The Economic Implications of the Revived and Renamed EU Constitution (The Bruges Group)

The Bruges Group waarschuwt voor de gevolgen van het akkoord dat afgelopen nacht door de Europese leiders in Portugal werd afgesloten.

Gordon Brown’s surrender in Portugal will sign Britain up to a Treaty that will allow the European Union to undermine the last vestiges of Britain’s competitive free market, bringing to an end the reforms introduced by Margaret Thatcher.

Britain is clearly losing the arguments in Europe. Many British workers will lose their jobs as a result of the so-called Reform Treaty moving the EU further away from the British vision of a competitive free-trading grouping towards the French style over-regulated protectionist social model.

Instead of embracing the opportunities of globalisation the EU is running away from the requirement to have a modern open economy and the discipline that is needed for this to be successful.

Key economic provisions in the Treaty:

State protectionism

A new paragraph will be added to Article 58 that will allow for state protectionism via the tax system to be used against competitors in third countries.(4. the Commission ... may adopt a decision stating that restrictive tax measures adopted by a Member State concerning one or more third countries are to be considered compatible with the Treaties)
This is to appease the French vision of the EU, at the expense of Britain’s free-trading global interests.

Article 58 could also be used by the EU to pressurise and damage the economies of developing nations.

Corporatism returns

Article 136a will force Britain and the EU to have a system where trade unions are elevated to the position of ‘social partners’. This will allow them to contribute to policy making along with big businesses.

The EU’s new name for the discredited corporatist polices of the 1950’s is ‘social dialogue’.

State monopolies and subsidies

Article 1 of Protocol 9 widens the opportunity for state monopolies and subsidies. This is through its reference to the support of ‘Services of General economic interest’. This will allow the socialist governments in the EU to give subsidies to selected businesses. Such companies are likely to be; German coal and steel producers, Italian, Belgian and Spanish airlines, and French businesses in general. Those measures come on top of the removal from the main text of the treaty the commitment to undistorted competition. This will give the green light to those, like President Sarkozy of France, who want to pick winners, who no doubt have good political connections, creating corporations that are tantamount to state monopolies at the expense of a dynamic and competitive economy.

EU expert Dr Lee Rotherham says, “Having surrendered so much to achieve the Single Market, we now find the Labour Government has signed up to a constitution that is its flawed successor. This shows yet one more reason why the rebranded EU Constitution deserves the fullest scrutiny, and a referendum to boot.”

Robert Oulds, Director of the Bruges Group, says, “The foolish economic policies in the treaty will radically change the nature of the European Union’s single market. Britain is already overburdened by excessive regulation. Now, as a result of the treaty, British business will be further held back and threatened by the EU’s political ambitions.

“The Reform Treaty will be even more damaging to our economy than the original EU Constitution would have been.”

The implications of EU control

The EU will use its power to force the UK to move away from its job creating free-market model economy and towards the uncompetitive and high-unemployment European social model.

More power to the trade unions

Trade union input into law making Government’s forced to consult with the trade unions EU wide trade unions Strikes across the EU could become a possibility because the EU will allow EU wide collective bargaining and EU wide legal agreements Trade union membership to be encouraged Increased trade union power undermining the successful balance that has been achieved in the UK

Threatening investment in the UK

The UK is currently the EU’s top destination for foreign direct investments (FDI). In 2006 Britain benefitted from inflows totalling $140 billion creating 27,481 jobs.

A major reason why Britain has this advantage is because Britain has more flexible labour laws than other EU countries. However, Britain’s lead over other EU members will be threatened as the EU seeks to undermine our flexible labour market and impose its costly bureaucratic anti-business laws on Britain.

British businesses being forced to compete with subsidised continental firms

Staying in a single market after the Reform Treaty has been ratified will see British businesses pressurised by continental firms who will be taking advantage of the changes in EU state aid policy.

How the EU’s economic plans affect the Red Lines

The Charter of Fundamental Rights

These proposals will further make Britain’s opt out from the Charter of Fundamental Rights, even if the ECJ decides that it does stand, irrelevant.

How the Charter is already being enforced

The EU has already established a Fundamental Rights Agency to monitor EU member states compliance with the Charter despite the fact that it has not even been ratified. And the EU is also using the principles of the Charter to guide its law making.