The UK EU Relationship: Divorce, separation or reunion? Discussions at the GBF

I’ve been concerned about the singular lack of any real debate on the proposed UK referendum  on Britain’s role in the European Union. Thus, this year’s annual conference of the German British Forum (www.gbf.com) was a real magnet to me. The topic was “The European Single Market and the Future of British Manufacturing”. High level keynote speakers from both Germany and the UK promised some real relevant information.

The event took place in Stationers’ Hall, a stone’s throw from St Pauls. A little gem in itself, there is an article on the Hall with photos available here: http://miltoncontact.blogspot.co.uk/2013/06/stationers-hall-brief-visit-to-london.html

The event covered four main sections:

1. Competitiveness challenges in the European automotive sector – German and UK industry strategies
2. The vital place of the single market in the new Europe – Keynote speech by Rt Hon Lord Owen
3. The European economy and the importance of the single market
4. The future of the Euro area – What kind of Europe do we want? What kind will we get?

Looking back on my notes, the insights gained came in a slightly different order.

1. The future of the Euro area

There was one clear message here: The current economic crisis was on the one hand pushing the Eurozone harder towards centralisation and on the other, revealing the stress fractures between and within nations. Indeed, there was a clear fear that under the pressure to survive, the Eurozone was dropping economic elements of “competitiveness” and “subsidiarity” and replacing them with a political “harmonisation”. At one particular point I was reminded of the poem by Baldrick of Blackadder fame: “Doom, Doom! Doom, Doom, Doom…”.

This was of course contrasted with the economic realities in the UK and Germany.

2. Competitive challenges in the European Automotive sector

Speakers from major automotive companies and their 1st and 2nd tier suppliers actually had a more optimistic note now after the harsh recession in the past decade. Transport is one of the major industries in the European single market. The German automotive sector is on the up again and Britain’s suppliers to the industry are also increasing trade. Three aspects were seen as of major importance to the future of the industry:

• Major investment in Research and Development
• Training of highly qualified staff
• The need for a period of political stability and longer term thinking.

Moving on, we considered the broader aspects of the UK’s benefits of being within Europe

3. The European Economy and the importance of the single market

This session began with great humour by our Eurosceptic UK delegate, John Redwood; Joking that where before he was seen as on the far right and now he is being criticised for being too middle of the road.

However the highlight for me was the presentation by Dr Rebecca Harding of Delta Economics. Her talk was full of more real data than I could record. Here are just some of the key points:

• 34% of world trade originates in Europe ($55 trillion).
• Europe predominately exports to itself.
• New accession countries like Poland and the Czech Republic are undergoing dramatic growth
• The economics of scale affect logistics and supply, thus the EU dictates patterns of trade in pharmaceuticals, cars and oil globally.
• The EU uses its union to strengthen its global supply chains . 

The remainder of the session echoed the need for longer term political and economic stability. The proposed UK referendum on Europe and the current negative political agitation were introducing a level of uncertainty.

So what was the solution that would address both concerns of the UK’s Eurosceptic majority and allow businesses and the UK economy to benefit from the European single market?

4. The vital place of the European market in the New Europe. A Solution?

Lord Owen’s speech suggested a practical and welcome solution (see further down). Taking us back through some of the EU’s history, Lord Owen reminded us that the current “In or Out” black and white perspective of the EU was inaccurate. The different nations within the EU had always had a plethora of sometimes conflicting attitudes and required solutions. This was reflected by the different agreements in place; from the Schengen free trade area, the EU Customs Union, the Eurozone to the European Economic Area.

Wikipedia has this excellent graphic illustrating this point by author Wdcf:

Lord Owen recognises that

• All European countries benefit from the single market.
• A number of EU countries are working towards political and economic union, as the Eurozone.
• The UK and some other countries wish to retain control over their own political and economic affairs.

The proposed solution is:

• To use the current framework of existing agreements to strengthen the membership and voice of countries within a restructured European Economic Area, as the single market.
• Whilst allowing the economic and political union of the Eurozone members to continue as one major bloc within the restructured EEA.

This requires strong but constructive negotiation by the UK prior to the proposed referendum.

At the meeting itself, I was initially sceptical of the proposal.  This was primarily because it may be difficult to get the message across to a Eurosceptic electorate. The current public thinking is simplistic in terms of “in or out of the EU referendum”.

Now, I am gradually coming around to the idea.

Conclusion

For the UK business community, it is essential that we give our political leaders a clear message: The UK economy is far better off within a European single market with a UK voice, than out on a limb on our own.

This meeting of the 18th Annual Conference of The German British Forum was a timely event prior to the run up to the future UK referendum on Europe.

Recommended reading: “Europe Restructured” by David Owen- For a more considered view of Lord Owen’s arguments than could be presented here. http://www.amazon.co.uk/dp/B00994MZS8