An oddly tentative piece in this week's Economist
Charlemagne column. It starts by telling Economist readers facts they will know and then points out that "the single market means different things to different people".
To the British, it is about removing non-tariff barriers to trade so as to create a market in which companies can compete. Theirs is a classic free-market position; it stresses deregulation and economic efficiency. This is a view held not only by the British, but also by the Irish, the Dutch, the Scandinavians and most new members from central Europe.
The paper claims this view "is also shared by most, though not all, European commissioners".
If that were so, then they would be singularly ineffective in their jobs. But in fact, as this blog has argued before, this is a lie, put about to placate the freemarketeers.
To many continental Europeans, the single market is not about free but about “fair” trade. Indeed, it is not primarily about trade at all, but rather about regulation and integration.... On this basis, the single market is not meant to be a competitive, deregulated one, but one that is united by regulatory standards and common levels of social protection.
The paper reminds us that when he arrived, Commissioner Barroso said that the “Lisbon agenda” of economic reform would be his top priority, rather than some grand institutional leap such as the European constitution, although he wanted that too. Strange then that the Lisbon agenda - hailed by Blair but vacuously pious from the outset - has sunk without trace, while the EU keeps talking about trying to revive the Constitution.
Indeed, even The Economist concedes that the Barroso commission's early years may have been what it calls "a high-water mark" in the British version of the single market. Huge new regulations like REACH have not been stopped, and Commissioner Verheugen's deregulation initiative looks increasingly like an embarrassingly inadequate figleaf.
And so - after this canter through a scenario which most Economist readers readers could probably recite in their sleep - we reach the crux of the article. "Worse, the benefits of the single market seem surprisingly modest to many".
And Mr Verheugen himself has put the cost of complying with EU regulations at as much as €600 billion a year. No wonder a recent poll of British businessmen found a majority claiming to believe that the costs of regulation outweigh the benefits of the single market.
Well, The Economist often does numbers,
there is a broadbrush number out there for the benefit of the single market, and it's nowhere near €600bn, as Ruth Lea among others has been pointing out.
The Single Market's regulations do not come cheap. Günter Verheugen, EU commissioner for enterprise and industry, recently announced that EU regulations were costing the European economy some €600bn a year (this was almost twice as high as previous estimates). €600bn is some 5.5pc of total EU GDP, equivalent to the size of the Dutch economy....
In 2003 the Commission published its assessment that EU GDP in 2002 was around €165bn higher than it would have been without the Single Market. Even after allowing for the extra GDP growth since 2002, this means that the benefits are less than a third of the costs.
Yes, I've cited this crucial number before, but No, The Economist doesn't seem to have seen it anywhere.
The paper argues that "it is fair to concede that there are doubts about all cost-benefit calculations applied to regulation". Well Commissioner Verheugen told the FT only last month that
New evaluation methodology of the administrative costs of EU legislation - including "gold plating" of laws by some member states - put the annual burden for business at up to €600bn ... compared with the original estimate of €320bn. That figure does not include the compliance costs of the laws [my italics].
Now,
as I remarked at the time, I'm not sure what "administrative costs" includes and excludes (apparently it excludes compliance, for starters). But
total costs are likely to be higher by an order of magnitude.
The Economist argues that "the EU is more than just a single market; there are many other benefits to membership" - though it does not suggest just what these other advantages might be, let alone countenance the heretical thought that there may be other
disadvantages too.
And it limply concludes -
Still, it is plain that the benefits of the single market have been less than enthusiasts hoped, and the costs may have been bigger. And, to judge by the changing climate of opinion about the single market, few people are ready to do anything about this.
An élite business paper should be able to do far better than this. Or are they - like Open Europe - scared of where the argument is leading them?