The UK and Poland – lots of opportunity to work on a growth agenda!
Since the global economic crisis started in September 2008 the story for Europe has been one of a stalling engine which has consistently failed to restart. Mired in mediocrity and wading through a bog of single market regulation more than half of Europe’s member states are today less competitive than they were a year ago. Greece is on the brink of meltdown and nearly half of Spain’s young people are unemployed. Europe’s politicians continue to meet, seemingly driven by a merrygoround of media interest yet are failing to address the fundamentals which will once again make Europe a great place to be. Why is growth so important?
Balanced growth is at the very cornerstone of global stability. With China, India and Africa projected to grow at levels of up to 8% in 2012 Europe is forecast to languish at 0.6%. It is important to appreciate the countries are at different stages of development but the current EU scenario is entirely unsustainable in its own back yard. Let’s take a look at the challenge and then then look at some pointers for action.
The crucial challenge of Europe is to unite the countries within it in a way which encourages them to aspire to economic and social excellence not force them down a path of enforced unity driven by a common denominator which protects the status quo and nurtures uncompetitiveness. The single market remains incomplete. There are still a colossal 4,700 professions across the EU to which access is regulated by government. In the name of social protection, the EU has promoted unnecessary measures that impose burdens on businesses and governments, and can destroy jobs - The Agency Workers Directive, the Pregnant Workers Directive, the Working Time Directive. Recent maternity leave proposals will cost more than 2 billion GBP per year in the UK alone without adding the other 26 countries. When it costs €593 to set up a business in Brazil, €641 in India and €644 in the US, why does it cost on average €2,285 to do so in Europe? Doing business in Europe is too costly and time-consuming. Dealing with bureaucratic rules and regulations hits our small businesses hardest and stifles enterprise (for every €1 per employee a large business spends to comply, a small business can expect to spend up to €10). Working Time regulations limit the flexibility of companies. Europe is awash with regulation concocted and approved by those who are not being held accountable for the end result. So Europe what needs to be done? Imagine we create an ideas box. What are a few of the ideas we would put into it?
The Single Market already adds €600 billion a year to the EU economy. Further liberalisation of services and the creation of a digital single market could add €800 billion more. This is the equivalent of making the average European household almost €4,200 better off each year. An extra 5.2 million jobs could be created by reducing barriers to trade outside the EU, more than all the jobs lost in the recession. The value of unrealised trade in intra-EU commerce is estimated to be up to EUR 184 billion. Concluding all ongoing trade negotiations could add €60 billion to EU GDP. Looking forward closing the gap between male and female employment would boost Eurozone GDP by as much as 13%. The creation of an effective digital market would generate an additional 4% of GDP by 2020. By 2020, 35% of all jobs will require high-level qualifications with the ability to adapt and innovate as compared with 29% today. The service sector generates 70% of the EU’s GDP, constitutes the main source of FDI and is responsible for 68% of employment. The service sector also creates most new jobs (96% of new jobs). Are we gearing our resources up today to efficiently manage our future destiny? Why are we not busting a gut to create a unified single market and taking our strength to the world? The implications for Europe are a deep and fundamental restructure; a new vision and strategy which aligns our combined strength to rise to the challenge.
The UK and Poland together have enormous potential. The UK, a country which was the catalyst of the industrial revolution which was the precursor of the world as we know it today. Poland a key partner in Europe, enjoying economic adolescence bringing an ambition and wealth of new markets within its reach. The UK and Poland enjoy an excellent relationship. Europe’s situation today allows a much deeper economic co-operation which has the potential to reach far beyond the borders and horizons of our own boundaries. The British Polish relationship combines the strengths of experience, success and most importantly future ambition. All this inspired by a driving ambition for success and renewal.
Europe should not be afraid of change. Now is the time to take brave decisions on creating new opportunity, removing all unnecessary regulations and fostering an approach which harnesses strengths and growth ambition. There is one solution to Europe’s current predicament and that is growth. Creating strategies for growth and aligning our resources to achieve growth, all this lies in our own hands. Is Europe standing at a crossroads or on the edge of a cliff? Whichever, we need to take the turning which is very clearly marked – offensive growth – and drive as fast as we can down that route before it is too late.