Open Europe Blog

We appreciate that Westminster and the media are occupied with the Queen’s speech and internal tory divisions over Europe (be them real or overblown), but real story in Europe lies elsewhere: where will the EU’s and UK’s growth come from?

Well, we know it’s not fashionable, but here’s a constructive idea.

Open Europe has today released a new report calling for the liberalisation of the services sector across Europe, both through the implementation of the current services directive but also by widening its scope. The report argues that this could boost EU GDP by €300bn and if it cannot be done with all 27 members, the UK and its allies should look to pursue it under ‘enhanced cooperation’ – allowing a smaller group of countries pressing ahead with more integration if not possible at the level of all 27 member states.

See here for the full report and here for a video with British Chambers of Commerce’s Director of Policy and External Affairs, Dr Adam Marshall, discussing the issue and OE’s proposal. That organisation represents thousands of businesses and knows a thing or two what’s needed for economic growth, beyond the navel-gazing of the Westminster village and the platitudes of some politicians.

Key points of the report:

– Fully implementing the existing Services Directive and implementing a new “country of origin” principle, a trade-boosting measure that was removed when the Directive was originally negotiated, would boost EU cross-border trade and produce a permanent increase to EU-wide GDP of up to 2.3% or €294bn, in addition to the €101bn already gained under the Services Directive (0.8% of EU GDP).

– If agreement among all 27 member states isn’t possible, a smaller group of EU countries should now press ahead with greater integration in services under the EU’s so-called ‘enhanced cooperation’ procedure, which is being used to pursue the financial transaction tax. This was an idea first floated by Mark Rutte, the Dutch Prime Minister, in 2011.

– In a “pro-growth” letter in February 2012, twelve member states – the UK, the Netherlands, Italy, Estonia, Latvia, Finland, Ireland, Czech Republic, Slovakia, Spain, Sweden and Poland – all committed themselves to “open up services markets”.

– We estimate that if only this group of countries were to fully liberalise their services markets, it would still produce a lasting boost to EU GDP of up to 1.17% or €147.8bn. If other countries, such as Germany, were persuaded to join, the economic benefits would be increased further. Ultimately, this measure should serve as a springboard to achieve services liberalisation for the entire EU.

– The political benefits of further services liberalisation are threefold:

1) It would be a positive, constructive, and pro-European means by which to secure continued engagement in the EU from non-euro countries, particularly the UK.

2) It would provide a new legally enforceable framework to improve competitiveness and growth in the Southern euro member states and therefore boost the economic prospects of the eurozone, but without costing an extra cent of Northern countries’ taxpayers’ money.

3) It would improve EU-wide growth, competitiveness and employment at a time when Europe is at risk of global economic decline.

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