Opinion from Lord Digby Jones

What is really holding us back?

Published Monday 23 September, 2013

In UK businesses small and large, there are the definite signs of greater economic activity and more confidence. Not a boom but all the indicators are pointing in the right direction. That is the good news; the not-so-good news is that we still have it all to do....this is Asia's Century and quite how we are going to be globally competitive is still a work-in-progress. Huge challenges await us in this truly globalised economy as we recover from recession, but we do have many of the fundamentals necessary to do the job in place already.

But we belong to a club that is holding us back and will render the task impossible.

The 530 million people of the European Union have enjoyed nearly seventy years of uninterrupted peace for the first time ever. A huge achievement. But it looks set to fail at the first hurdle of the Global Competitive Stakes. It is not fit for purpose as those 530 million face the battles that lie ahead in growth, public spending, employment, education, investment, trade and social stability.

"Don't divert attention away from our economic recovery" is a familiar cry when the question of sorting out our membership of the EU comes up. But our membership, or not, is intrinsically linked to our chances of making our recovery sustainable and successful for our grandchildren, and we must not delay in sorting it all out.

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

So much effort, political capital and not a few billion of taxpayers' euros go into keeping people in work, employed at a time when the unemployed of the EU are crying out to get those out of work into work. The dead hand of EU-based employment regulation and competition-destroying state subsidies have been job-destroyers for years. Nothing has been done to enable (especially small) businesses to take on new people without the time-consuming, opportunity-debilitating plethora of regulation just making it all not worth the effort.

We are faced with a Common Agricultural Policy that spends more of your and my taxes on commodities (where someone else dictates the price for what you produce) than is spent by the same EU on its Universities and Technical Colleges. If the wealth of 21st Century Developed Economies is going to be determined by how successful the development is, transfer and exploitation of knowledge enabling EU Member States to succeed in adding value to its goods and services, how wrong-headed is that! Moreover, EU protectionism rules the roost in agriculture to the point that Brussels spends billions of our euros on overseas aid yet debilitates those same donee countries with tariffs and subsidies which prevents them creating sustainable economies which would extinguish the need for aid in the first place.

In some rival countries within the EU (competing for commercial success within and without the Single Market) compliance with uncompetitive regulation in all areas of business activity, from environmental issues to procurement, from financial markets to fishing, is basically a voluntary event. There is no EU-wide inspection and compliance structure and no confidence that any of it will change any time soon. Laughed-at slaps on wrist are few and far between, let alone any meaningful sanction. So the good guys comply, become relatively uncompetitive and in the only market place that really matters, the globalised economy, they become also-rans.

At a time when all Member States are cutting back public spending, Brussels constantly seeks, and spends, more. The EU should be cutting its suit according to the cloth of its paymasters.

The much- vaunted Single Market is vital, but after decades of haggling, there is still no Single Market in Services......and which Country has the largest Services Sector in its economy? You guessed it!

For the good of every single person living in the 28 member states of the European Union, all this, and much more, must change....and change quickly. Globalisation does not take prisoners. This should not be about the UK seeking some sort of exceptional position; seeking opt-outs and exemptions just for us. This MUST be about the entire EU being extensively and speedily reformed. The alternative is permanently high unemployment (especially amongst the young), austerity and attendant social dislocation and crime for decades, on a scale that will make Greece's current woes look like a walk in the park. Indeed, we will all be visited by the very things the EU was created to prevent!

There is much talk of reform, but when, how, by whom? The chances of certain big countries giving, as they see it, a competitive advantage to others by changing things is nil. The political dynamic in many nations will simply not allow reform. Those in the Eurozone are on a pathway to the creation of one country (whether they acknowledge it or like it or not) and nothing will get in the way of such integration; those outside will pay the price as well.

So should the UK leave?

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, with more than the current glacial pace, free trade agreements with the rest of the world, helping poorer nations develop their economies through trade as well as creating more jobs in the UK.

We are told that we would have to comply with many of those regulations relating to the sale of goods and services within the EU without having any influence over their composition. After years of seeing the workings of Brussels from the inside I would ask....what influence? We have secured a nudge here, a sop there, a delay in implementation perhaps, but no real, hard influence. If I'm wrong, why, for instance, 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.

But it is not in the UK's interests to leave a hugely-reformed EU. Germany and the UK have so much they can achieve for their mutual benefit by jointly reforming it; one as the major economy within the Eurozone and the other as the major EU economy outside it. Such a group could really take on the World in Asia's Century and create wealth for all their peoples. What a prize!

But will it happen? I wish it would but I just don't see it.

The Prime Minister's plan to negotiate reform then lance the boil once-and-for-all by putting our membership on such revised terms to the referendum-starved electorate creates a long period of business-confidence sapping uncertainty and it presupposes that game-changing reform is possible. The chances of any British Prime Minister being able to secure that are virtually nil. The Eurozone will not co-operate, even though such EU-wide reform is in its interests as well. A minor nudge here and there for sure, but not the sort of reform that is essential, not the sort of reform upon which our future membership should be conditional.

Stay in a hugely reformed EU? Yes. Stay in the current mess? Frankly, our Nation just can't afford to if we are to provide for our grandchildren a globally competitive economy worthy of the name.