Writing in the Daily Telegraph (May 11th), Boris Johnson talks a good story about EU renegotiation and reform. (I think he’s entirely wrong about the potential for reform – but that’s another story. The EU is beyond reform, and deserves to be put out of its misery).
One particular sentence hit me: “The best and cheapest way to kick-start growth (in the EU) is to complete the Single Market”. He goes on to elaborate on this proposition in specific terms with regard to the single market in financial services.
The faith of the Tories in the Single Market is touching. Early in my career, when asked if there was anything good about the EU, I used to reply that the Single Market was a great Conservative achievement – and for a while I actually believed it. Later I realised that the Single Market is merely an old-fashioned Customs Union creaking under the weight of excessive regulation.
Boris says “We need to complete the market in financial services …. because every European company needs access to the capital markets to help it grow”.
Bizarrely, in the same paper, in the business section, Philip Booth (programme director at the Institute of Economic Affairs and Professor of Finance & Public Policy at St. Mary’s University, Twickenham) makes almost precisely the opposite case – and he seems to me to know a great deal more about financial services regulation that does Boris.
He argues that attempts to create all-embracing financial regulatory architecture covering many different countries with widely varying financial industries has resulted in mind-numbing complexity, and has facilitated “regulatory capture”. “Unfortunately, complexity begets more complexity, and quite soon, only experts in the subject will understand regulation ….this is a classic case of ‘regulatory capture’ by big business and bureaucrats”. He concludes “In the EU, centralisation of financial regulation will raise the cost of doing business … we might end up with a single capital market, but it won’t be an efficient market serving consumers”.
In fact (and here’s some advice for Boris) the best and cheapest way to kick-start growth in the EU would be to dismantle our perverse energy policies (and in the UK, to repeal the Climate Change Act), and to follow UKIP’s prescription for secure and affordable energy. Industry in the EU is paying broadly speaking double what our international competitors are paying for energy. Energy-intensive businesses are closing plants on an epic scale, and moving jobs and investment out of the EU altogether.
I’ve said it before, but I don’t apologise for saying it again: out-going Energy Commissioner Günther Oettinger said that the EU can no longer afford a unilateral energy policy. Out-going Industry Commissioner Antonio Tajani said “We are creating an industrial massacre in Europe”.
If the Greens are right about global warming, then with many hundreds of new coal-fired power stations in the global pipeline, the die is cast – nothing we do in Europe will make a scrap of difference. And if the Greens are wrong, then their policies are utterly futile – but also doing vast economic damage.
So come on, Boris, point the finger at the real enemies – green policies, intermittent renewables – and Brussels.