European Movement UK

Britain's future is with Europe! Join the debate and put your opinion forward!

Tell the growth story!

While the debate on Britain’s membership of the EU focuses on the loosely defined notion of “sovereignty” it ignores the fundamental principle at the core of European integration.
In its simplest terms, the European Union exists to widen access to international markets and increase the competitiveness of each member state within the Union.
The issues that have cluttered the European debate over the past ten years, such as debt-GDP issues, opt-outs from the Social Chapter or other EU policies are secondary to the core raison d’etre of the European Union, which is to promote trade and economic growth.
It is this focus on growth as a positive story rather than a negative one that is what we are missing. Relentless negativism about Europe masquerades as “debate” and creates uncertainty around the whole project across Europe, not just in the UK.
Clearly this is a difficult story to tell. Europe teeters on the brink of recession and the fragility of the truce between the markets and Europe’s policy makers was made briefly evident when the Italian election results suggested more uncertainty and rekindled the rhetoric around sovereign debt and the collapse of the Euro. Delta Economics’ trade forecast suggests a flat picture for growth in trade for at least the next two years which will result in a decline in its share of world trade of 0.3%.
But there is potential for re-focussing the growth debate. Growth remains a challenge but, as the same recent report by Delta Economics demonstrates, Germany, France, Spain and Ireland will see strong growth in their trade performance (all well above 3%, and Irish trade growth at 5.9%) during 2013 and this reflects greater export penetration into emerging markets. At a recent event on trade a senior financial executive said, “Come on, the peripheral European economies don’t trade anything – how can they get out of their mess?” But we see a 26% increase in Greece’s oil exports to Saudi Arabia over the next two years suggesting a rebalancing of Greece’s trade economy so that it competes more directly with the likes of Turkey as a hub between central Europe and the Middle East. (http://www.deltaeconomics.com/wp-content/uploads/Europe-Feb-2013.pdf)
The economic case for the EU hinges on trade: to widen internal European markets and therefore to provide a competitive platform for its businesses to trade outside of Europe. Underneath the trade headlines are a few little-known facts: The EU is largest economy in world, worth €12.6 trillion. The Single Market has 500 million of the world’s most affluent consumers. The EU is top trading partner for 80 countries (by comparison, the US is the top trading partner for a little over 20 countries). Europe constitutes 33% of world trade (if you include intra-regional trade); European countries dominate as importers into all of the emerging economies as demand in them for cars, medicines and high-end electrical equipment increases; Europe’s exports to China alone are forecast to grow at above 7% year-on-year for the next three years; while Europe as a trading block may see flatter trade, Europe’s businesses are an integral part of global supply chains.
All of this suggests that we are looking at the wrong things. We need to look at how Europe’s businesses are adapting to a new global order, not only by exporting to the emerging economies but also by locating there and building competitiveness from outside of Europe. Failure to look at what’s good about Europe means that we stoke the fires of uncertainty and, as Delta Economics research shows, this fundamentally weakens the trade environment and therefore the potential for growth through trade.
The debate needs to focus on the practicalities of trade integration rather than just the underlying politics of the European project. The EU is founded upon economic as well as political principles, and mutually beneficial trade at its heart. It is upon this founding principle the project of European co-operation must build its route out of the current economic crisis.
Dr Rebecca Harding – CEO Delta Economics and economic policy adviser to the European Movement
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