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Changing the European Economic Model?

Politicians returned to Westminster for a brief interlude before their party conferences. They found that events have moved on. The Eurozone had a bad August. Initial estimates in mid August suggested poor economic growth in the second quarter of 2014. Today’s Eurostat figures confirm the gloomy picture of zero percent Eurozone growth, with German growth declining by 0.2 percent and the French economy in stagnation. There the high tax and spend policies of Francois Hollande’s socialist regime have crippled enterprise, led to high unemployment and brought the world’s fifth largest economy to its knees.

Politically too, there is turmoil. The French left has fallen out of love with the EU project and the demands of its co-partner, Germany. At the end of August, Hollande sacked rebel ministers on the left who opposed him and his new Prime Minister, Manuel Valls, in order to usher in the more ‘liberal socialist’ policy demanded by Valls (a French version of Tony Blair). It remains to be seen whether the proposed business friendly policies will get through the French parliament, as the ‘aile gauche’ has neither been won to capitalism, nor to the ‘Merkel imposed’ deficit reduction.

On this side of the Channel, Parliament has had its own shockwaves. MPs returned to Parliament to find the Conservative MP, Douglas Carswell had left his party to become UKIP’s first MP. He will now stand for re-election under the purple banners on 9th October. The reports are that Mr Carswell, a respected MP locally with a strong personal and cross party vote, is likely to be returned for Clacton on Sea.

Carswell and the Eurozone are part of the same story of British pragmatism about the UK’s relations with the EU. Most voters, whatever their party colours – Conservative, Labour, UKIP or Lib Dem – would agree that when it comes to renegotiation, Britain’s future relationship with the EU should be built on the foundations of free trade with the EU. Unless the right arrangements are in place, economic prosperity and the growth and jobs that depend on selling goods in a competitive global market, will suffer.

British voters recognise this, with a majority voting for change in European elections in May, UKIP topping the poll in and the Conservatives running in third place. What Mr Carswell and the Prime Minister share in common is the knowledge that events and the people of this country have moved on. The big state structures which meddle in every aspect of economic life will damage Europe’s older economies fighting for their global future, in a tougher, cheaper, leaner and more competitive world. Markets matter and cannot be bucked, whether by Brussels or its idiotic preoccupations, the most recent example being the ban on high voltage vacuum cleaners, with hairdryers and toasters next in line. Even M Hollande and his prime minister Manuel Valls now see that France too must become more market friendly.

Many people in France and Germany share the concerns of British people over unregulated immigration, ‘social’ dumping, and benefit ‘tourism’. Though these seem to be populist anxieties, they strike at the heart of a country’s paying its way, flourishing economically, and so meeting the expectations and aspirations of its citizens in an ever tougher world. If Britain and its European neighbours are to pay their way, they will need to take tough decisions about their own economies and about the direction of the EU and Eurozone model. That will mean free trade and remodelling the single market to make it free.


Dr Sheila Lawlor

Dr Sheila Lawlor is Politeia’s Founder and Director of Research. Her background is as an academic historian of 20th century British political history, having started her working life as research fellow at Sidney Sussex College, Cambridge and Churchill College, Cambridge. Her academic publications include Churchill and the Politics of War 1940-41 and for Politeia she has written on social, economic and constitutional policy.

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