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Britain should reform itself before pointing the finger at Brussels

Undynamic and uncompetitive? Shutterstock.com

Britain should reform itself before pointing the finger at Brussels

Undynamic and uncompetitive? Shutterstock.com

George Osborne has started his tour of European capitals in a bid to renegotiate Britain’s terms of membership of the European Union. He is pushing to make the EU a “more competitive and dynamic continent”, wielding examples of gross inefficiency and economic blockage.

On paper, the EU’s GDP compares favourably with the US (US$18.5 trillion vs US$17.5 trillion) and other trading nations. But with the trials and tribulations of the euro and dissatisfaction at the heavy-handed treatment of Greece, an integrated Europe has not been the resounding success its chief theorists Christopher Layton and Jean-Jacques Servan-Schreiber predicted it would become.

The small and large “C” conservative view is the union lacks dynamism, is anti-business and encroaches on individual economic rights. Meanwhile, the UK is presented as a paragon of economic sense and success. But a look at the reality of Britain’s economy and the benefits that the EU has brought over the past 42 years of membership shows the opposite.

EU benefits

The EU has produced great benefits in terms of trade liberalisation, standardisation and regional funding – from which the UK has historically done very well. In the late 1980s and early 1990s, deprived, post-industrial regions of the UK received billions of pounds in funding to rebuild local infrastructure and develop either new industries or encourage foreign direct investment such as Nissan’s investment in the north east of England.

The EU’s single market is a big factor behind investment in British industry. Number 10, CC BY-NC-ND

The single market helped make foreign direct investment a success. Without the single market, British exports to its large continental marketplace would be subject to tariffs.

The Common Agricultural Policy is an EU scheme that has prevented a substantial number of British farmers from going out of business. My profession has done very well out of EU funding and its current round, Horizon 2020, has done wonders for funding research in areas essential to the economy and the continent’s social wellbeing.

Britain’s economy

Despite the many benefits the EU has brought Britain, the idea that the country would have been better off if it never joined or left is pervasive. And it’s largely based on an idea that the British economy is strong enough to stand alone.

This is not what colleagues at Liverpool and Bangor universities and I have found in our research into how economic changes in the UK since 1979 have affected the economic prospects of the British Average Joe. There are a number of deep issues with the UK economy that have arisen in spite of the above mentioned benefits that EU membership has brought. And there is no indication that these issues would be any less pressing outside of membership.

Yes, more people ended up owning their home after 1979 than renting. But personal debt increased exponentially and recently the number of home owners has declined with those aged below 40 unlikely to own a home. Yes, many have made money out of rising house values. But with a three-bedroom terraced house in North London now valued at over ten times the average household income, even modest homes are beyond the reach of average earners.

Yes, inflation has been low but the UK is still earning less in real terms than almost a decade ago. Yes, the UK is free to opt out of European working hours directives, which allows workers to chose to work longer hours if they decide to. But to what cost? Are workers really choosing to do this or is it an accepted part of getting a job – the unwritten rule being to sign or not get employed?

France, with its EU-mandated 35-hour working week, has productivity levels that are 15% higher than the UK – are its workers or economic performance damaged by this arrangement?

The UK’s housing market is in greater need of reform. EPA/Facundo Arrizabalaga

The need for reform

This is not to say that the EU is not in need of reform. Its central institutions are monolithic and could undoubtedly be more cost-effective. There is a democratic deficit that jars with voters across the continent and has led to popularist political movements in Greece, Italy and Spain. It appears to be dominated by one nation and the narrow interests of its voters.

But let’s not forget that the EU has provided funds to regenerate impoverished post-industrial regions in core members, reinvigorated dilapidated economies in Eastern Europe, integrated disparate national economies and reduced tension in a continent that had suffered countless wars.

And with Britain’s host of economic problems – an increasing gap between rich and poor effecting productivity, middle aged couples unable to afford a house, long working hours for pay that hasn’t increased in real terms for many years and a capital city populated by foreign oligarchs, forcing the average citizen into the suburbs – it may be the case that the UK needs to reform itself before pointing the finger at Brussels.