Open Europe Blog

As we noted in an earlier post, London Mayor Boris Johnson’s intervention on the UK’s future relationship with the EU set out a list of policy objectives that go well beyond what David Cameron has so far proposed. They noticeably set the bar higher for any successful renegotiation.

Boris also told the Evening Standard this week that the UK had to go into the negotiations prepared to be tough. “You don’t go in hard to the tackle you are never going to come out well. You’ve got to go in hard and low,” he said. Judging by his past form, he means business:

Here are the key reforms that Boris outlined, which embellished on those contained in the report authored for him by his economic advisor Dr Gerard Lyons – a member of our Advisory Council. They are an excellent marker for the direction in which the EU needs to go and most of them are reforms we have ourselves proposed and promoted:

  • Make progress on the single market in services: The report for the Mayor cites Open Europe’s research which illustrates that an ambitious liberalisation of cross-border trade in services could boost EU GDP by 2.3%. This is in fact a call for free trade that could boost competitiveness across the EU – the UK should push this policy hard and, if others aren’t willing to agree en masse, be prepared to lead a vanguard of countries who are.  
  • Better protection for the City of London from intrusive financial services regulation: A long-standing concern for us. We have noted that, since the eurozone crisis, the EU’s regulatory output in this area has become far more trade-restricting and items such as the FTT were outright hostile to the City of London. This ties into the eurozone/non-eurozone point below, and why mechanisms to ensure that the single market cannot be controlled by the eurozone-bloc are essential to the UK’s interests.
  • Reform the relationship between euro ins and outs: This is arguably the biggest strategic issue facing the UK in Europe – and the report goes into far more detail on this than Boris did in his speech. The UK will not be able to live within an EU dominated by the eurozone. The ad-hoc solution used in the European Banking Authority of so-called ‘double majority voting’, which we were the first to propose, illustrates that this can be addressed but how easily this model can be replicated elsewhere is debatable and other solutions will be needed.
  • A ‘red card’ for national parliaments: Again, a policy we have long championed. This is something that has support in several member states and would if member states and the Commission are serious about respecting it, root EU policy making more firmly in the hands of those with most democratic legitimacy in Europe – national MPs
  • Reform “if not abolition” of the CAP: Abolition of the CAP is clearly a tall order, but we have set out how agricultural policy could be radically reworked which would hugely reduce the budget required and make it more market-orientated. Another budget reform we would through into the mix, which Boris didn’t mention, is the repatriation of regional funding to the richer member states
  • A return to intergovernmental cooperation in justice and home affairs, outside the jurisdiction of the EU: We have long argued that the ECJ should not have jurisdiction over crime and policing law as it applies to the UK and that the UK should seek a return to intergovernmental cooperation that does not cede democratic control over such a sensitive area.
  • Reforming social and employment law: Boris talked of minimising “the costs to all EU businesses”, but also said that if this meant resurrecting the UK’s social policy opt-out, “I don’t think it will be a bad thing.” We have calculated that EU social law currently costs UK business and the public sector £8.6bn a year – a figure also cited by Boris in his speech – and while these costs would not magically disappear if this area was left to national governments, there would be far more flexibility to tailor rules to local needs and practises – i.e. the UK’s flexible labour market.
  • On free movement of people, Boris called for “managed migration”: Here Boris went further than Gerard’s report. Boris seems to be calling for the principle of free movement to be revisited. It’s not entirely clear what he means but we have long argued that EU migration can provide benefits to the UK and EU economy but that reform is certainly needed to the rules around access benefits for EU migrants. This means far more discretion for national governments over who can access state welfare and public services and on what terms. However, we do think the principle of free movement of workers – as originally intended – should remain. 
  • Halting ‘ever closer union’: Often dismissed as a symbolic change, in fact this is about changing the culture of the EU and the default position that centralisation is always good. It is about instilling the principle that not all member states want to head in the same direction and that powers should be able to move downwards from Brussels to national capitals.

This is a reform agenda that would indeed radically reform the EU and the UK’s relationship with it. As we have noted elsewhere, if there is a referendum in 2017, the British public will be far better placed than in 1975 to decide if the change is enough to vote for and that  is why the stakes are now so high. As we also have noted, however, the big challenge will be the timetable. Will this be possible before 2017?

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