The asteroid may finally be approaching the EU
No one can accuse the EU of not thinking about its economic competitiveness. It’s a world leader at devising growth strategies.
As long ago as 1993, the Delors Commission was endorsing a new strategy for “economic growth in a sustainable way”. Its failure saw it replaced in 2000 by the Lisbon Strategy, to make the EU “the most competitive and dynamic knowledge-based economy in the world”. By 2010 this had failed, too, and was replaced by the Europe 2020 Strategy for “smart, sustainable, inclusive growth”. No such growth appeared, and so in 2020 we got Ursula von der Leyen’s Green Deal “to transform the EU into a modern, competitive, and resource-efficient economy”.
Unfortunately, these growth strategies haven’t generated much actual growth. Through all this blizzard of paper, the EU’s share of the global economy has almost halved even though it has twice as many members as in 1993; and the income gap with ordinary Americans is over 50 per cent bigger.
In some parts of the world, this might have been grounds for a rethink. Not in Brussels. Wheel on Mario Draghi, the all-purpose Eurocrat, central bank governor, former prime minister of Italy, and saviour of the collapsing euro. This week, he came up with yet another strategy.
The Draghi Report blurts out some hard, if obvious, truths – for example that “high energy costs in Europe are an obstacle to growth” (as indeed they are in Britain). But his recommendations are the same as his predecessors’: a bigger EU budget, more EU borrowing to finance public investment, more economic policy-making in Brussels, and a last-ditch attempt to make Europe a green energy superpower (a ship which has already sailed – to China).
Draghi is an intelligent man. Even so, I’m sure he believes these ideas. But he must know that there is little chance of them being implemented – fortunately – because the mood among EU leaders for a further jump in integration is pretty limited. Brussels rules already constrain core elements of national sovereignty, so if anything now the pressure is the other way, as the rebellion against mass migration goes mainstream, and as Germany reintroduces border controls and starts closing Volkswagen factories. So Draghi’s report can confidently be added to the long series of hefty tomes now propping doors open in the Berlaymont.
The problem is that Brussels and its outriders are not able to rethink. Lionel Barber, former editor of the FT, wrote this week that the EU was “on the road to serfdom” if it didn’t implement Draghi’s report. Sadly that is about as much Hayek as the EU is likely to get, for its leaders won’t go down the alternative route of allowing member states a freer hand to solve their problems. Nor can they bring themselves to lift the dead hand of statist EU policy-making and bureaucracy, “Brussels knows best” thinking, hostility to innovation, and simple suspicion of free-market capitalism.
So the EU can’t go forward, and won’t go backward. So it will likely remain where it is now, less than the sum of its parts, prey to fractious internal argument, the Austro-Hungarian empire of the 21st century: more a source of worry to its friends and allies than a serious independent source of power in the world.
Why does this matter to us? After all, we are largely out of Brussels’ legal reach now, though Labour shows every sign of trying to reverse that.
The reason is that we certainly aren’t out of the EU’s intellectual reach. Indeed, arguably we never left it. We have similar problems to the EU and we reach for similar solutions. Face it, there probably isn’t going to be much to choose between the Sunak and the Starmer versions of economic policy-making. The same ineffectual efforts to boost investment, the same deficit spending, the same failure to reform and liberalise: all this will just be set at a slightly higher tax level under Labour.
That’s the EU norm, too. Joe Stiglitz, Mariana Mazzucato, Mario Draghi, Christine Lagarde at the ECB, all the fashionable statist economists who think they have infallible wisdom, are rampaging over what’s left of the EU’s innovators and entrepreneurs like brontosauruses in the swamp.
But the asteroid may at last be approaching. In the end, reality will out. The EU’s woes mean that Keir Starmer’s project of boosting growth by resetting relations will eventually come to be seen as futile. I don’t expect Labour to reach that conclusion any time soon, so we must do everything we can to stop them bargaining away our national independence. But the longer we can hold them off, the more obvious it will be that the economic future for Britain is not re-enmeshing ourselves in the Brussels net.
“Brexit is failing” say know-nothing commentators here. In fact, if anything is failing it’s the Monnet method, the EU institutions, and the existing European elites who prop them up. They’ve run out of road. They don’t know how to proceed. Unless they can find it in themselves to abandon much of what they have come to believe, they will, sooner or later, be left behind by history – and by the rest of the world, too.