Earlier this autumn I attended an international policy summit in Brussels, one of a series of high-level roundtables ICAEW is holding around the world, bringing together senior business and political leaders to discuss the legacy of the financial crisis. During the debate, a leading figure within the Brussels establishment raised the question of the European electorate’s loss of trust in EU institutions and how they needed to assess if they are fit for purpose to cope with the demands of 27 member states. His views reflected my own.
Personally, I have always been very pro-European, but some of the things that have gone on in the wake of the financial crisis have been questionable. The way Brussels operates has to be reformed if the EU is going to thrive and prosper economically, politically and socially.
Part of the problem is that some of the institutions of government were designed to deal with six, nine or even 13 member states, not 27. In trying to adapt to the enlarged union, they have become unwieldy and remote from the lives of the EU’s 500 million residents.
But there has also been an increasing tendency for the EU to adopt an interventionist role and to legislate through regulation rather than directive. As a result, we are ending up with a one-size fits all approach that does not take into account the differences in the way that countries in the north are run from countries in the south. All this is leading to very negative thinking in the UK (and elsewhere) about being “in Europe”, which is dangerous. There seems to be little focus on the benefits of EU membership, especially for business. We forget at our peril that Europe – our natural backyard – is the world’s most important trading area, larger than the US and Japan combined and with a GDP of £11trn.
Eight out of 10 of our main trading partners are in the EU, including France and Germany, and they account for 51% of all UK exports (compared to 13% for the US). EU exports earn us over £200bn a year and directly or indirectly support around 3.5m jobs in the UK. Our EU membership also brings foreign direct investment, from other member states but also from non-EU companies looking for a foothold in the market.
At some point over the next couple of years, we may well be asked to vote in a referendum about our EU status. In anticipation, ICAEW will be firming up its policy in the area. I am sure that you all hold views across the spectrum but, however you feel about the issue, I would urge you to take an interest in the debate. If we sleepwalk our way into a decision that is damaging in the long term, it will have serious consequences for how we conduct business in the future.