BNE Blog

For eurosceptics, the grass is always greener on the other side

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.

Posted in European Politics, UK Politics | No Comments »

North East businesses want to stay in the EU

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.

Posted in Economy, SMEs | No Comments »

Britain is not drowning in EU red tape

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

What reforms do Business for Britain want? Hard to tell when it’s all Latin gobbledegook…

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

The UK would have implemented European financial regulation outside the EU

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

The huge prize of staying in the EU and fighting for reform

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.

Posted in Economy, SMEs | Comments Off

A City outside the EU would be diminished and lose its status as #1 global financial centre

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

“Europe or the Commonwealth” is a false choice

January 23rd, 2015

By Will Cousins

Forget the EU- let’s take on the world with our TRUE friends”, screams the headline in today’s Daily Mail. The author is Daniel Hannan, Conservative MEP for South East England, and the theme is a familiar one- that Britain is “shackled to a corpse” in the EU, and should focus instead on the Commonwealth, or the “Anglosphere” as Hannan often calls it. In this back-to-the-future narrative, membership of the EU has “artificially redirected” our trade to European countries, which “dislike” us”, from our “true friends.” These friends comprise what used to be known as the Old Commonwealth- Canada, Australia, New Zealand- plus the United States and India.

First, the facts. In 2013, the rest of the EU bought 44% of our exports. The five countries Hannan mentions bought 23%. This is despite the fact that the rest of the EU has a population of 444 million and a GDP of $15 trillion, while the Anglosphere has a population of 1.6 billion and a GDP of $22 trillion. It is true that our exports to the EU fell, but the same is true of our exports to the USA, Australia, Canada and New Zealand. Only India saw an expansion.

He doesn’t mention foreign direct investment either. In 2012, the Anglosphere accounted for 32% of the total stock of FDI in Britain. The EU was responsible for 50%. In that year, investment from the EU jumped by £95 billion, while the level of investment from all the Anglosphere countries save America fell. Hannan may think he knows where our “destiny” lies, but the numbers are not so sure of themselves.

And that shouldn’t be surprising. Hannan may be right when he says that, economically, “geographical proximity has never mattered less”. But it still matters a great deal. A 2008 study on the distance effect on bilateral change showed that its importance has hardly changed in the past fifty years. [Anne-Célia Disdier & Keith Head, ‘The Puzzling Persistence of the Distance Effect on Bilateral Trade’, 2008]. Work by the OECD found that a 10% difference in distance between two countries decreases intermediate goods imports by 8.2% as compared to 7% for consumption, and 5.3% for imports of capital goods [S. Miroudot, R. Lanz & A. Ragoussis, ‘Trade in Intermediate Goods and Services’, 2009].

The immense importance of the European market to Britain is not simply caused by geography. The CBI shows [CBI, ‘Our Global Future’, 2013] that EU countries have the highest level of export complementarity with the UK. Belgium is top, with 71%. Eight of the top 10 are in Europe; India comes 135th.

This is not to deny for a moment the importance of our links with the Anglosphere countries. We are close to all of them, and of course the alliance with the United States is vitally important for Britain. But our relationships with these countries are not damaged by our EU membership; they are enhanced by them. Britain brings a great deal to the EU table, and our alliance with the United States is one of them. British governments, both Labour and Conservative, have traditionally tried to form a bridge across the Atlantic. If we left the EU, Washington would simply deal bilaterally with Brussels, Berlin and Paris.

As for the others, they simply do not form a viable alternative to Europe. Are we really going to deliberately and permanently damage our relationship with Germany in order to re-emphasise our kinship with New Zealand? Rugby matches against Australia and royal visits to Canada are no replacement for a structured alliance with our neighbours.

Hannan loves the Anglosphere- but not enough, apparently, to listen to what its leaders are saying. He seems not to have noticed that the Obama administration emphatically stated that “we want to see a strong British voice in that European Union. That is in the American interest.” That was in 2013, and if he missed that, he cannot have missed the fact that every US administration since Kennedy has supported British membership. In the same year, the Australian foreign minister said: “Australia’s strong links with the UK allow Australian businesses to use the UK as a platform for trade and investment in the broader EU market. I encourage the UK to maintain its influence by remaining an engaged participant in all aspects of the EU internal market.” The Prime Minister of New Zealand, John Key, was in London last week, and was too diplomatic to say what he thought about Britain’s future in Europe. But the purpose of his trip was to pursue a trade deal with the whole of Europe, and to enlist British help in achieving it.

And that is the point. “Europe or the Anglosphere” is a false choice. The Commonwealth countries want Britain to stay in- to make the EU better, and to improve its links with their own countries. Hannan has not provided one shred of evidence that our relationship with the Commonwealth would be any better if we left.

Hannan quotes Churchill in his article. Fifty years from the great man’s death, it might be worth remembering what he said in a radio broadcast, in a prophetic growl, in November 1934. “There are those who say: Let us ignore the Continent of Europe. Let us leave it with its hatreds and armaments to stew in its own juice, to fight out its own quarrels. Let us turn our backs upon this alarming scene. Let us fix our gaze across the ocean and lead our own life in the midst of our peace-loving dominions and empire. There is much to be said for this plan if only we could unfasten the British islands from their rock foundations and could tow them 3,000 miles across the Atlantic Ocean and anchor them safely upon the smiling coasts of Canada. I have not heard of any way in which this could be done.”

Britain is 23 miles from France, and 11,426 miles from New Zealand. We will continue to trade and do business with the nations of Europe. We will continue to inhabit the same space, and face the same threats, from terrorism and a resurgent Russia. Churchill knew that denying this fact, and dreaming of detaching Britain from its place in the world, was useless fantasy. Eurosceptics would do well to listen.

Posted in Foreign Policy | Comments Off

Could a eurosceptic party win a national election? And what could be the consequences of Grexit?

January 23rd, 2015

With the Greek elections fast approaching, and polls all pointing to a likely anti-austerity coalition led by Syriza, this morning Business for New Europe brought together a panel of experts to discuss the possible fallout – what would a Syriza victory mean for Greece and the rest of Europe?

Panellists were Catherine Fieschi, Director of the political think tank Counterpoint; Vicky Pryce, chief economic advisor to the CEBR, a former head of the Government Economic Service and author of Greekonomics: the euro crisis and why the politicians just don’t get it; and Professor John Ryan of the Von Hügel Institute at St Edmund’s College, Cambridge University.

 

Catherine began by pointing out that the two Greek parties generally labelled as “populist”- Syriza and Golden Dawn- are in fact nothing of the sort. Golden Dawn are a straightforwardly neo-Nazi party, while Syriza is a party of the radical left that lacks the narrative of exclusion that typifies populist parties.

She said that it is effectively certain that Syriza will win the elections, as Greek voters generally fall behind the party that is ahead. However, the election result will probably create some certainty, as Syriza in opposition have so many people claiming to speak for them. If they form the government, Alexis Tsipras will form a government and install some discipline. Additionally, the threat of Grexit is likely to be hollow, because 2/3 of Greek voters want to stay in.

Finally, she reminded us that contagion can be political, as well as economic. A Syriza victory could boost the prospects of other anti-austerity parties in the Eurozone, such as Podemos in Spain and even the Front National in France.

 

Vicky Pryce said that Syriza is a relatively new party and a protest movement for all those who have had enough of austerity. People are also angered by the continued Greek problems of corruption and tax avoidance.

She agreed with Catherine that Syriza will prove more coherent and moderate in government than they have been in opposition. They have eased back on the rhetoric about walking away from the bailout, and the people who have so far been speaking for Syriza will not be the ones actually making the decisions and holding power if they win. That said, they still have a number of deeply unrealistic policies, such as re-hiring redundant public sector workers, increasing the minimum wage and completely ending austerity. She said that Greece has made too much progress on reducing its debt to GDP ratio to start spending more money now.

Vicky said that it was crucial that two things should happen quickly: a stable government should be formed and they should try to conclude negotiations with the EU as quickly as possible. The sectors which have kept the Greek economy going, such as tourism, need to have stability restored, so that people keep coming to Greece and that the whole of the EU has a plan for the future.

It is clear that for EU leaders, their primary concern are their domestic electorates – for example, Alex Stubb, the Finnish Prime Minister, who has softened his line in recent days, but has made it very clear that he would not back any debt forgiveness for Greece.

 

John Ryan criticised both the European Commission and the German government for some of their recent comments about Greece. He said that the views of Syriza and the EU are so irreconcilable that something will have to give. He believes that debt restructuring must happen, as Greece will never be able to pay them off otherwise. The problem is that this will create a knock-on effect, with other deeply-indebted countries like Ireland demanding a restructuring of their own debt. Indeed, the Irish government have supported the principle of holding a European Debt Conference.

In the end, a Syriza victory will force a choice for the Eurozone member states- do they accept an extremely damaging Greek exit from the single currency, or do they permit Europe-wide debt restructuring?

 

The question and answer session was also enlightening. The bottom line for Syriza, said Vicky Pryce, is that they need to be able to claim to have negotiated an end to austerity. There are ways of doing this beyond simply writing off debts, such as increasing debt maturity or reducing the interest rate.

In response to a question about Greece’s economic fundamentals, she said that growth has been reasonable, and the vital tourism sector has held up well. However, wages, productivity and living standards are all well down. The tax base has become stronger, but avoidance remains endemic, with everyone from oligarchs to taxi drivers hiding money abroad. There is also widespread avoidance of VAT.

The panel agreed that Greece needs even more structural reform if it is to achieve serious rates of growth. Agriculture is an example of a hugely backward and inefficient sector of the Greek economy, and it will need huge changes.

 

In all, it was a very enlightening event. BNE is very grateful to the three panellists and Thomson Reuters. We, like the rest of Europe, will be holding our breath when the votes are counted on Sunday night.

Posted in European Politics | Comments Off

BNE and the curious case of getting our facts right

January 19th, 2015

By Lucy Thomas

In today’s edition of The Times, a headline reads ‘Whitehall accused of pro-EU bias’. The story turns out to show Business for New Europe checking some numbers with the Department for Business  – numbers which are publicly available and would be provided to anyone who asked for them.

As a pro-European campaign group, BNE makes the economic case for Britain’s EU membership based on facts and figures. Hardly surprising then, that when we publish information on jobs or the economy we want it to be accurate and up to date.

This involves looking at existing research from a range of sources, and where information is held by the relevant government department, checking with them. This is often found online, but sometimes we get in touch to make sure we have the very latest information.

So it is somewhat surprising that the Department for Business is criticised for verifying information which they hold – and information that is publicly available. Were Business for Britain or any other organisation with any view on our EU membership to ask for the latest figures, I’m sure BIS would oblige.

Surely if our opponents were confident in their research, they wouldn’t take issue with others checking official statistics to see how they measure up?

It is also current government policy that the UK should remain part of a reformed EU. So perhaps the headline should instead read: ‘Whitehall accused of doing its job’?

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