Sunday

24th Mar 2019

Opinion

The 'Little European' mentality

  • "Macron and Gabriel's answer is one of a 1950s dogma, not one that prepares the entrepreneurs of the EU to face the challenges of the 2050s" (Photo: O Palsson)

Reading the recent call by Emmanuel Macron and Sigmar Gabriel for France and Germany to push ahead with European integration, I have to admit to divided loyalties.

Their op-ed in many European newspapers sets out an opportunity for the UK but also a serious threat to the competitiveness of the European Union.

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As a British MEP, the French and German economic ministers' vision of a further integrated Eurozone might enable the whole EU to move towards a more flexible relationship, especially for countries that have no intention of joining the euro.

The socialist dream that these two politicians propose would soon turn into a nightmare not just for the Eurozone, but for the entire EU.

Macron and Gabriel want to begin driving forward integration within the Eurozone. We need to strengthen governance within the Eurozone in order to get sustainable growth again, and not rely on growth created by the creation of cheap money. However, Macron and Gabriel's proposition assumes that the 17 other countries will immediately fall in behind what the so-called 'engines' of integration are demanding.

Even in Germany there is resistance with the German Bundesbank President earlier this year saying that you can have a monetary union without the need for political union. What is needed is a much clearer adherence to the rules, and much greater responsibility and discipline.

However, that is a decision that the Eurozone itself must take.

Little European mentality

My greatest concern with Macron and Gabriel's proposal is not just the level of integration that they propose, but the direction of integration. Their socialist vision of harmonised taxation and more social policies sounds utopian on paper but it fails to accept a basic fact: that Europe is not the world, and Europe cannot close itself off from the world.

Unfortunately, we see this "Little European" mentality from many politicians on the left.

After several decades of centralisation in the EU, we have seen the results: lower turnout in European elections, more sceptical parties on the rise, and a failure to keep up with growing economic competitiveness in many parts of the world.

Macron and Gabriel's answer is one of a 1950s dogma, not one that prepares the entrepreneurs of the EU to face the challenges of the 2050s with increased globalisation and technological advances driving power away from centralised institutions and into the hands of individuals and local communities.

Specific proposals such as harmonised corporate taxes are nothing new from the socialists, but they would reduce European competitiveness. Tax competition - as long as it is open, fair and transparent - works.

Experience of the past 30 years shows that tax competition has driven down the average top rate for corporate income in the developed world to less than 27 percent today from 48 percent in 1980.

With greater harmonisation Europe's tax rate would only be as low as the highest-taxing member.

Gabriel and Macron want some of that ever-shrinking tax revenue to be hypothecated towards a Eurozone budget - creating a spiral where more prosperous countries subsidise the less competitive.

We are all dragged down to the lowest common denominator, rather than all competing to achieve something more. Norman Mailer put it best when he said, "the function of socialism is to raise suffering to a higher level".

Macron and Gabriel end by saying: "Our common goal is to render it unthinkable for any country in pursuit of its national interest to consider a future without Europe - or within a lesser union." However, a more centralised, overburdened and socialist European Union would make it less attractive to entrepreneurs and wealth creators, which in turn might lead the more mobile to consider a future outside Europe.

Not everyone in EU countries - including many in France and Germany - necessarily want further moves towards a United States of Europe.

So Macron, Gabriel and their supporters can keep the red flag flying. The rest of us want less socialism and less centralisation in Europe.

Syed Kamall chairs the European Conservatives and Reformists Group in the European Parliament

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