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  • Big business’s diagnosis won’t cure Europe

    Brussels is getting ready for a new five-year round of European policymaking, and it is fair to say that uncertainty about the future of the European project has never been greater. Here come my two cents’ worth of views.

    It is no secret that the European Parliament elections saw unprecedented numbers of Eurosceptics coming in. But that’s about all you can say these newcomers have in common. Some are hard right (especially in the north and east), some are hard left (especially in the south), and some are awkward mixes. They are already having one impact – the centre-left and centre-right factions in the Parliament banding together quite successfully in a ‘grand coalition’ style. For example, the two groups will back Juncker and Schulz for Commission and Parliament president, respectively. Paradoxically, Parliament could well turn out to be stronger rather than weaker as a result of the ‘rise of the fringes’.
    But in terms of policy substance, a bigger battle is going on.
    A lot of people in Brussels seem to think that the problem of the European project has been about too much and too intrusive regulation of business. It is a mantra repeated over and over again by the UK government (with occasional help from their dwindling band of friends), the Brussels business lobbies, and the Anglo-Saxon press – including the Economist, the Financial Times, of course, but increasingly also the supposedly neutral BBC. And with English being Brussels’ lingua franca, the influence of this diagnosis cannot be overestimated.
    But here’s where this diagnosis falls down. The EU is very popular with business. Not a single business lobby wants the EU to end or disintegrate. The UK business lobby is dead scared of Britain leaving the EU. As a matter of fact, in the 28 EU capitals, business lobbies always argue for EU-level rather than national regulation.
    The real problem the EU has is that it has lost trust with citizens – not with business. Trust in the EU fell from 57 to 31 per cent between 2007 and 2013. And the reason the EU has lost this trust is that it badly handled the ‘euro boom’ years, and even more badly the ‘euro bust’ ones. This makes regular people pay the price for the mistakes of the financial sector and its regulators, which is a major reason that the gap between rich and poor is rising to alarming levels. Amazon running out of copies of Piketty’s blockbuster on capital and inequality is surely a sign of the times. France, Italy, Spain, Portugal, Greece and many of the ‘new’ member states really have more important things to worry about than EU red tape for business; they worry about the younger half of their population not having a future.
    So if now we’ve got the diagnosis right, what is the cure? If we want to create jobs for young people, surely it is not a good idea to protect the old and dirty industries of the past; you need to stimulate the new and clean ones of the future. If you worry about stagnation and lack of investment, you need change and innovation. If your problem is too few jobs and too much pollution, you need to lower taxes on labour, and to increase those on emissions. If you worry about citizens paying the price of corporate greed, you need to make your laws with citizens in mind rather than companies. If you don’t want Russian-style autocracy to be an appealing alternative to some, you should build a European economy that uses less oil and gas.
    Europe, worry less about the business lobby – it represents the old guard, and it’s loving your internal market anyway. Worry more about your young people – they demand change and opportunities, and they will vote on your future.