwhelming majority of 58% of businesses wanting to stay in the EU, against a mere 11% who want to leave. This is exactly the same proportion as that found by the CBI (a target of Eurosceptic vitriol)- 11% for leaving, 78% for staying in.
And is it any wonder? A conference in London last Wednesday, attended by very prominent anti-Europeans, concluded that the best option for Britain would be to leave the EU and trade with it under the World Trade Organisation rules. This would mean that our exporters would face the EU’s common external tariff. The tariff on cars is 10%. Think about Nissan’s plant in Sunderland, the greatest industrial powerhouse in the region. Most of its cars are sold to the EU- how would it cope with such a rise in cost? Nissan is one of those big, foreign companies that hold a special place in Eurosceptic demonology. But what about supply chains? Car companies like to source their parts as locally as possible. Small, privately owned engineering firms would be hammered if Nissan got into trouble.
Further south, in Teesside, chemicals are a dominant local employer. The North East Process Industry Cluster employs 35,000 people directly, and another 190,000 people indirectly. It produces 50% of the UK’s petrochemicals, and 35% of pharmaceuticals. The EU tariff on chemicals is 5%- how do eurosceptics expect the industry to cope with that? Leaving the EU would achieve nothing more than the shipping of jobs, investment and scientific expertise in the chemical industry to Germany.
Foreign direct investment is also vital for the region. Siemens, the German industrial giant, employs 2,000 people in the North East, mostly in high-skilled energy sector jobs. Denmark’s Grundfos makes pumps in Sunderland; Germany’s TyssenKrupp makes parts for the automotive sector in Aycliffe; Hitachi is investing £5.8 billion in a new factory near Durham. Without access to the EU Single Market, many of these sorts of investments would become uneconomical.
It is also true that the North East benefits from the EU’s regional policy. Over the next six years, the region will receive £1 billion from Brussels, allocated to projects in infrastructure, small business support, digital and trade support.
Of course business does not want the EU to stand still. As the NECC’s Ross Smith put it: “Our members feel passionately that reform, rather than further integration or outright withdrawal, is most likely to deliver business and economic benefit to the UK.” Business wants the EU to change, along the lines of our Business Manifesto for Reform: completion of the Single Market, more free trade deals, greater competitiveness and less regulation. The good news is that this is happening. Just yesterday, for instance, Britain’s EU Commissioner Jonathan Hill outlined his plans for a Capital Markets Union across the EU. This will make it easier for small business to get funding from non-bank investors, such as venture capital and crowdfunding.
As the general election gets ever-closer, business minds are being focused by the possibility of a referendum on EU membership. All the evidence we see is that business wants to stay in the EU and work to make it better. And that is as true of small manufacturers on the Tyne and the Tees as it is of big banks by the Thames.
February 11th, 2015
By Will Cousins
Two interesting reports have been produced recently that cast doubt on the common claim that Britain is being strangled/smothered/drowned in “EU red tape.” Anti-Europeans hurl around wild estimates of the proportion of British laws originating in Brussels, some as high as 80%. In this view, the only thing anybody seems to do in Brussels is come up with more pointless regulation to load on British business.
So it might surprise you to learn that the proportion of acts exclusively implementing EU decisions is 1.4%. The proportion of UK statutory implements referencing EU law in any way was 12.9%. And as the Labour MEP Richard Corbett has pointed out, the vast majority of these “simply mention the EU or define an EU term for UK purposes.” This is according to a report by the House of Commons library, which is completely non-partisan and has no campaigning agenda whatsoever. In total, an average of 13.3% of UK legislation is EU-affected.
But not only does Brussels legislate less than you think; it legislates less than it did. Democratic Audit, another non-partisan think tank, shows that the number of EU-adopted acts across Europe has fallen precipitously in recent years. From a high of just under 250 in 2008, it had fallen by just 100 in 2013. The legislation passed is also less weighty that it was, having fallen from 500 million words in 2009 to 150 million in 2013.
This has not all happened by magic. The EU is coming round to the British view that less is more, that Brussels should act where it can make a real positive difference, but not tinker for the sake of it. The new Commission President, Jean-Claude Juncker, put it well: “Citizens expect the EU to make a difference on the big economic and social challenges… they want less EU interference on the issues where Member States are better equipped to give the right response at national and regional level.” And Juncker is not just talking the talk. The Commission’s agenda for 2015 proposes 23 new initiatives, of which just 14 are legislative, and withdraws 80- in stark contrast to previous years.
Britain has long struggled to make the EU more open and business-friendly. We are succeeding in that goal. If we left the EU, we would still have to abide by a great deal of its regulations if we wanted access to the Single Market- just look at Norway, which implements around 75% of EU legislation. Do we want to help make the rules, or do we want to have them made for us?
Posted in Regulation | Comments Off
February 5th, 2015
For a campaign run by a seasoned pro (No to AV, Taxpayers’ Alliance etc), it is a surprise to see an embarrassing draft version of a campaign document uploaded to their website rather than the final thing they presumably meant for public consumption.
The document entitled ‘One final push on the EU’ has two full pages in place-holder Latin, as well as editing comments such as ‘add more pins’ to the map make it look as though they have support all over the country.
There aren’t any classicists in the BNE team, so we can’t tell you what any of this means. Maybe all of Business for Britain’s internal documents are written in Latin – it plays to the nostalgia that is euroscepticism’s driving impulse, after all. Still, who knew they wanted to take Britain quite that far back? The Romans did build an enormous wall along the border to keep out immigrants. But they also created a single European state. As Monty Python might say, what has the European Union ever done for us? Apart from the Single Market, the free trade, the absence of war…
Onto the editing notes, particularly funny on the final page. A map of Britain is covered in pins, apparently representing BFB’s business supporters. Apparently. Your suspicions might be aroused by the fact that one of the pins is several miles off the coast of Aberdeen. Perhaps the business person in question was out fishing when they decided to become a supporter? However, the editing symbol next to the picture of Julie Meyer has the instruction, from BFB’s Campaign Director, to “add a few more pins.”
This matters, because eurosceptics like to claim that business is split down the middle in its attitude to Europe. This isn’t true. The ComRes poll yesterday, showing that just 1% of large company directors wanted to leave the EU, is a case in point. Our supporters are real businesspeople, creating jobs and growing the economy. They aren’t imaginary pins on a map.
Posted in Uncategorized | Comments Off
February 4th, 2015
By Will Cousins
We all know how vital the financial services industry is to this country. It accounts for 10% of GDP, 12% of the tax take, and supports 1.1 million jobs, most of them outside London. By any measure, the City is the financial services capital of Europe, accounting for 75% of European capital markets and investment bank revenues, 80% of hedge fund management and 70% of private equity management. Moreover, British membership of the EU is an important reason for the sector’s success- without a financial passport to operate in the Single Market, banks wishing to do so would have to move some of their operations to the continent.
But there are concerns about regulation. There is a perception among some that EU regulation has been heavy-handed, and they have a point. The bonus cap is a bad policy, one which will not do UK financial services much good. But these legitimate concerns have been grasped by Eurosceptic groups, who pretend that the City is strangled by vast quantities of Brussels red tape. A report by Business for Britain, claiming that the UK would not have introduced 50% of financial regulation, is an example of this.
That is why a new House of Lords report, “The post-crisis EU financial regulatory framework: do the pieces fit?“, deserves reading. Produced by the EU select committee, it was noticed for its view that Britain’s influence is on the wane in Brussels, in part due to Eurosceptic policies and the possibility that we might leave. But it had much more to say than that.
The report is unequivocal that: “It is likely that the UK would have implemented the vast bulk of the financial sector regulatory framework had it acted unilaterally, not least because it was closely engaged in the development of the international standards from which much EU legislation derives.” The only regulations it concedes that would not be implemented by the UK acting alone are those related to remuneration.
The report also addresses the “gold-plating” of EU directives by the UK government. It is true that, given the size and scale of our financial sector, we might need more sophisticated regulation than some small EU states. But the committee finds the extent of gold-plating to be excessive. It rightly reminds us that “the more regulatory inconsistency that is created, the greater the threat of regulatory arbitrage and of competitiveness risks.”
This matters because it shows that the UK government acting on its own has added to the regulatory burden. As former chair of the European Parliament committee on economic and monetary affairs Sharon Bowles put it in her evidence to the committee, it is “rubbish” to believe that “in the absence of EU regulation there would be no regulation” in the UK. It is equally absurd to pretend to own a crystal ball that can prove that financial services regulation would be particularly different were Britain not a member of the European Union.
Read the full report here: The post-crisis EU financial regulatory framework: do the pieces fit?
Posted in Financial Services | Comments Off
January 27th, 2015
By Will Cousins
The case for Britain staying in the EU is not just about present prosperity; it is about creating opportunities for our businesses in the future. This will be made clear today at an event hosted by Business for New Europe and FIPRA in Brussels, on priorities for the Single Market and the “cost of non-Europe.” It will show how action at an EU-level will create vast gains for businesses across the EU, and here in Britain. The European Parliament estimates the cost of a lack of economic integration in Europe to be a staggering €800bn, or 6% of the EU’s GDP.
There are many areas where the EU can deliver gains for businesses in specific sectors. But we should focus on five priorities, which will benefit all types of businesses.
Firstly, the digital sector. The Single Market is perhaps the EU’s greatest achievement and has boosted EU GDP by an estimated 2.2% since its creation. But it was created before the internet revolution changed the way we live and do business, and subsequent reforms have not done enough to bring it up to date. At a time when consumers use online purchasing so regularly, the number of cross-border transactions in Europe is still disappointingly low. There is a clear need to create a single area for online payments and e-invoicing , to protect intellectual property rights at a European level, and to break down geographical restrictions that exclude foreign competitors. All this could raise the long-run level of EU GDP by 4.1%, or €520bn. This could be absolutely transformative for Britain, as we have the biggest digital sector in Europe.
It isn’t just in digital where the Single Market is incomplete. According to the European Commission, trade integration in the EU is at 22% for goods, but only 5% for services. This is largely because, while there are almost no barriers to trade in goods within the EU, service markets remain fragmented. There should be fewer barriers to cross-border services, public procurement should be opened up, and the existing Services Directive must be much better enforced. The European Parliament believes full completion could be worth €233bn a year to the EU economy- and once again, the UK would be a big beneficiary, given the importance of services to our economy.
Creating a Capital Markets Union is the job of Jonathan Hill, Britain’s European Commissioner. And it is an important job. Completing financial markets could create an efficiency gain of €60bn a year, 90% of which would go to small businesses. European SMEs get 75% of their funding from banks, compared to around 25% in the USA. Opening up capital markets would create a huge new pool of investment for small businesses to tap into. The EU is not about big businesses flourishing amid the red tape- it is about breaking down national obstacles that stand in the way of small businesses growing and succeeding.
Ongoing war in Ukraine and turmoil in the Middle East have turned European minds to the security of the continent’s energy supply. A new drive towards energy security must include far greater integration of Europe’s energy markets- which, happily, would also save businesses some €50bn a year. Europe has been helpful to the British government’s energy strategy recently; permitting the government to spend £25bn building a new nuclear power plant at Hinckley Point, which when completed could produce 6.5% of Britain’s energy needs.
The Transatlantic Trade and Investment Partnership, or TTIP, has been covered prominently, and not always fairly, in the news recently. This ambitious free trade and investment deal with the United States could boost the EU’s GDP by €60bn a year, and Britain could benefit by up to £10bn. The US is a vital economic partner for Britain, buying 18% of our exports and providing 27% of our foreign investment. TTIP has clearly proved controversial, and will take longer to negotiate than thought. But the political will is clearly present on both sides of the Atlantic, and we should reflect on how good a deal we would get if we were negotiating with the American behemoth on our own, rather than as part of the world’s largest economy.
These five areas have long been priorities for Britain. A joint letter by David Cameron and 10 other reform-minded European leaders in 2012 emphasised completing the single market, the digital sector, Energy Union and free trade. In 2013, 260 businesspeople signed Business for New Europe’s manifesto for reform, which included all of these as priorities.
The fact that four of the ten signatories to David Cameron’s letter now have senior positions in the EU should indicate how good the chances of this agenda being delivered are. They dominate the new Commission’s Work Programme for 2015, and the relevant Commission portfolios are held by pro-reform, pro-business politicians, such as Jonathan Hill.
Some might think, cynically, that if we can leave the EU while retaining access to the Single Market, then we will benefit from its completion anyway. This is a complacent attitude to take. Leaving aside the very high possibility that we would not be able to stay in the Single Market if we left the EU, Brussels will still need pushing by member states in order to deliver. There is a reformist faction in Europe, and Britain is its natural leader. The Single Market was a British achievement, and we have spent forty years fighting for a more open and business-friendly attitude in Brussels. If we stay in Europe and lead this agenda, the benefits for British business will be immense.
January 24th, 2015
By Haude Lannon
Bad news for the rare City eurosceptic this morning: Goldman Sachs has come out (repeatedly) to say that “Britain should stay in the EU to ensure London remains a great financial capital of the world“. Note that this is not the first time Goldman or other international banks have said this – many have raised the possibility of even leaving London in case of a Brexit, see here. Also industry associations like the British Bankers’ Association have come out clearly in favour of EU powers over financial services.
There is another good and balanced read on the subject: an interview in CityAM back in November with James Bardrick, head of Citigroup in the UK.
He leaves no doubt that the EU is good for the City and Britain has the influence to make the EU even more competitive: “Remember, the UK very much led the formation of the single market, and has been right behind some of the best changes that have been made to it over its history. I see no reason why we shouldn’t continue to do that.”
On the question of what would happen in case of a Brexit, he is very clear
“We’d have to make changes to our operating model to reflect some of the increased inefficiencies that being outside the EU would throw up, and there is no doubt that would lead to changes in the way we have to deploy some of our resources, both financial and people.”
Have no doubt: banks are obliged to consider their business interest and are already making contingency plans on where to move their European wholesale operations in case the City of London loses the right to freely sell financial services to the EU (the so-called passport). The winners may be Frankfurt or Paris, but even Dublin could grow into a financial hub from the jobs moved from London (see the reports here).
As for how many jobs and how much tax revenue would be lost in Britain – we don’t know yet exactly. The question is not whether the City would lose, but how much.
Posted in Financial Services | Comments Off