The European Union is searching for a purpose as well as fighting for legitimacy and sovereignty in the current international climate. Given this soul-searching and head-scratching, the European Union should look back to look forwards.
Looking back to the EU’s purpose: peace and progress
The origin of the whole EU project was a search for peace. On the back of bitter, bloody wars that had wrecked Europe physically, economically and emotionally, visionary business and political leaders decided that a new order needed to be constructed from the rubble of the continent. A functional union of the coal and steel industries was the first building block - making war between former enemies physically impossible - towards a union of countries built on the Rule of Law (rather than “might is right”) and cooperation.
Lessons of the past, lessons for the future
The EU of today would therefore be well-served in revisiting its original purpose for inspiration as we start the new 2019-24 institutional cycle with a new European Parliament and a new European Commission. This purpose should include promoting and facilitating free trade - through the EU Single Market and globally within the framework of the WTO. The EU should also be encouraging openness - including the fight against corruption and human rights abuses, as well as protecting the Rule of Law - in addition to promoting personal choice.
The Hanseatic League - the Nordics, Baltics, Netherlands and Ireland are natural allies here - should drive this agenda within the EU, but it should not be a closed shop. It should be open to all countries who share, and strive for, these values.
A multi-speed Europe
Moreover, given the size and complexity of the EU today a multi-speed Europe is inevitable. EU Member States should be allowed to go further on certain issues and work in different constellations within the EU framework. The notion of “variable geometry”, “asymmetric integration” and a Europe of “concentric circles” is not new. It was evoked by former Commission President Jacques Delors over two decades ago.
While the integrity of the EU and its “four freedoms” (labour, capital, goods and services) are immutable, there needs to be a flexibility across policy areas to allow willing coalitions to go further and not be hindered by the slowest wagon in the train. The current fragmentation and polarisation in the EU will also demand this. A multi-speed Europe would also not represent a significant step-change. We already see this reality today in the financial area, with the Eurozone, and on border issues with Schengen.
Furthermore, Europe does not stop at the borders of the EU 28 Member States. A true multi-speed Europe would allow us to facilitate different levels of integration. The basic acquis communautaire of the EU should be respected but the possibility of outer-tiers of membership should not be discounted. This would allow the EU to open up to the Western Balkans, former Soviet States and even North Africa. This could be considered like a club with silver, gold and platinum membership. You have the same basic rights and responsibilities but gain new benefits as you go further.
Given the issues facing the world today - and connecting back to the founding tenet of establishing peace, prosperity and progress in Europe - stabilising these regions on Europe’s current frontiers could be the most important purpose that the EU can find today.
As the European Union stands at a crossroads - buffeted by the storms of populism, as well as economic and social crises - many have asked the question “what is the purpose of the EU today?” The new mantra that many European politicians and officials have come up with is “A Europe that protects”. But as the EU fights for legitimacy, as well as sovereignty, it is appropriate to ask the questions: “protects against what?” and “is this goal achievable?”
Protection from what?
To answer the first question, “protection from what” is a difficult concept to pin down: it means different things to different people. The broad framework, however, is one of taking back control. The fact that this was ironically used by the Vote Leave campaign during the Brexit debate in the UK - and was found to contain little but hot air - should bring a smile to the face of many a cynic.
A Europe that protects the environment, the rights of the individual and free trade is a positive thing and should rightfully be supported. However, laying the blueprint for a “Fortress Europe” would be a terrible backward step. A Europe which erects borders, vetoes investments by non-EU companies, puts in place a European Industrial Policy to create national/EU champions would be the wrong type of protection. Businesses and consumers would lose out.
Is protection possible?
Secondly, is protection achievable? Given the reality of the increasingly globalised world, the idea of being able to put a lid on economic, political and social forces is chimerical. Furthermore, the political fragmentation and polarisation across Europe means that there is no universal consensus. Achieving a position which will appeal - and be promoted - across the EU 27 is almost impossible, even if real protection were possible.
Europe has been badly harmed by recent crises, and the current wave of populism which is fueled by perceived inequalities, falling living standards and reduced opportunities. By promising a Europe that protects and that will take back control, European leaders may risk creating another crisis when it becomes clear that this vision is not achievable.
With a new European Parliament now elected, and a new European Commission set to be installed in the autumn, we stand at a perfect juncture to look Janus-like at what has happened, where we are now and assess where the European Union should be heading. Now more than ever there is a need for an EU that is committed to free trade, openness and personal choice.
The EU: democracy’s graveyard?
Within the EU, the belief in liberal democracy and globalisation has been questioned. The 2019 European elections will be held in a climate of uncertainty, discontent and change. The reasons for this are complex and nuanced. All across the EU, voices are being heard on perceived inequalities, falling living standards and reduced opportunities. Ever since the Financial Crisis of 2008, the Euro Crisis of 2010 onwards and the Migration Crisis starting in 2013, voters have been turning to more extreme solutions to local, national and European problems. With national elections across Europe having delivered significant gains for right-wing political parties and nationalists, we need to ask the question: are liberal values, openness and free trade falling out of favour?
From Italy to Poland, Hungary and beyond we are seeing the rule of law diluted and a desire to put up barriers to protect against perceived threats from foreign businesses, labour and money. Many column inches and much ink has been used to describe the decline of liberal democracy in Europe.
Granted the financial crisis of 2008 dented the image of free trade and liberal policies, as has the fact that living standards in Europe are no longer growing at the levels they once did. Elites are seen as out of touch and many feel that popular views are not being expressed in policies. These are serious concerns, and they should be addressed, but it is important to keep a perspective.
Fear the alternatives
After the Second World War, the alternative to fascism was clear and attractive to all. Similarly, during the Soviet occupation of Central and Eastern Europe and the Cold War, liberal democracy was again the natural choice around which to organise states and society. Today, we should once more consider the alternatives. Do European countries really want to install regimes where we see rights eroded and the will of the people increasingly – and counter-intuitively – ignored? Free trade, liberalisation, personal choice and the rule of law need to remain central pillars of our democracies. Just looking at the alternatives underlines this reality.
A new hope
The current period of reflection and soul-searching should be put to good use. One reality is that the smaller states with export-orientated economies who favour free trade, openness and personal choice are losing their champion with the UK leaving the EU. While the UK would take many of these fights in the past, there is now the need for like-minded countries such as the Nordics, Baltics, The Netherlands and Ireland to work together and increase their cooperation to make their voices heard and shape the EU agenda. There has been ad hoc, high-level cooperation on financial issues between these states, but there is a need to expand this across policy areas – from environmental stewardship to the digital single market – while also facilitating a bottom-up approach from business and civil society. In this way, “the new Hanseatic League” as it has been christened will be a vital vehicle in modernising the EU and ensuring that free trade, openness, Atlanticism and personal choice remain front and centre in EU policy-making.
No “Fortress Europe” and no Franco-German closed shop
By contrast, the creation of a “Fortress Europe” would be a disaster for the EU and also send out the wrong signals globally. Despite being faced by a progressively more isolationist and the tariff-wielding US, and a commercially aggressive China, the EU needs to stay true to its liberal democratic heart. After all, there is never a right way to do the wrong thing.
By the same token, the future of Europe cannot be built solely on the outdated concept of a Franco-German axis. The calls to create a European Industrial Policy – with all the terrible trappings of old-style state intervention and French dirigisme – are a worrying sign of what may come to pass if we blindly followed this route. Statism, picking winners and creating national/EU champions would waste resources and ensure that consumers and other businesses lose out. History clearly shows that a lack of competition often leads to higher prices, less choice and poorer products due to a lack of innovation.
In sum, the EU needs to evolve and address an increasing number of internal and external challenges. Free trade, openness and personal choice rest at the heart of the solution to these issues and the Nordics need to partner like-minded countries to promote this agenda.
It is a well known fact that Juventus and Portugal football star Cristiano Ronaldo employs his own chef. Every meal is calibrated to ensure the right amount of protein, carbohydrates and nutrients so that one of the greatest footballers that has ever lived is able to play to his maximum ability and deliver the goals, trophies and titles that his employers demand. As such, excess sugar and junk food do not enter the equation. You are what you eat and a top athlete cannot perform without the right fuel.
At the same time that Ronaldo’s athletic frame is gracing stadiums and TV screens across the globe, obesity is an increasing problem: particularly among the young.
The rise of obesity and the reaction of governments
WHO statistics show that over 50% of men and women in Europe are overweight, while 23% of women and 20% of men are obese. Childhood obesity is rising too and WHO figures show that one in three 11-year-olds are obese in Europe. This alarming statistics are strongly linked to illnesses such as diabetes and heart disease, as well as poor mental well-being and underachievement at school and work.
The reaction from politicians has been regulation. A sugar tax was introduced in the UK in April 2018 while Hungary and Mexico launched their taxes in 2011 and 2013, respectively. Denmark introduced a “fat tax” in 2011 on food items with more than 2.3% saturated fat, and had plans to extend this to a sugar tax over time. The results were terrible: less than 10% of Danes reduced their fat intake while hundreds of jobs were lost as Danes headed to Germany to buy their products. This mess led to the “fat tax” being abandoned after 15 months and the sugar tax being shelved indefinitely.
While tackling obesity is a big and important issue, legislation and increased taxation are not the answer. In the same way that many of the most corrupt countries on earth have the strictest anti-corruption laws, legislation is no guarantee of a positive effect and a change in human behaviour. Very often this means that the consumers of fatty and sugary products - often people on low incomes - continue to consume them, but pay more for the “privilege.”
At the heart of addressing childhood obesity lie education, personal choice and leading by example.
A better approach: beyond the nanny state
Firstly, education. Almost everything in moderation is ok: whether that is a Big Mac, a fizzy drink or a green apple. Eating junk food on a daily basis and avoiding fruit and vegetables is not good but we should not make people feel guilty about an occasional bar of chocolate, for example. The risk of provoking eating disorders - already on the rise in Europe - is equal to the threat from obesity. We need to tread very carefully.
Secondly, we should not forget personal choice. We need to take responsibility for our own lives and say “no” to unhealthy options. We only get one body and it is in our interests to look after it. We do this by giving it the right mix of the best fuels - combined with regular exercise and sufficient sleep - not filling it up with rubbish. No politician, tax or campaigner should have to decide for us.
Setting a good example is also key. Whether this is parents, teachers or Cristiano Ronaldo, people learn by copying behaviour rather than by being told what to do. There is a reason why “influencers” on social media are so popular and paid so much. People like to copy behaviour and the lifestyles of people they aspire to be. Therefore setting a good example is very important. And if you can’t be a good example then you may be a terrible warning!
Robert E Lee once said that you should never do a wrong thing to make a friend or keep one. This advice was probably top of mind as the European Commission rejected the merger of rail companies Siemens and Alstom on antitrust grounds. Despite political pressure, it was right to do so.
This proposed mega-merger between the French and German giants has brought the topic of creating European champions to the fore once again. The voices for an EU industrial policy are bolstered by a progressively isolationist and tariff-wielding US, as well as a more commercially aggressive China.
The folly of picking winners
Picking winners and creating super companies has often been the whim of politicians and some industry leaders. This tendency has been particularly strong in countries like France for many decades. It is a trend that must be resisted. Creating European (or national) champions wastes resources and ensures that consumers and other businesses lose out. The lack of competition often leads to higher prices, less choice and poorer products due to a lack of innovation.
Merely copying the short-sighted strategy of the US and China in this field is no excuse. There is never a right way to do a wrong thing. This applies in business as it does in life. Very often the threat from other countries and their champions is overplayed to scare politicians and decision-makers to adopt a strategy that creates local champions. All too often cries that companies will be smashed underfoot by giant foreign behemoths have come to nothing.
The need to stand firm
In short, big mergers which create monopolies should be given a red light, regardless of the political pressures. The European Commission is right to fully test the dominance that new companies will have, as well as their likely impact on markets and therefore consumers. The European Commission is admirably holding a firm line in the face of criticism and political meddling.
While almost no one in political circles wants a no-deal Brexit, there is the strong possibility that the UK will sleepwalk off the cliff-edge. This is due to Prime Minister May being unable to satisfy the right and left wings of her party - or the Northern Irish Democratic Unionist Party which props up the Prime Minister’s minority government - while the opposition Labour party are focused on calling a general election - not national unity - while remaining stoutly Eurosceptic. As the clock ticks down towards the March 2019 deadline, Prime Minister May’s almost universally unloved Brexit deal and a no-deal Brexit are the two realistic options which lay on the table. From a democratic perspective, polls show that the support of UK citizens for a no-deal Brexit is pretty high. 40% said they would support this in a recent poll.
The only other remote possibility would be a second referendum which would be intended to make the whole Brexit issue go away. This remains highly unlikely and opinion polls show that the result of any hypothetical second referendum could well be identical to the one held in June 2016.
For these reasons, a no-deal Brexit is highly likely. Although the details are being thrashed out, it is important for business to know the threats and look for opportunities. Outside of how planes will take off and land on 30th March - or how gas and electricity networks will operate - this is what businesses need to know.
No Single Market for the UK
The UK would no longer have unrestricted access to the EU internal market of nearly 450 million citizens. The basis for the UK’s trading framework would disappear, as would the immense body of laws, practices, standards and agreements that have been established over the past 45 years which cover everything from food standards to financial markets and water quality. This wrench would be painful, confusing and costly to businesses big and small. Tariffs would immediately be imposed on all goods and services, for example. The legal quick-fixes that could be established are uncertain and are likely to be rudimentary at best.
Future trade deals?
Despite the confidence of the UK government that leaving the EU will make the country a rejuvenated and nimble international player, deals take a long time and a lot of effort to develop and sign. The UK International Trade Minister Liam Fox famously stated that 40 free trade agreements would be signed and in place by the time the UK leaves the EU. He has not managed to deliver even one.
That said, there are immense opportunities for companies to access a market of 65 million people which remains one of the biggest and richest economies in the world. The ideal scenario would be an open, dynamic UK market focused on freeing up trade and developing relations with countries that have been kept outside the EU’s tariff wall. Regardless, now is the time for companies to be courting UK politicians and decision-makers as to the shape of the UK’s business and trading future.
Opportunities for companies
This previous point leads us to the fact that the UK government will be desperate to show that it is still open for business after a no-deal Brexit. This translates into an excellent opportunity for companies to benefit from tax breaks, incentives and sweeteners of all shapes and forms. From building factories to creating jobs and guaranteeing investments, this represents a golden opportunity for companies to negotiate a favourable deal. Furthermore, if a no-deal Brexit led to lower (or no) tariffs, more open trade and fewer checks and regulations would follow. The opportunities would be huge for companies to secure better access to the UK market. World Trade Organisation (WTO) rules mean that lowering tariffs for one country, or trading bloc, would need to be done for all. You cannot pick and choose your tariffs without a formal trade agreement. Free Trade Europa would be supportive of this no tariff approach and feel it would be an excellent positive example internationally.
Trade in services, however, is a notoriously difficult area. Regulatory harmonisation is politically sensitive and incredibly tricky to achieve at the EU level, let alone within the WTO where rules are threadbare in the extreme. Financial companies, for example, will need to establish a base in the UK and EU since the “passporting rules” which allow institutions to carry out activities from within any EU market to serve another will no longer be possible.
A no-deal Brexit is also likely to lead to a slide in the value of sterling. While this will make UK goods cheaper, and benefit exporters, the long term effects could well be higher inflation and an increase in interest rates. This will affect the purchasing power of companies and UK citizens alike over the longer term.
UK and EU supply chains will also be drastically affected. Modern logistics networks see goods and materials sourced internationally and the “just in time” nature of these supply chains means that warehousing requirements are kept to a minimum. The UK government will need to safeguard its transport infrastructure and allow these networks - which criss-cross national borders - to continue or else risk a catastrophic collapse in the UK’s business infrastructure.
Similarly, the evaporation of the free movement of workers within the EU is tragic for business - as well as socially and politically - in Free Trade Europa’s view. Not only will the supply of skills and talent be reduced but increased rules will push up costs, increase confusion and cause delays for business.
What about agriculture?
The support and subsidies that the UK agricultural sector benefits from - through the Common Agricultural Policy - would disappear. The UK would no longer be able to compete on the global stage and tariffs would cut farmers off from the EU market. This would likely lead to the decline and even demise of much of the agricultural sector in the UK without significant funding from the UK government, which is unlikely to materialise.
From an international perspective, a UK agricultural market freed from the grip of the Common Agricultural Policy could mean lower tariffs and regulations, and therefore a more attractive destination for meat, fruit and vegetables. The result could also be cheaper food for UK consumers.
Grey clouds with silver linings?
Although the future remains uncertain, a no-deal Brexit is certain to be messy, complicated and time-consuming. Many rules and regulations will be unclear and there will be a huge amount of ill will to go around. That said, business will need to pick its way through the wreckage and seek out the opportunities. In business - as in life - finding the positive in every negative is essential. There are huge potential gains for those who get it right.
Brexit and the tragic end of the free movement of people.
There is an old saying that there is never a right way to do a wrong thing. This certainly applies to the UK leaving the European Union. One of most dramatic and damaging elements of Brexit could be encapsulated in Prime Minister May's triumphant declaration that the free movement of people would be ended "once and for all". This was probably one of the most tragic, depressing and damaging statements made in a long while.
The interchange of ideas, culture and peoples has been at the heart of forming the UK as well as being the lifeblood of dynamic, open and progressive societies. By cutting this off, the UK - and particularly cities like London - risk losing the essence of what makes them a vibrant, thriving and attractive metropolis today.
Cities - like companies and successful organisations - realise that diversity is at the heart of creativity, innovation and progress. They have worked on this for decades, rich in the knowledge that diversity makes a city an exciting and attractive place to live and work.
The European single market - a fantastic creation in the eye's of Free Trade Europa - was the brainchild of a French Socialist in European Commission President Jacques Delors and a British Conservative in Margaret Thatcher's chosen disciple Lord Cockfield. On the face of it an extremely odd couple, but diversity so often reaps impressive and unexpected results.
Similarly, the European Union we know today is built on the post-World War II vision of people like Robert Schuman: a politicians born to a Luxembourgish mother and German father in a region which became French after a war with Germany - and Jean Monnet: a French Brandy salesman turned internationalist and statesman. Opposites do attract and the synthesis of different people, from different backgrounds and with different ideas never ceases to amaze. The possibilities are endless.
We can but hope that the UK's leaders realise this sooner rather than later. Cutting off Brits from finding work and opportunities (both professional and personal) in other countries, as well as vice versa, would indeed be a tragedy.
Banning single-use plastics.
With winter upon us in Europe, memories of lazy, sunny days by the sea have long since faded. One thing that should remain vividly in our minds is the amount of plastic waste in our seas, oceans and waterways. From plastic bags to bottles and drinking straws, our seas are literally drowning in plastic waste. The Plastic Oceans Foundation calculate that human beings are producing 150 million tons of single-use plastic every year, and over 8 million tons are being dumped into our seas.
Thankfully the tide is turning. European-wide laws have been agreed to ban single-use plastics by 2021 in an effort to reduce marine pollution. Companies are also taking the lead by phasing in plans to ban non-recyclable plastic packaging. The requirement for goods and products to be made from sustainable materials will be a step forward for the environment, and will help combat marine pollution. At the same time, this reality will open up new market opportunities for innovative packaging companies and retailers as well as for recycling plastics. Deposit-return schemes for single use bottles are common across Scandinavia, for example, and significantly help with plastic waste. This is something that should be considered more broadly in other countries. Similarly, promoting a "circular economy" - which covers waste disposal from product design to recycling - needs to be front and centre for governments and companies alike.
Yet companies and legislation cannot, and should not, be the panacea for cutting plastic waste. Personal responsibility and changing our own behaviour is vital. Simply not dropping litter and disposing of plastic waste properly has a huge beneficial effect. By way of an example, research shows that 50% of the plastic waste in the Estonian waters of the Baltic Sea comes from cigarette butts. Once plastic waste makes its way into our seas and waterways it is very difficult to remove. Each one of us has a role to play in looking after our environment and building a sweeter future.
Turning the UN Sustainable Development Goals into concrete actions.
Many of us are familiar with the 2030 Sustainable Development Goals. These were adopted in 2015 and set out 17 key objectives that need to be addressed and solved by 2030. These range from getting rid of poverty to the provision of affordable and clean energy.
Like motherhood and apple pie, there is very little to argue against in this list. Like so much that is produced by the United Nations it is necessarily vague, lofty and all-encompassing.
Furthermore, if someone had sneaked in "fill in Jupiter's red spot" as Goal 18 then a cynic could have stated that the United Nations would be equally likely to achieve success. Goals are one thing, but achieving them is a different matter entirely.
This reality was brought into focus when the UN Climate Change Panel stated that global temperatures are set to rise more than 1.5 degrees Celsius above pre-industrial levels. Scientists have been stating for some time that this will spell doom and gloom for the planet. Rising sea levels, drought and extreme weather are highlighted as likely results. So why is not more being done?
In reality, a great deal is already being done and a focus on better communication would improve things still further. Merely repeating that the world is falling apart - painting an ever more bleak picture - can only take us so far. Studies show that using a negative approach and dictating to people is not effective over the longer term. After a while businesses and citizens switch off. They become immune. It is therefore time to turn the rhetoric on its head.
From a business perspective, there is a huge opportunity for companies to create solutions which mitigate against the effects of climate change. Action is not only good for the environment, but also for profits and the economy as a whole. Whether it is power generation, building materials or even sales of electric bikes, there are huge business opportunities for a number of sectors. Climate change is a form of disruption. As always with disruption, the organisations best-placed to handle this will be the winners.
From a consumer perspective, the issue seems too big and too global to get a handle on. What can one individual do? The key is to educate that every act counts, no matter how small, and these should be applauded. Simple messages and using the right channels - where people are active and actually spend time - are as important as promoting the positive angle. For example there are a few things that everyone can do - as of today - that will have a significant impact on the environment, as well benefit them personally:
Through education, communications and changing behaviour the biggest gains can be made.
Time to focus on a bit of carrot. We have had enough stick.