The EU is a malfunctioning construct for today’s world – and even more so for tomorrow’s. It needs either to undergo fundamental reform or to break up.
It was conceived in a world of large blocs, dominated by the Cold War rivalry between the United States and the Soviet Union and before globalisation and the rise of the emerging markets. Its agenda of harmonisation and integration inevitably leads to excessive regulation and the smothering of competition. This is largely why, in contrast to the prevailing view that the EU has been an economic success, its economic performance has in fact been relatively poor.
If nothing changes, the EU’s share of world GDP is set to fall sharply and, with it, Europe’s influence in the world. Meanwhile, the EU is becoming more unpopular; most people do not want to press on to a full political union; and increasing numbers of its citizens want to leave the EU altogether. European integration is the great issue of our day.
Like many British people, I feel both British and European. The culture I love is European – its food and its wine, its history and its buildings, its literature and its art and, for me, especially its music. It is precisely because I am so much of a European, and because I so desperately want Europe to succeed in the world, that I take issue with the EU as it is currently constituted. For me, the EU is the most important thing that stands between Europe and success.
It has several key defects: it suffers from a profound identity crisis; its institutions are mainly badly structured and badly run; it is focused on a largely irrelevant agenda; and it is alienated from its electorates.
To the casual observer, it may seem that the EU has been successful. After all, it is the world’s largest economy and trading bloc. It accounts for almost 30pc of global output, 15pc of trade in goods and about 24pc of overall global trade. Its people are prosperous, with standards of living that their parents and grandparents could only dream about.
In fact, this does not prove very much. Size alone is not decisive; after all, the Soviet Union was big. It is on income per capita that the issue turns. On that score, the EU’s record is not outstanding. Most countries in the world, including those in Europe that do not belong to the EU, enjoy living standards much higher today than those of 30 or 40 years ago.
Perhaps the very least we can say is that the EU has not been an outright failure. Nevertheless, that is not saying a great deal either. The issue is how much of the success of EU members, and how much of their failure, is down to the EU itself.
The first couple of decades of the European Community’s existence were characterised by very strong economic growth. From 1957 to 1973 (when the UK joined), Germany grew at an average annual rate of 4.7pc, France by 5.2pc, the Netherlands by 4.6pc and Italy by 5.3pc. The six countries that formed the European Community in 1957 – the above four plus Belgium and Luxembourg – grew at an annual average rate of 4.9pc. By comparison, over the same period the UK grew at an average annual rate of only 2.8pc.
The fact that the UK was losing ground to the Continent was one of the driving forces behind the case for British membership. The reasons for the UK’s slow growth revolved around more fundamental issues of excessive trade union power, weak management, under-investment and poor economic structure. When the UK finally addressed these problems under Prime Minister Thatcher, its relative growth performance improved.
Indeed, just to prove the point that it was not membership of the then EEC that made all the difference, other countries outside the Community were also growing nicely over the period leading up to the UK’s accession (1957–73). Switzerland and Sweden grew at an average annual rate of 4.3pc, the United States by 3.8pc, Norway by 4.1pc, Australia by 4.8pc and Canada by 4.6pc.
By contrast with early apparent success, over the last couple of decades the growth of most EU members has been disappointing. Not only has the growth rate fallen back in comparison to their own past histories, but economic growth has also been low relative to the US and even low relative to their fellow EU member, the UK, never mind the rapidly growing countries of Asia.