Continuing our series of blogs on Manufacturing: Our future in Europe, today I look at what could be achieved in Europe, not just to the benefit of the UK, but of all member states.
We previously highlighted that UK manufacturers continue to see UK membership of the EU as important for their business, but there is still a great deal that could be done that could accelerate the better balanced growth, more jobs and better living standards across the EU. In our report we highlight four areas, where action has started, but progres could be a lot faster.
Completing the single market
Full single market completion could add 10% of GDP to EU in the long-term. Benefits for the UK are estimated in the region of 7% of GDP.
A great deal of progress made in creating a single market for goods across Europe, but liberalisation of services has lagged behind – not all services are tradable across borders, some service markets would require significant cross border investments to operate across Europe and completing the single market would also require further domestic reforms.
While this is inevitably a continuous process, the EU has been attempting to reinvigorate efforts to progress completion of the Single market.
There are still benefits to be had for businesses and consumers with more competition and choice, particularly in areas of transport and energy networks; e-commerce and payments services; digit infrastructure and financial and business services.
Progress in some of these areas could be particularly beneficial to the UK, but will require a strong UK voice in ensuring that while progress is made potential downside impacts are minimised.
Would signal a light touch approach by the EU in future and that institutions are focused on competitiveness.
While a UK opt-out from specific Directives and regulations would provide marginal, and potentially only time limited benefits in the event that domestic action replaced EU regulations, there is nevertheless the need for a more concerted effort on deregulation across the region.
A health and safety specific review is underway, and from a UK perspective, this should deliver simplification and consolidation of hazard-specific requirements.
Europe-wide efforts on employment legislation and the regulation of chemicals (discussed earlier) are overdue.
The UK's EU Red Tape Taskforce can take the lead in identifying priority areas of reform, collecting a supporting evidence base and setting out actions and a timetable for reform.
This approach would reduce the regulatory and compliance burden across all EU member states, thus ensuring that globally focused companies are not encumbered by overly bureaucratic requirements that their competitors are not subjected to.
Long term GDP per capita gains for Europe from TTIP are estimated at 5%, the corresponding figure for UK GDP per head is over 9%.
The EU leads for all member states in trade and investment negotiations. A number of deals are currently on the table, including with Canada, Singapore and India. But the largest global agreement is with the US.
With the aim of reducing tariffs and removing regulatory barriers to trade, the potential gains on both sides of the Atlantic are significant.
The EU will need to manage a range of diverse views about its negotiating priorities, but it will need to stick to an ambitious mandate and ensure a relatively swift conclusion to talks.
The benefits of a comprehensive deal are not just opening up new markets for exporters and investors, but it would position the EU and the US to together set global standards and rules that would support global trade in the long term.
UK efforts to secure faster progress on these areas would have clear bottom line benefits for the UK's manufacturers and the economy as a whole. If the UK did vote to leave and Europe got on with these priorities - wouldn't we want to be a part of it?
Britons are from venus, the rest of Europe is from Mars?
We are not the only country looking for Europe to focus on these issues. A perception that emerged from our consultation with manufacturers is that on a range of issues, from social policy to the state's role in industry, the UK thinks and acts differently from other member states.
Historically – this may be true, but the turning tide of opinion, the need for a more competitive Europe and arrival of new member states means we increasingly have common priorities.
Business groups, like EEF, across the EU, are as keen for a coherent, pro-growth reform agenda as the UK is.
Calls for more free trade agreements, open and competitive markets, progress on the better regulation initiative, progress on single market completion, strengthening exports and production chains across Europe, better exploitation of industrial R&D, a balanced climate change policy ….. can be heard from business organisations across Europe; from Finland to Spain and from Denmark to Germany.
“EU and member states are encouraged to create a simple, coherent and stable regulatory environment. It should impose as few burdens on companies as possible, and promote business activity rather than hemming it in”.BDI, the Voice of German Industry
The European economy needs measures which will encourage open borders with free movement, free trade and dynamic growth. The centre of gravity of the EUs efforts must be in the completion of the internal market and in combating protectionism in all its forms.Confederation of Swedish Industry