The UK EU Relationship: Divorce, separation or reunion? Discussions at the GBF

I’ve been concerned about the singular lack of any real debate on the proposed UK referendum  on Britain’s role in the European Union. Thus, this year’s annual conference of the German British Forum (www.gbf.com) was a real magnet to me. The topic was “The European Single Market and the Future of British Manufacturing”. High level keynote speakers from both Germany and the UK promised some real relevant information.

The event took place in Stationers’ Hall, a stone’s throw from St Pauls. A little gem in itself, there is an article on the Hall with photos available here: http://miltoncontact.blogspot.co.uk/2013/06/stationers-hall-brief-visit-to-london.html

The event covered four main sections:

1. Competitiveness challenges in the European automotive sector – German and UK industry strategies
2. The vital place of the single market in the new Europe – Keynote speech by Rt Hon Lord Owen
3. The European economy and the importance of the single market
4. The future of the Euro area – What kind of Europe do we want? What kind will we get?

Looking back on my notes, the insights gained came in a slightly different order.

1. The future of the Euro area

There was one clear message here: The current economic crisis was on the one hand pushing the Eurozone harder towards centralisation and on the other, revealing the stress fractures between and within nations. Indeed, there was a clear fear that under the pressure to survive, the Eurozone was dropping economic elements of “competitiveness” and “subsidiarity” and replacing them with a political “harmonisation”. At one particular point I was reminded of the poem by Baldrick of Blackadder fame: “Doom, Doom! Doom, Doom, Doom…”.

This was of course contrasted with the economic realities in the UK and Germany.

2. Competitive challenges in the European Automotive sector

Speakers from major automotive companies and their 1st and 2nd tier suppliers actually had a more optimistic note now after the harsh recession in the past decade. Transport is one of the major industries in the European single market. The German automotive sector is on the up again and Britain’s suppliers to the industry are also increasing trade. Three aspects were seen as of major importance to the future of the industry:

• Major investment in Research and Development
• Training of highly qualified staff
• The need for a period of political stability and longer term thinking.

Moving on, we considered the broader aspects of the UK’s benefits of being within Europe

3. The European Economy and the importance of the single market

This session began with great humour by our Eurosceptic UK delegate, John Redwood; Joking that where before he was seen as on the far right and now he is being criticised for being too middle of the road.

However the highlight for me was the presentation by Dr Rebecca Harding of Delta Economics. Her talk was full of more real data than I could record. Here are just some of the key points:

• 34% of world trade originates in Europe ($55 trillion).
• Europe predominately exports to itself.
• New accession countries like Poland and the Czech Republic are undergoing dramatic growth
• The economics of scale affect logistics and supply, thus the EU dictates patterns of trade in pharmaceuticals, cars and oil globally.
• The EU uses its union to strengthen its global supply chains . 

The remainder of the session echoed the need for longer term political and economic stability. The proposed UK referendum on Europe and the current negative political agitation were introducing a level of uncertainty.

So what was the solution that would address both concerns of the UK’s Eurosceptic majority and allow businesses and the UK economy to benefit from the European single market?

4. The vital place of the European market in the New Europe. A Solution?

Lord Owen’s speech suggested a practical and welcome solution (see further down). Taking us back through some of the EU’s history, Lord Owen reminded us that the current “In or Out” black and white perspective of the EU was inaccurate. The different nations within the EU had always had a plethora of sometimes conflicting attitudes and required solutions. This was reflected by the different agreements in place; from the Schengen free trade area, the EU Customs Union, the Eurozone to the European Economic Area.

Wikipedia has this excellent graphic illustrating this point by author Wdcf:

Lord Owen recognises that

• All European countries benefit from the single market.
• A number of EU countries are working towards political and economic union, as the Eurozone.
• The UK and some other countries wish to retain control over their own political and economic affairs.

The proposed solution is:

• To use the current framework of existing agreements to strengthen the membership and voice of countries within a restructured European Economic Area, as the single market.
• Whilst allowing the economic and political union of the Eurozone members to continue as one major bloc within the restructured EEA.

This requires strong but constructive negotiation by the UK prior to the proposed referendum.

At the meeting itself, I was initially sceptical of the proposal.  This was primarily because it may be difficult to get the message across to a Eurosceptic electorate. The current public thinking is simplistic in terms of “in or out of the EU referendum”.

Now, I am gradually coming around to the idea.

Conclusion

For the UK business community, it is essential that we give our political leaders a clear message: The UK economy is far better off within a European single market with a UK voice, than out on a limb on our own.

This meeting of the 18th Annual Conference of The German British Forum was a timely event prior to the run up to the future UK referendum on Europe.

Recommended reading: “Europe Restructured” by David Owen- For a more considered view of Lord Owen’s arguments than could be presented here. http://www.amazon.co.uk/dp/B00994MZS8

Investing time and money in a sustainable future

I had a meeting with the TSB in London, about the future for business in sustainable construction. What's more, they not only wanted to hear my opinions on problems to be tackled, they even offered a pot of 50m GBP I could tap into!

By now it should be apparent that I was not talking to a bank. My partner was the Technology Strategy Board, and I was not alone. Experts from a slew of construction interests, from business to research had come.

This was just one of a series of meetings, ably organised on behalf of the TSB throughout the UK by WECREATE.

The objective was to identify those stumbling blocks for businesses over the next five years active in the area of low impact buildings. My personal interest in participation came from work with architects active and expert in sustainable construction e.g. Tollé Green Architecture.

We were split into groups of three or four first, to brainstorm the key issues. This was followed by listing the top five barriers that prevented commercial progress in low impact construction. From these, TAB would identify where to provide support to overcome these barriers.

There were three problem areas and each group was given one to concentrate on:

1. Maximising existing stock
2. Zero carbon new build
3. Resilience to future climate

I found myself in a group tackling future climate (we had no choice).

A consistent theme, when chatting to other participants afterwards, was the need for clear communication and incentives. This should be working from the ground up.

In contrast to some of the northern European countries, sustainability issues are lower on the priority list of the UK population. Construction complies to the letter of regulations against the backdrop of a competitive market and striving to keep costs down, in a recession.

Changing attitudes with the public and in construction will ultimately provide the self motivated shift required for reasonable progress.

We were encouraged to tweet our identified issues and solutions under #lib201318. For the non-twitterati, four of our suggestions are repeated below:

1. App for people to easily calculate benefits of changes to their behaviour or buildings.

2. The need for an industry recognised prestigious prize to promote adoption of climate resilience.

3. Collection of real-time data from existing occupied buildings on performance.

4. Recognised standards for meeting resilience to future climate change.

In addition to having made some interesting new contacts, we left with the anticipation of the Technology Strategies Board future project-funding proposals.

What will the next 50m GBP go towards?

EMU and the Netherlands

Professor Klaas Knot, President of De Nederlandsche Bank gave us a calm view of the future of the EMU and the Netherlands' place in Europe in his talk in the OMFIF Golden Series on World Money, 17th February 2012.

Having the meeting in the auspicious environs of the Armourers and Braziers Hall in London, which had survived the Great Fire of London in 1666 and the Blitz in the 20th century, Professor Knot quipped, was surely an auspicious sign for this talk. Perhaps the small cannon facing his back merely reflected the frisson of uncertainty that the Euro-zone is currently experiencing.

The free trade with the rest of Europe is vital to the economy of the Netherlands as over 60% of its exports are to this area. Furthermore, its cautious economic policies have allowed the economy to broadly mirror that of the EUs powerhouse, Germany. The overall interest is therefore in the success of the EMU.

We were reminded that EMU stands for Economic and Monetary Union – a vital point as it is often confused with Europe in a more political sense. Historically, it initially worked very well as countries aiming to join the EMU put in place stricter economic domestic measures that meant a good convergence. The spanner in the works was the financial crisis, after which there was a dramatic divergence between different EU countries in how they responded. National Debt as a proportion of GDP also varied from 80%, the EU average, to over 140% as with Greece.

I was also fascinated to see how economic efficiency in terms of labour costs was an area where Germany had, in the long run, benefiter from the union of the former FRG and East Germany.

The current crisis has prompted governments into taking major actions to counter the situation. However, a more common and consistent approach is essential across the Eurozone, which naturally means greater EU integration. As Professor Knot pointed out, this could only happen with popular acceptance and a greater democratisation of EU institutions. It was also important that the financial measures or future firewalls were also matched by a consistent narrative that was able to tell the positive aspects of the EURO story, because, despite all the current perceived problems, the EURO is still a resounding success story.

We came away with the feeling that, in the Netherlands at least, there is a very strong interest in the stability and maintenance of the Euro-zone. There was also an inclusive approach to trying to keep Greece in the Euro-zone. For the moment, with the last weeks 3 month solution for Greece, it appears that the situation may match Professor Knots inclusive approach.

In a market with speculation rippling through any conversation by groups of two or more, Professor Knot's presentation was a good attempt of pouring oil on the troubled waters.

Previous OMFIF talk attended at Armourers Hall

The International Monetary System is to local crises like the climate is to weather