Mats Persson of Open Europe: Cameron’s alleged deal on treaty change for working time changes would be a strategic mistake

Mats Persson is Director of Open Europe.

For real time updates from across the EU and eurozone, follow Open Europe on Twitter.

It has become clear, over the past few months, that German Chancellor Angela Merkel wants to reopen the EU Treaties in order to beef up the rules on eurozone economic governance, giving the EU institutions, including possibly the European Court of Justice, the power to impose and enforce semi-automatic sanctions when euro states break the budget rules. There’s no concrete proposal for Treaty change yet on the table, but the Germans will most certainly want to seek a “limited” change to the EU Treaties without the need for referenda across Europe.

Irrespective of the merits of the proposals, with German money necessary to keep the eurozone show on the road, you can understand why Merkel feels the need to take some sort of action. 'Never again' is the implicit lead theme. But where does all of this leave Britain?

Last week, David Cameron, who has the power to veto Merkel’s demands as they require unanimous consent, flew to Berlin, presumably to tell the German Chancellor what he wants. Both the German and British press had a field day with the alleged tensions between the two countries. German tabloid Bild – the most widely read paper in Europe – led the pack asking, “What is Britain still doing in the EU anyway?”

Mats Persson: The financial turmoil – what can the UK do?

Mats Persson is Director of Open Europe.

Ed Balls hit the wires yesterday complaining that the “British government is absent from the global economic debate at this critical time.” It’s true, that the UK government hasn’t exactly taken the bull by the horns in the eurozone crisis, but it’s also true that it was on the previous Labour government’s watch that we entered the financial crisis in the first place. What we’re now experiencing is not a return of the 2008 crisis as much as a continuation of it. In short: the debt bubble was never really dealt with following the Lehman collapse, it was mostly shifted from banks to governments, which in Europe has been exacerbated by a flawed Single Currency.

The brutal truth is that EU leaders are running out of options.  They have wasted so much time and manoeuvring room on completely failed policies, i.e. the bailouts, that some of the paths that were previously open to them, such as a full restructuring of struggling countries’ debt, are quickly closing (although I hasten to add that it’s not quite off the table just yet).

Mats Persson: The UK should push EU leaders to plan for an orderly restructuring of Greece’s debt, not another bail-out

Mats Persson is Director of Open Europe.

So David Cameron is again attending an EU summit marred by the raging Greek and eurozone debt crisis. As Open Europe has documented and argued repeatedly, this crisis just won’t go away.

Following a “row” with Germany over the UK’s involvement in a new rescue package for Greece, Cameron has declared something of a victory. The EU bail-out mechanism through which the UK would have been partly liable, the European Financial Stabilisation Mechanism (EFSM), won’t be activated and the UK will only contribute €1bn or so to a fresh Greek aid package via its IMF commitments.

Not that it was much of a row in the first place – it was primarily the Guardian that got a bit over-excited, quoting one German official, which made No 10 look pretty good in the end.  A proposal for activating the EFSM was never really on the table. However, since the UK actually doesn’t have a veto over its own participation in this fund (bizarrely, the activation of the EFSM is decided by a majority vote amongst EU leaders) there was still a theoretical risk that the UK could be outvoted. Indeed, the fund could again be called upon in future bail-outs. So this game isn’t exactly over.

Mats Persson: The political lesson from the Portuguese bail-out is don’t give up EU vetoes

Mats Persson is Director of Open Europe.

That Portugal has joined Greece and Ireland on the eurozone casualty list has become a fact of life – so has the UK’s liability in the latest EU bail-out.

Open Europe has looked at the various economic implications of the bail-out for Portugal, the eurozone and Britain in detail elsewhere. However, the biggest political lesson from this episode for any British government has so far been overlooked. That lesson is simple: don’t give up vetoes over sensitive areas of EU policy without first thinking through every possible consequence.

And here’s the thing, the reason why the UK is now required to underwrite a Portuguese bail-out to the tune of £3-4 bn (partly via the EU budget, the legality of which is dubious, party via the IMF, which is fair game) isn’t Alistair Darling, who signed the emergency bail-out deal in May last year, or George Osborne, who allegedly was consulted by Darling. The UK long ago gave up its veto over the part of the EU treaties – the now infamous article 122 – that can be used to commit Britain to financially assisting other EU countries in trouble, if that country is hit by a “natural disaster” or “occurrences beyond its control.” Even if Darling, or Osborne for that matter, had objected to the emergency EU bail-out fund last May, they would probably have been outvoted as the decision was subject to majority voting (whether a UK Chancellor, even if he had had a veto, would have wanted to block the deal, given the enormous financial and political pressures at work is also open to debate).

The question then is, whose brilliant idea was it to give up the veto over article 122 – which has effectively become the financial equivalent to Nato’s Article 5 on mutual military assistance?

Before answering that question let’s make something clear: there is no legal basis in the EU treaties for eurozone bail-outs. As we argued back in January last year when eurozone rescue packages were first discussed, the official line from the legal service of the Council of Ministers, was always that the “no bail-out” clause in the EU treaties is superior to the article allowing for financial assistance to member states (Article 122). And consider this statement from German Chancellor Angela Merkel, as late as March 2010:

"According to our understanding, this article 122 sets as a condition that the countries should not have contributed to the situation that has evolved, but that exceptional circumstances are responsible. According to my and our understanding these are rather earthquakes and floods, but also natural catastrophes, than something that can be applied to the Greek situation. So according to my opinion there is no contractual basis in the Treaty, on which basis of which one could do that.”

You can hardly be much clearer. Therefore, the Conservative leader in the European Parliament, Martin Callanan, and others are correct to point out that the Portuguese bail-out lacks both legal and democratic legitimacy – in the UK as well as the EU as a whole.

Mats Persson: Today's European Court ruling combines virtually everything that is wrong with the EU's judicial system

Mats Persson is Director of Open Europe.

This morning, the European Court of Justice ruled to scrap the insurance industry's opt-out from the EU's 2004 Gender Directive, which will mean insurers can no longer offer different products and prices to men and women based on their sex from December 2012.

This may appear like an everyday consumer story, but it's not. In fact, it's difficult to find an example which better illustrates why EU judges need to be reined in and David Cameron needs to revisit his election promise to limit the jurisdiction of the ECJ and the application of the Charter of Fundamental Rights, entailed in the infamous Lisbon Treaty.

Of the two European courts - the ECJ in Luxembourg and the European Court of Human Rights in Strasbourg (ECHR) - the former is clearly the one with the most influence. On occasion, the ECHR rules on highly symbolic and emotionally charged issues such as prisoners' right to vote - rulings which rightly get a lot of attention. But the influence of the ECJ creeps in to a whole range of areas, striking deep into British society and the economy, from working time for junior doctors to the governance of the UK's most important national industry - the City of London.

The ECJ's ruling this morning combines virtually everything that is wrong with the EU's judicial system. And there's a lot going on. Here goes:  

Mats Persson: Two EU laws that urgently need to be renegotiated

Mats Persson is Director of Open Europe.

The members of this Coalition Government pride themselves on being the great de-centralisers and have proposed a series of measures to amend or scrap intrusive domestic legislation. But if this agenda is going to have any credibility whatsoever, the Coalition must take it to Brussels with full force and seek renegotiations of a slew of misguided EU laws. And they must do so now.

Encouragingly, this week we have seen signs of ministers beginning to wake up to the fact as two exceptionally bad EU laws again hit the headlines: the Working Time Directive (WTD) and the European Arrest Warrant (EAW).

These two laws are textbook examples of EU legislation gone out of control: both are hugely disproportionate and have evolved in a way that was not at all foreseen when UK ministers first signed up to them, in turn creating a range of unintended and negative consequences.

Using the Government’s own figures Open Europe has calculated that the annual cost of the WTD is currently estimated at between £3.5bn and £3.9bn, making it the most expensive EU regulation for the UK economy each year. And unnecessarily so.

In recent weeks, there has been a wealth of stories in the media about what the WTD has done to the NHS. Remedy UK, the junior doctors’ pressure group, said that the Directive had resulted in a generation of junior doctors receiving “minimal and sketchy exposure to ‘real medicine’.”

Mats Persson is Director of Open Europe.

The members of this Coalition Government pride themselves on being the great de-centralisers and have proposed a series of measures to amend or scrap intrusive domestic legislation. But if this agenda is going to have any credibility whatsoever, the Coalition must take it to Brussels with full force and seek renegotiations of a slew of misguided EU laws. And they must do so now.

Encouragingly, this week we have seen signs of ministers beginning to wake up to the fact as two exceptionally bad EU laws again hit the headlines: the Working Time Directive (WTD) and the European Arrest Warrant (EAW).

These two laws are textbook examples of EU legislation gone out of control: both are hugely disproportionate and have evolved in a way that was not at all foreseen when UK ministers first signed up to them, in turn creating a range of unintended and negative consequences.

Using the Government’s own figures Open Europe has calculated that the annual cost of the WTD is currently estimated at between £3.5bn and £3.9bn, making it the most expensive EU regulation for the UK economy each year. And unnecessarily so.

In recent weeks, there has been a wealth of stories in the media about what the WTD has done to the NHS. Remedy UK, the junior doctors’ pressure group, said that the Directive had resulted in a generation of junior doctors receiving “minimal and sketchy exposure to ‘real medicine’.”

Mats Persson is Director of Open Europe.

Mats Persson is Director of Open Europe.

Mats Persson: How the Coalition can hold real leverage in European negotiations and force some EU reform

Mats Persson is Director of Open Europe.

Europe is an absolutely explosive issue – both at home and abroad. For the Con-Lib Dem coalition it involves a number of risks but also huge opportunities. The risk is that the Conservatives turn into their predecessors and try to deny the existence of Brussels. But Europe is also ripe for reform and the Conservatives, aided by the EU-friendly hand of Nick Clegg, can actually get stuff done in Europe.

The Conservatives have clearly watered down their EU reform pledges on issues such as the repatriation of employment law, crime and the Charter of Fundamental Rights. In return they received a pledge that the UK would not join the euro over the course of the next Parliament (which is an entirely hollow victory since there was no chance that any party would have pushed for euro entry in the next Parliament).

But the most important things to watch are the pledges on opposing further transfer of powers to Brussels and the promise to put any Treaty change that does so to a referendum. This pledge could now be put to an immediate test with Germany on Friday tabling a proposal for the creation of more EU economic powers, which would involve EU Treaty changes. David Cameron and Nick Clegg’s gamble that they could keep the ‘European issue’ at arms length therefore looks unlikely to pay off.

Mats Persson is Director of Open Europe.

Mats Persson is Director of Open Europe.

Mats Persson: The costs of EU regulation and the related challenges that will face a Conservative government

Mats Persson is Director of Open Europe.

Broadly speaking, the UK Government has two tools at its disposal to achieve its aims: budgetary policies and regulatory policies.  But while one will feature heavily in the debate leading up to the general election, the other will be almost completely absent.

This is unfortunate, because as boring as it may sound, regulation matters. Good regulation can free up markets, increase liquidity and boost stability and consumer confidence – all of which are needed in the wake of the crisis, not least in financial markets. Bad regulation can have the complete opposite effect, ultimately hurting jobs, growth and competitiveness at a time when we can least afford it.
 
Open Europe this week published a study – based on over 2,300 of the Government's own impact assessments – which showed that regulation has cost the UK economy £176 billion since 1998. Of this amount, £124 billion, or 71%, had its origin in EU legislation. This cost is unnecessarily high.

We also found that despite some good efforts by the European Commission and UK Government to streamline regulations, the cost of red tape continues to rise every year. Since the UK Government launched its 'Better Regulation Agenda' in 2005, the annual cost of regulation introduced since 1998 has doubled, now standing at £32.8 billion, 59% of which stems from EU legislation.

Mats Persson is Director of Open Europe.

Mats Persson: The Conservatives are right to focus on EU social policy – but only a comprehensive opt-out from all relevant Treaty articles will do

Mats Persson is Research Director at Open Europe.

An argument heard in some corners is that employment and social policy is the “wrong battle” for an incoming Conservative government looking to bring back powers from the EU. EU social legislation is stuck in neutral, the argument goes, and picking a fight on these laws would see David Cameron waste valuable political capital that he can better spend elsewhere.

True, the Barroso Commission has been less active than its predecessors in pushing through employment legislation, and EU enlargement has to some extent stilled the appetite for new continental-style labour laws.

But to argue that EU social policy has died a quiet death is just wrong.

First, existing EU social and employment laws are having a massive impact on the UK economy.  A recent study by Open Europe, based on over 2,000 of the Government’s own Impact Assessments, estimated that regulations introduced in the UK between 1998 and 2008 have cost the British economy £148.2 billion. Of this, £36.7 billion, or 25 percent, stems from EU social laws alone.

Looking ahead and using the same methodology, EU social legislation will cost the UK about £71 billion between 2010 and 2020, even in the unlikely event that no new laws are introduced in that time.  In terms of impact on the British economy, EU social legislation is therefore exactly the right place to start.

Social policy also continues to evolve in the EU courts. The scope of the Working Time Directive has been extended no less than eight times by the European Court of Justice.

Mats Persson: Exposing the spiralling cost of EU regulations

Mats Persson is Research Director at Open Europe and author of its latest piece of research, Out of Control: Measuring a decade of EU regulation, which exposes exactly how much EU regulations are costing Britain. He summarises its findings here.

Over at Open Europe we’ve spent a tense six months trying to do what many told us was impossible – to track down and analyse more than 2,000 Government Impact Assessments in order to get a picture of the cost and flow of regulations.

Because while fiscal policy is subject to continuous scrutiny and media attention – with daily and lively debate over tax rates – regulatory policy remains shrouded in mystery.  As a report by the OECD once said:

“Regulatory costs are the least controlled and least accountable amongst government costs. Many governments have no idea how much of their national wealth they are spending through regulation.”

Ten years ago, Tony Blair’s Government introduced a system of analysing costs and benefits for all the most significant pieces of legislation, recognising the clear need to get a grip on the flow of regulation.

And in 2005, the Government introduced its ‘Regulatory Reform Agenda’, hoping to bring down the cost of red-tape affecting businesses.

Out of control: the cost of regulation is increasing all the time

But our research, which uses the Government’s own figures for the cost of legislation, reveals that instead of decreasing, both the flow of regulations and their cost impact have in fact skyrocketed.  Since the launch of the reform agenda in 2005, the annual cost of regulation in this country has gone from £16.5 billion to £28.7 billion – an enormous increase of 74%.