What Britain wants for the G8 summit

Tax

What Britain wants for the G8 summit

By Simon Tilford, 16 June 2013
From Channel 4 News

Link to press quote:
http://www.channel4.com/news/g8-summit-tax-david-cameron-northern-ireland

Britain’s role in the EU

David Cameron: The good European

David Cameron: The good European spotlight image

David Cameron: The good European

10 June 2013
From The New Statesman

Link to press quote:
http://www.newstatesman.com/politics/2013/06/david-cameron-good-european

Can national parliaments make the EU more legitimate?

Can national parliaments make the EU more legitimate?

Can national parliaments make the EU more legitimate?

Written by Charles Grant, 10 June 2013

The EU has long had a problem of legitimacy, but the euro crisis has made it worse. According to Eurobarometer, 72 per cent of Spaniards do not trust the EU. The Pew Research Centre finds that 75 per cent of Italians think European economic integration has been bad for their country, as do 77 per cent of the French and 78 per cent of the Greeks.

For more than 60 years, the EU has been built and managed by technocrats, hidden from the public gaze – or so it has seemed. In fact national governments have taken most of the key decisions, but public scrutiny has been insufficient. This model cannot endure, because the EU has started to intrude – particularly in the euro countries – into politically sensitive areas of policy-making.

Political institutions can gain legitimacy from either ‘outputs’ or ‘inputs’. The outputs are the benefits that institutions are seen to deliver. The inputs are the elections through which those exercising power are held to account. The euro crisis has weakened both sorts of legitimacy.

The outputs are hardly impressive. Economies are shrinking in many member-states, credit is in short supply in southern Europe, unemployment in the eurozone is over 12 per cent, and youth unemployment in Greece, Italy, Portugal and Spain is between 40 and 65 per cent. Neither the EU nor the euro appears to be delivering much in the way of benefits – whether to Greeks who blame Germans for austerity, or to Germans who resent contributing to Greek bail-outs.

Input legitimacy has also suffered. Given the complexity of decision-making, with power shared among many institutions, lines of accountability in the EU have never been easy to follow. But the perception that power is unaccountable is growing, especially in the heavily-indebted eurozone countries.

Power over economic policy has flowed away from national parliaments and governments to financial markets and to unelected institutions. Having mismanaged their economies, Greece, Portugal, Ireland and Cyprus have had to negotiate programmes of deficit reduction and structural reform with the ‘troika’ of the European Commission, European Central Bank and International Monetary Fund. Other countries, such as Italy, Spain and Slovenia, have avoided full bail-out programmes but had to follow the Commission’s budgetary prescriptions in order to avoid reprimands and possible disciplinary proceedings. Decisions on bail-outs and the conditionality that applies to them have been taken by eurozone finance ministers and heads of government. It is not at all clear where and how such decisions can be held to account, as became evident during the messy rescue of Cyprus in March.

There is no silver bullet that can suddenly make the EU respected, admired or even popular among many Europeans. Its institutions are geographically distant, hard to understand and often deal with obscure technicalities. However, unless the EU becomes more legitimate and credible in the eyes of voters, parts of it could start to unravel. For example, at some point eurozone governments may seek to strengthen their currency by taking major steps towards a more integrated system of economic policy-making. But then a general election, a referendum or a parliamentary vote could block those steps and so threaten the euro’s future.

The best way to improve the EU’s standing would be to improve its ‘outputs’. If European leaders moved quickly to establish a banking union, to strengthen the EU’s financial system; if Germany did more to stimulate demand, thereby helping southern European economies to grow; if structural reform started to restore the competiveness of those economies; and if unemployment started to fall – then EU leaders would look competent, and support for eurosceptics and populists would wane. For the most part such outcomes require not new institutions, but better policies.

Nevertheless EU governance is in bad need of an overhaul. For many federalists, the answer to perceptions of a democratic deficit is simple: when decisions take place at EU level, the European Parliament should exercise democratic control (alongside the Council of Ministers). And if more decisions are being taken at EU level, the powers of the Parliament over them should grow.

However, these arguments face both practical and theoretical difficulties. The practical problem is that the Parliament has serious shortcomings as an institution. Since its first direct elections in 1979, four major treaties have boosted its powers. MEPs now have considerable sway over the EU’s laws, budget and international agreements. Yet in every European election, the turn-out has declined – from 63 per cent in 1979 to just 43 per cent in 2009.


MEPs do a good job in some areas. In recent years they have, for example, improved the directive on hedge funds and private equity, and helped to reform the Common Fisheries Policy. But few voters are aware of the Parliament’s good work and many of them are sceptical that MEPs represent their interests; a lot of MEPs have little connection to national political systems.

Much of the time, the Parliament’s priority appears to be more power for itself. Since the 2009 European elections, MEPs have increased their hold over the Commission, and not only because of the extra powers the Lisbon treaty gave them. One of their techniques is to block what the Commission wants in one area, in order to extract a concession in another. The Parliament always wants ‘more Europe’ – a bigger budget and a larger role for the EU – but there is little evidence that most voters think the same way.

There are also theoretical objections to the Parliament becoming the main body for democratic oversight of the eurozone. In the EU’s usual law-making procedures – known as the ‘community method’ – the Parliament plays an important role. Thus in the last few years it has amended and approved new laws on eurozone budgetary discipline. And it is probably the best-placed body to question the Commission on its monitoring of member-state economies.

However, the money that rescues heavily-indebted member-states has to be voted by national parliaments. The EU budget is not involved to a significant degree, so the European Parliament plays only a minimal role in bail-outs. Decisions on bail-outs and the conditionality that applies to them are taken at EU level by eurozone finance ministers and heads of government. But these decisions have to be implemented by national parliaments: the German Bundestag had to vote money for Cyprus’s bail-out, while the Cypriot parliament had to approve the winding up of Cypriot banks.

These are reasons to increase the involvement of national parliamentarians in eurozone governance – and in the EU more broadly. Critics of their involvement argue that most of them focus on national issues and have little understanding of the wider European interest. Those are valid points. Any attempt to enhance the role of members of parliament (MPs) therefore needs to encourage them to ‘think European’. The European Council has helped heads of government to do so. The prime ministers who attend wear two hats – as national political leaders and members of the EU’s supreme authority. As Luuk van Middelaar, an adviser to Herman Van Rompuy, demonstrates in his excellent new book ‘The passage to Europe’, when national leaders attend the European Council, they start to consider the European interest – sometimes to their own surprise.

So how can MPs play a bigger role in scrutinising the EU? There are increasing numbers of ‘inter-parliamentary’ bodies that bring together MPs and MEPs. These range from the general Conference of European Scrutiny Committees (COSAC) to more specialised groups for foreign policy and Europol. And the recent fiscal stability treaty set up a ‘conference’ that will gather MPs and MEPs to scrutinise the operation of the treaty and discuss wider economic issues. However, these bodies – though useful – are merely consultative and are often treated disdainfully by MEPs. They do not give MPs a sufficient stake in the EU.

Accountability should start at home. Some parliaments, such as that of Denmark, have good systems for holding ministers to account, before and after they attend the Council of Ministers. Others, including that of Britain, scrutinise draft EU laws but do not follow Council meetings closely. National parliaments could improve their systems by emulating best practice across the Union.

The links between national parliaments should be strengthened. The Lisbon treaty created the ‘yellow-card’ procedure, whereby if a third or more of national parliaments believe that a Commission proposal breaches subsidiarity – the principle that decisions should be taken at the lowest level compatible with efficiency – they may ask that it be withdrawn. The Commission must then do so or justify why it intends to proceed. So far this procedure has been used just once, when the Commission withdrew a measure that would have enhanced trade union rights. A small treaty change could turn the yellow-card procedure into a red-card procedure, so that, say, half the national parliaments could force the Commission to withdraw a proposal. A similar system could enable national parliaments to club together to make the Commission propose the withdrawal of a redundant or unnecessary EU law.


A more fundamental reform would be to implement the long-discussed idea of establishing a forum for national parliamentarians in Brussels. The forum’s workload should be modest, so that the best and brightest MPs would want to participate. It should not duplicate the legislative work of the European Parliament. Rather, the forum should ask questions about, and write reports on, those aspects of EU and eurozone governance that involve unanimous decision-making and in which the Parliament plays no significant role.

This forum could become a check on the European Council. It could challenge EU actions and decisions that concern foreign and defence policy, or co-operation on policing and counter-terrorism. On eurozone matters the new body could – meeting in reduced format, without MPs from non-euro countries – question the euro group president or give opinions on bail-out packages. The forum could start work as an informal body and, if it proved useful, be given formal powers – such as the election of the euro group president – through a new treaty.

Hopefully, the forum would encourage MPs to think European. Sceptics and cynics will rightly argue that a new institution cannot on its own make the EU accountable. But in the long run, MPs will have to become more involved in the workings of the EU. Because MPs are usually closer to their constituents than MEPs, and because they are elected on a higher turnout, they stand a better chance of improving the EU’s legitimacy.

Charles Grant is director of the Centre for European Reform.

Comments

Added on 16 Jul 2013 at 06:41 by Angus

One good model of how to involve national MPs in European affairs would be one that has been successfully used for more than 60 years at the EU's less well-known older sister, the wider circle of nations (now 47) that is the Council of Europe.

The Parliamentary Assembly of the Council of Europe was the main focus of the early builders of Europe for a few brief post-war years before some of its disenchanted luminaries peeled off to create the Coal and Steel Community, the EC and so on. It came up with - and still guides, to some extent, the development of - the European Convention on Human Rights.

Churchill and the others who conceived the CoE understood that "tying in" parliamentarians was critical to the success of the whole enterprise.

And today it is PACE which, despite its limited statutory powers, is generally regarded as "the driving force" of the Council of Europe, prodding the governments into action, and often taking the lead in new initiatives - such as opening its arms to Eastern Europe after 1989 for example (and now Arab Spring countries), or abolishing the death penalty.

There are other democratic advantages. National obsessions have a natural outlet at European level, and the traffic can be two-way: MPs return to their home parliaments having "rubbed shoulders" and compared notes with their fellows in Strasbourg, who are often dealing with the same issues back home. The overall effect is to tilt perspectives away from troublesome national interest and towards deeper European values - just what the EU is after.

There have been growing ties in recent years between the Council of Europe and its much more successful offshoot, the EU. But if the EU is seriously considering a parliamentary arm it might do well - as my father (a native of Aberdeen) used to say - to "tak pints" from its forerunner.

Added on 10 Jun 2013 at 14:49 by Tony Brenton

It really does say something about the state of the European debate that the suggested solution to the current opaque proliferation of Euro- institutions is to create another one.

Added on 10 Jun 2013 at 14:48 by Marcus Walker

I don’t buy van Middelaar’s argument that Merkel and co. become Senators of the Republic of Europe when they go to Brussels. I think this is a self-serving and wishful-thinking piece of Van Rompuyian propaganda. Having researched and written close reconstructions of the Eurocrisis summitry since late 2009, I think there is far more evidence that these were negotiations between hard-nosed national interests wrapped in the European flag.

This affects the kind of education/socialisation that national MPs could realistically undergo if they played more of a role in Europe. The difference between, say, Merkel and her Bundestagfraktionen isn’t that she thinks more of the broader European interest, but that she thinks of a bigger set of domestic and foreign national interests; whereas sacrifices of the former for the latter can be harder for MPs to sell to their constituents, who are also socialised by German media to think mainly in terms of the price tag of bailouts.

My sense is that national leaders were more likely to think and decide ‘as Europeans’ before the financial crisis – especially when the Kohl/Delors generation was in office – than in the era of Merkel and friends. The pressures of this crisis have sharpened the struggle for national interests – of obtaining exactly and only those European policies and institutions that suit individual creditor or debtor countries – that used to be softened by lofty historic ambitions of ‘building Europe’. It’s a change of personalities/generation as well as of circumstances. Call me cynical.

Poor old Schäuble sometimes gets into trouble because he’s a throwback to that earlier generation…he agrees to a ‘European’ deal because that’s where his heart lies, but then Merkel tells him he went too far and he has to go back to Brussels and do it again. It has happened at least twice, including over debt relief for Greece.

Furthermore, different policies could improve the ‘output’ as you say, but the policies you rightly list are hard to imagine if power in the EU/Eurozone is dominated by a club of self-interested national governments. German national interests and political culture militate against banking union, fiscal stimulus or a broader mandate for the ECB. Southern Europe’s national political cultures and institutions make liberal economic reforms possible only at a snail’s pace – and under a level of duress that creates these very problems of legitimacy. Only federalism could break through this, but voters don’t support it: why reward EU institutions whose outputs have been so bad…

Added on 10 Jun 2013 at 14:42 by Ian Campbell

The EU Commission should be a technocratic/secretariat "back office" type institution to national governments and parliaments. It should not be initiating anything other than co-ordinating issues of mutual interest to the membership and helping to find the best solutions across that membership. Perhaps some extra powers for the Council of Ministers who should have their proposals accepted by parliaments/governments.

It was created in the reverse order required to give it any democratic legitimacy. It should be subservient to the nations it serves.

This construct would add time to getting matters through such revised EU machinery , but this would mean that it only dealt with what must be at the European level. Thus subsidiarity would be consistent with its brief and role.

Added on 10 Jun 2013 at 14:23 by Anne Palmer

You ask, "Can national parliaments make the EU more legitimate"?

It is far too late to even try to make any NATIONAL Parliament here in the United Kingdom of Great Bitain and Northern Ireland to make the EU more Legitimate.

Right from the very beginning in 1972/3 here in the UK, lies HAD to be told to the people of this Country-by a Head of Government no less, before the only Referendum the people have had on "whether to remain in the then European Community", to get then to vote to remain in what they were told was a Common Market, in which "there would be no loss of essential Sovereignty".

Legitimate=to make lawful? The EU could never be LAWFUL here in the UK because it was and is and always will be completely contrary to our very own long standing Common law Constitution.

Had the people been told the truth from the very start, the people would never have agreed to remain in the then "Community".

The CER commission on the UK and the single market

The CER commission on the UK and the single market

The CER commission on the UK and the single market

Written by John Springford, 07 June 2013

The case for British membership of the EU has always rested primarily on the country’s participation in the single market. The CER’s commission on the UK and the single market held its first meeting this week. It will examine whether participation in the EU helps or hinders Britain’s economy. If the referendum on EU membership takes place, the commission’s report will provide balanced evidence to help the UK make its decision.

Membership of the EU cannot be weighed solely in pounds and pence. But in a period of economic stagnation, any decision about membership will be shaped by the pecuniary costs and benefits. Unfortunately, the British debate has lacked objective analysis of these, with both eurosceptics and europhiles using evidence selectively to make their case. As the UK is not a member of the eurozone, and is unlikely to join, an appraisal of EU membership should centre on the single market.

Martin Wolf of the Financial Times, and Brian Bender, former permanent secretary at the UK business department, introduced the discussion at the inaugural meeting of the commission. There was broad agreement that Britain only has two choices: leave the EU and withdraw from formal participation in the single market, or stay in. Commissioners ruled out a third option: that of joining the European Economic Area. Theoretically, Britain could be in the single market, but not in the EU. The EEA provides Norway, Iceland and Liechtenstein with free access to the single market, but they have to sign up to its rules, and have no say over what the rules are. As one reason for dissatisfaction with EU membership is the loss of sovereignty over rule-making, it was felt that this would be worse than either staying in or leaving.

Few commissioners thought that leaving would be an economic disaster for Britain. There would be little significant impact on jobs, because the level of employment was largely determined by how well the British labour market matched the demand for and supply of workers, rather than the amount of trade that the UK conducts with Europe.

The impact of exit on national income was more contentious. Many estimates put the economic gains from membership of the single market at around 2 per cent of GDP. But some commissioners argued that the immediate impact of leaving would be closer to zero. Others argued that there would be a small negative impact on UK national income in the short term, but there would be a steady erosion of Britain’s attractiveness as a location for foreign investment.

Commissioners questioned whether leaving the EU would allow Britain to extricate itself completely from EU rules in any case. The EU would remain the UK’s largest trading partner, and companies exporting to the rest of Europe would have to conform to EU product standards.

The second option was stay in the EU on current or renegotiated terms. Some commissioners thought that cherry-picking the single market – repatriating social and employment rules, for example – was not really on the table because it would be unacceptable to the other member-states.

One British interest was deepening the single market. A second was making the EU regulate less. Some participants questioned whether these two interests were compatible. The UK liked the single market, but did not like the transfer of rule-making power to Brussels that further integration would entail. So it faced an uncomfortable choice: it may have to cede more sovereignty in order to get more out of its economic relationship with the rest of Europe. And if it decides to promote integration, it may in any case be difficult to get other member-states to sign up to a deeper single market. Countries like France were cooler on the single market than Britain, and their priority was addressing the eurozone’s problems, rather than furthering trade integration. But a focus of the CER’s commission should be the policies needed to open markets in industries in which the UK has a  comparative advantage.

Commissioners were divided on whether Britain should seek to reform the EU to make it a less active regulator. Participants from the business world said that the European Commission and Parliament had become hyper-active and too keen to regulate, which was costly for Britain. Others disagreed, and said that EU regulation hardly tied up Britain’s economy in red tape: by OECD measures, Britain had among the least regulated labour and product markets in the developed world. The EU’s institutions had failings, they said, but also benefits for the UK: the EU acted as a counterweight to national protectionism; and a common external trade negotiator had more bargaining power than Britain would wield on its own.

The commission meetings that follow will take evidence from experts in particular areas of the single market: the free movement of labour, of goods and services, and of capital, to assess whether the single market works for Britain in these areas. The report, which will be published in the spring of 2014, will provide a cool-headed appraisal of the UK’s two options.  If commissioners find that staying in would be best for Britain, the report will propose reforms to deepen Britain’s trade integration with Europe.

John Springford is secretary to the commission and a CER research fellow. More details about the commission can be found here.

Launch of the CER's Commission on the UK and the Single Market

Launch of the CER's commission on the UK and the single market

Launch of the CER's Commission on the UK and the Single Market

05 June 2013

Speakers include: Sir Brian Bender, former permanent secretary, UK business department and Martin Wolf, chief economics commentator, Financial Times

Location info

London

Event information download: final_singlemkt_proposal_7june13.pdf

Event Gallery

CER/BNE/Open Europe fringe event at the Conservative party's conference: 'Does Britain's economic future lie in Europe?'

Conservative fringe meeting - 'Does Britain's economic future lie in Europe?'

CER/BNE/Open Europe fringe event at the Conservative party's conference: 'Does Britain's economic future lie in Europe?'

30 September 2013, 5:30 pm - 7:00 pm

With:

Margot James MP, PPS to Lord Green, minister for trade and investment and member of the No. 10 Policy Advisory Board
Andrea Leadsom MP - co-founder, Fresh Start Project 
The Rt Hon David Lidington MP - minister of state for Europe
Maurice Thompson - vice chairman, Citi, EMEA
Chair: Mats Persson - director, Open Europe

Location info

Exchange 11, Manchester Central
Manchester

Tilting at European windmills

Tilting at European windmills

Tilting at European windmills

Written by Katinka Barysch, 29 May 2013

Britain’s European debate is moving from process (referendum when? how?) to substance – the question of whether the costs of EU membership outweigh the benefits. This debate is healthy. What baffles me is that some of the most frequently made arguments in this debate are baseless yet enduring.

I have done a number of public debates with UKIP leader Nigel Farage and other zealous eurosceptics. Such debates are not part of my job: the Centre for European Reform is an independent think-tank, not a campaigning organisation. Yet as an analyst, I believe that the debate about Europe should be well informed.

Hard-core eurosceptics often base their arguments around claims that are simply not correct. Their pro-European counterparts are then left to protest lamely that the eurosceptics are economical with the truth. The eurosceptics have the initiative; the pro-Europeans have the moral high ground. As long as eurosceptics get away with telling the public that EU windmills are dangerous giants, the debate about Europe will be skewed.

One of the most frequently repeated arguments in the British EU debate is that “the Commission in Brussels dictates 75 per cent of our laws” (this is a quote from UKIP’s website but I have heard the number repeated in public debates and in the national media).  The European Commission does not dictate laws; it is allowed to propose laws. But it is the ministers from the (elected) EU governments that negotiate and agree them, together with the (elected) European Parliament.

The 75 per cent figure comes from a statement that Hans-Gerhard Pöttering, then president of the European Parliament, made in 2009:  "Today approximately 75 per cent of the European Union legislation is decided by the European Parliament together with the Council of Ministers and has a direct impact in our daily lives.” Note: Pöttering was talking about the share of EU legislation that is influenced by the European Parliament. He did not refer to national legislation.

So what is the true share of UK legislation linked to EU directives? There is no easy answer. First, EU laws and national laws cannot be compared like for like. EU regulations apply directly in the member-states. EU directives are implemented through national laws and regulations. Sometimes one national law implements four EU directives, sometimes four national laws implement one EU directive.

A lot of British business regulation is likely to be related in some way or another to the single market and hence to the EU. But the EU does not get much involved in setting British rules governing tax (other than VAT and excise duties), social security, pensions, education, policing (except cross-border operations), spatial planning or the health service. The House of Commons Library has tried to calculate the percentage of secondary legislation in the UK that results from EU requirements and concluded that "[t]his figure has fluctuated between 8 and 10 per cent in the last decade". OpenEurope, a eurosceptic think-tank, has spent a couple of years looking at the question of how much British law can be traced back to the EU. The researchers concluded that it was not possible to determine the share with any kind of accuracy.

Nor is it a straightforward question how much EU regulation costs the UK. The anti-EU Bruges Group claims that EU regulation costs the UK £28 billion a year, but it is not clear where this figure comes from. Some eurosceptics have also claimed that EU regulation cost the UK over £100 billion over the last decade. This figure is probably based on research that OpenEurope did in 2010. It should be used with great caution.

OpenEurope looked at the impact assessments attached to 2,000 UK business regulations since 1998. (Many national governments, as well as the EU, try to estimate the potential positive and negative impacts of planned pieces of legislation before they enact them.) OpenEurope’s researchers then added up the estimated costs of the proposed regulations as well as the estimated benefits. They found that the 2,000 pieces of regulation could have cost the economy a total of £176 billion since 1998, and that £124 billion of this could have come from regulation that was in some way related to EU policies. I say “could have” because the £176 billion and £124 billion figures are made up of ministerial estimates of potential costs, not actual costs.

The researchers also added up the estimated benefits of the regulations and found that they are significantly bigger (by 60 per cent) than the estimated costs. In other words, although regulations can be burdensome, their net effect on the economy is thought to be positive because they usually help business to trade with one another as well as making workers more productive and products safer. OpenEurope says that the positive net effect is smaller for EU-related regulations than for national regulations. But it admits that it is particularly hard to quantify the benefits of EU regulation since impact assessments do not usually take into account wider benefits, such as access to the single market or the price decreases resulting from stronger international competition.

The costs of EU regulation also depend on how it is implemented in the individual EU countries. Some governments go beyond what is required by the EU. A 2006 review found no evidence that the UK was doing more ‘gold plating’ than other EU countries. But any meaningful estimate of the burden of EU regulation would have to consider the share of costs added at the national level.

These costs would then have to be set against the benefits of being a member of the single market and the world’s largest trading bloc. These benefits are every bit as hard to calculate as the costs of EU membership. Therefore, when pro-Europeans use figures such as the 3.3 million jobs that directly depend on exports to the EU or the £3,300 that every British household gains from being inside the EU each year, they should also be taken with more than a pinch of salt.

Eurosceptics claim that access to the European market is no longer worth much since Britain now “mostly” trades with non-EU countries. It is true that the share of British exports that go to the other EU countries has fallen to just below 50 per cent and that sales to emerging markets are growing faster  –  that is exactly what you would expect, given that the eurozone is in recession while many emerging markets are still growing briskly.

But British exports to emerging economies are starting from a surprisingly low base: in 2007, 3.3 per cent of UK exports went to the BRIC countries; by 2012, that share had risen to 5.6 per cent. Britain still sells more to Germany than to Brazil, Russia, India, China and South Africa, Australia, New Zealand and Canada – combined. Another key export market for Britain is the US – with which the EU is currently negotiating a free trade and investment agreement.

Eurosceptics often imply that if Britain severed its ties with the EU, it would trade more with emerging markets. In a purely arithmetical sense this might well be true: if British business found it more difficult to access markets in France, Spain and Poland they might try harder to sell things in India and Indonesia. But the idea that the EU is holding Britain back is spurious. Germany sells six times as many goods and services to China as the UK does. If it is the EU holding Britain back, why is it not holding back Germany?

Another figure that the eurosceptics like to use is £50 million: that is supposed to be the daily British contribution to the EU budget. This number has some validity, although it is outdated. In 2011 the gross UK contribution to the EU budget was £13.83 billion, or £37 million a day. Is this a lot or a little? It depends how you look at it. As a share of GDP, the UK’s gross contribution is the lowest of any EU country, lower than those of poorer countries such as Poland or Bulgaria. And of course, Britain also gets money back from the EU for its farmers, universities and poorer regions. Once these revenues are factored in, Britain’s net contribution amounts to roughly 1 per cent of total government spending.

Even 1 per cent is a lot if, as many eurosceptics claim, the money is wasted. UKIP calls the European Union a “bureaucratic monster” and sometimes implies that most EU spending goes to meddlesome bureaucrats. In reality, around 5 per cent of the EU budget is spent on administration, and half of that on the European Commission. The European Commission has 23,000 employees, less than Birmingham City Council. It is true that EU officials are “unelected”, as are the 32,000 officials in the British Home Office and those of any other state administration around the world. No doubt, the EU’s bureaucracy could be streamlined and made more effective but the real potential for savings – as many British politicians have pointed out for years – is in the common agricultural policy and funds for poorer regions.

The latest figure that has crept into the European debate is £150 billion – that is supposed to be the sum that the UK could lose through the euro crisis, according to the Bruges Group. Among the heroic assumptions underlying this calculation is that all other 26 EU countries would go bankrupt simultaneously so that Britain would be lumbered with the entire £60 billion costs of a lending facility called the European Financial Stabilisation Mechanism; that the European Investment Bank (an AAA-rated infrastructure lender) would fold; and that Britain would be called upon to bail out the European Central Bank if the euro broke up.

The fundamental truth is that the European Union is an extremely complex undertaking that cannot easily be reduced to simple numbers – either on the positive or on the negative side. But perhaps by feeding random numbers, half-truth and fiction into the debate, the hard-core eurosceptics will force other politicians and journalists to do a better job of explaining what is really at stake in Britain’s EU membership.

Katinka Barysch is deputy director of the Centre for European Reform.

Comments

Added on 29 May 2013 at 12:05 by Anonymous

"Pro-Europeans have the moral high ground". That's not true either, as those same people who claimed Britain would loose out by being out of the Euro are now saying that Britain will loose the same number of jobs by being out of the EU. The simple matter is that neither side knows the Pro's and Cons of Trade. Britain would gain some advantages (such as reclaiming its WTO post that was taken by the EU) and it would be able to sign bilateral agreements and loose others such as being able to take other European nations to court when they flagrantly violate the Common Market - e.g. France and British Beef and would be reliant on the slow justice of the WTO.

You claim the advantage of having the numbers on your side then repeat the oft quoted lie that 50% of British Products are sold into Europe. Scrub out the Rotterdam effect and that's nearer 35% of the UK's products that are sold into Europe. Important yes, but not the only game in town. You also assume that this is one way traffic, with Britain being lucky to receive UK goods whilst Europe doing the UK a favour buying their goods which is rubbish, if the goods are worth buying people will buy them regardless of which Club they happen to be in. I drink Budweiser Beer, doesn't mean I have to be in NAFTA to do so. Furthermore I think Audi, BMW and Mercedes might have something to say to Frau Merkel were the EU suddenly to slap punitive charges on British Goods into the EU, bearing in mind that Britain is Germany's largest Market in Europe. You also neglect to Mention the fact that the Common Market is in Good;, services are not anywhere near as free as anybody trying to buy a French Utility company would find out. Britain gains less from the EU than Germany because Britain sells more services - not goods.

You quote the fact that if Britain left the EU then the Free Trade deal between the EU and the US will exclude the UK. You assume that firstly the US Congress would ratify the treaty at all without Free Trade Atlanticist Britain involved in the legislation backing such an agreement. You also assume that the Democrats (and an Anti-British President at that) will be in the White House in perpetuity.

Europhiles oft quote the City of London being excluded from Euro Denominated Trades. Again it is assumed that Firstly there will be a market at all with the FTT making capital very unwelcome in Europe. Europhiles also assume that the main market will be physically settled rather than in cash settled Futures and other OTC products. As the OMX Sweden exchange proved, capital flies at a rate of knots from Transaction Taxes. If I had a £5 every time I heard that London would loose out to Frankfurt I'd be a rich man.

Both sides are guilty of mendacities in this debate when discussing the Economics. The Eurosceptics are responding to Europhile Half Truths or outright lies with half truths and lies of their own. This is because the debate hasn't got onto what actually matters, does the UK want an 8% say in EU law, or 100% of UK law? The debate is ultimately about national sovereignty. Right now the pro EU argument is fighting on its own turf, when the EU is fighting on why this was allowed to happen without scant Democratic Mandate then the Europhiles and Europhobes will have to debate without this insipid Economic hyperbole.

Added on 29 May 2013 at 11:10 by Anonymous

Excellent article. The in/out debate about UK and the EU needs more informed exchange of views in order for a rational rather than an emotional outcome for all concerned. As someone who is not well informed on this subject, I look forward to following these types of articles in order to better equip myself to understand both sides of the argument. Well done and keep up the good work,

Dinner on 'Climate and growth: Is there a conflict?'

Dinner with the Rt Hon Edward Davey MP

Dinner on 'Climate and growth: Is there a conflict?'

21 May 2013

With the Rt Hon Edward Davey MP, Secretary of State for Energy and Climate Change

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London

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Issue 90 - 2013

Bulletin - 90

Issue 90 June/July, 2013

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