Opinion from Lord Digby Jones

Leaving is not such an unattractive option.

Published Friday 8 November, 2013

In UK businesses, small and large, there are definite signs of greater economic activity. The not-so-good news is that we still have it all to do. This is Asia’s century and becoming globally competitive is a Herculean work-in-progress. What’s more, we belong to a European club that is holding us back and if it is unreformed it will render the task impossible.

Some argue that discussing EU membership is a distraction from the task of economic recovery. They are wrong. The nature of our membership is intrinsically linked to our chances of making our recovery sustainable. We must not delay addressing it. Although its 530 million people have enjoyed nearly 70 years of uninterrupted peace, the EU looks set to fall at the first hurdle in the Global Competitive Stakes. It is simply not fit for purpose.

We are faced with an unelected ruling elite in Brussels that still can’t balance its books, where the culture is still one of marching valiantly towards 1970 and where criticism is condescendingly seen as heretical.

The dead hand of EU-based employment regulation and state subsidies has been a job destroyer for years. Money that should be invested in education is instead sunk in the Common Agricultural Policy. Brussels spends billions of euros on overseas aid yet debilitates those same developing countries with tariffs that prevent them creating sustainable economies that would extinguish the need for aid in the first place.

In some rival countries within the EU, compliance with uncompetitive regulation, from environmental standards to procurement, from financial markets to fishing, is almost voluntary. There is no EU-wide inspection and compliance structure. The good guys comply and become uncompetitive. The single market is vital, but after decades of haggling there is still no single market in services. This is particularly disadvantageous to Britain, which has Europe’s largest services sector.

For the good of every single person living in the 28 member states of the EU, all this must change, and change quickly. Globalisation does not take prisoners. This should not be about the UK seeking opt-outs and exemptions just for us. Fundamental reform is not just about helping an unemployed kid in Manchester or Cardiff but Madrid and Lisbon too. The alternative to continent-wide reform is permanently high unemployment, especially among the young. The worrying rise of the Far Right in many member states, including France, has an excellent recruiting sergeant: mass youth unemployment and a perception that economic policies are implemented by unaccountable bureaucrats.

If Germany and the UK really want to lead a Europe that can give Asia a run for its money, then let us have independent enforcement of regulation, massive reform of fisheries and agriculture, huge investment in Europe-wide technical establishments, abolition of trade protectionism and serious slimming of the autocracy in Brussels. But will it happen? I fear not. My experience leads me to believe that the chances of certain big countries changing things is nil.

The Prime Minister’s plan to negotiate reform and then ask the British people to affirm or reject continuing membership would create a long period of uncertainty for business. It would be better to hold a referendum as soon as possible and end the uncertainty. David Cameron will get minor adjustments here and there but he won’t get the sort of reform upon which our future membership should be conditional. If anyone, the CBI included, thinks that fundamental reform is on the EU agenda, they are deluding themselves.

Leaving is not, as some pretend, such an unattractive option. There is a lie put about that three million jobs depend on our continued membership. Not true. There would be free trade agreements in place the day after our exit. Germany would demand no less. We would be free to negotiate, at more than the current glacial pace, free trade agreements with the rest of the world.

We are told that we would have to comply with EU regulations without having any influence over their design. What influence? We have secured a nudge here, a sop there, a delay in implementation perhaps, but no real, hard influence. Why is the UK with its enormous market share of EU financial services faced with so much uncompetitive regulation forced upon it by Brussels? Dubai, Shanghai and Mumbai are laughing in anticipation.

We certainly must put the option of leaving on the negotiating table. The tactic of promising to stay in the EU regardless of what the Prime Minister can negotiate is insane. When did anyone start negotiations with “It’s OK, we don’t mean it, we will do what you want anyway” as an opening gambit?

Staying in a reformed Europe has to be the right course, but should we stay in the current mess? Frankly, our nation just can’t afford to if we are to provide our grandchildren with a globally competitive economy worthy of the name.