Bill Jamieson: Slowcoach Europe derails growth

Today's European vote count could be rock bottom as the electorate feels leaders are not boxing clever. Picture: PA
Today's European vote count could be rock bottom as the electorate feels leaders are not boxing clever. Picture: PA
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As Euroscepticism spreads across the continent, voters may feel their ballot efforts are wasted, writes Bill Jamieson

For the first time ever, in more than 40 years of elections big and small, I am seriously contemplating not voting today.

As with millions across Europe, a profound disillusion and ennui has long set in. That I’m not alone is no comfort. Across the UK the turnout will struggle to top 25 per cent. The verdict of the voters, for what it’s worth, will be treated by the pundits as of little consequence other than its possible implications for voting intentions at Westminster next year. Few are seriously interested in what it might mean for the EU – the supposed purpose of this voting exercise.

That alone speaks volumes about what’s wrong with Europe. The disillusion is not just about the remoteness of its parliament, or its arcane and barely reported deliberations, or its expense, or its unfathomable accounts, or its waste, or the stream of tiresome and irritating directives and regulations. It’s a deep sense that the problems with the EU project are now so intractable that little will change no matter how many Eurosceptic voters “send a signal” today. For the transmitters at FM Brussels are only calibrated to send signals – not to receive them.

Some say the European project is dying of indifference. It’s more than that. It is dying by its own hand. All the years of earnest endeavour to promote integration and convergence in the name of economic growth have resulted in austerity programmes more severe than any experienced here, mass unemployment in many regions and a pronounced and recurring failure so far to achieve any convincing uplift. Europe is being left behind by every other region in the world.

Last month the International Monetary Fund unveiled its latest economic forecasts. These put overall global growth at 3.6 per cent for this year. The United States is set to grow by 2.2 per cent. China continues to barnstorm ahead with 7.5 per cent expansion and the IMF’s forecast for the UK is for growth of 2.9 per cent – the fastest rate across all the G7 economies.

What was arguably the most striking feature of the IMF release was its forecast for the eurozone – that vanguard, inner club of the EU that was expected to set the growth pace. The good news is that the baleful minus sign that has long preceded these estimates should disappear this year. But the expected growth pace is just 1.2 per cent.

However, poor figures for the first quarter of this year, released last week, have dashed hopes of a sustained recovery. They showed growth across the eurozone of just 0.2 per cent quarter on quarter – no change from the pace from the final three months of 2013.

Not only is there a worrying lack of momentum, but within the eurozone (unemployment rate 11.9 per cent) the outcomes are remarkably scattergun, with little sign of convergence, still less one around a rising growth performance.

Germany is in the lead with growth of 0.8 per cent. Spain (unemployment rate 25.9 per cent, youth unemployment rate 57 per cent) had 0.4 per cent growth. The French economy (unemployment rate 10.2 per cent) flat-lined with no growth whatever in the first quarter. The Netherlands contracted by 1.4 per cent while Italy (jobless rate 13 per cent) and Portugal (15 per cent) also fell back.

Little wonder Euroscepticism is on the rise across the continent, not just here. These performances are especially disappointing given recent pious expressions of hope from the European Commission that there was a “more lasting recovery” and that it was “more balanced regionally”. These assertions must now be questioned. And all this is disappointing for the UK as a poorly performing EU makes it difficult for our exporters to sell more goods and services.

Indeed, there are now real questions as to whether membership of the EU single market has conferred anything like the benefits routinely claimed of it. Growth of UK exports to faster growing non-EU markets has been significantly more dynamic than growth to slow-growing EU markets. Says Ruth Lea of the Arbuthnot bank group: “It would seem that, for all the vigorously promoted benefits of being in the EU’s single market and Customs Union, they do little, if anything, to offset the more obvious attractions for UK exporters of exporting to growing markets rather than exporting to sluggish ones”.

She points out that, while our global exports have increased by 76 per cent over the decade, they grew by 45 per cent to the EU, whilst more than doubling to the non-EU.

All of the UK’s high performing trade relationships have been with non-EU countries, mainly outside any preferential trade deals. “Trade with major EU countries has simply underperformed trade with non-EU countries”, concludes Ruth Lea, “and it can only continue to do so”.

Epochal changes are reshaping our lives and our prospects – and little of it is to do with Europe. Last month, Dominic Barton, senior guru at consultants McKinsey & Co, gave a startling presentation in Edinburgh to the Asia Scotland Institute on Global Mega Trends.

Of a projected 4.9 billion middle-class consumers by 2030, 2.8 billion, he said, will be in Asia. There will be some 7,000 more large companies (revenues of $1 billion plus) and of these, seven out of ten will be in emerging countries. Already the number of Asian companies (excluding Japan) in the Fortune Global 500 has doubled in five years.

How much of this is being noted here? Over the past two years it sometimes seems as if Scotland has fallen under a mass hypnosis: a conviction that the referendum is the game-changer for our lives and prospects – that and our continuing membership of the EU.

They aren’t. Their consequences shrink before these mega trends and the changes in digital technology and innovation that will accompany them. Perhaps on 19 September there will be a sudden snap of the fingers and we will awaken from this trance to a rediscovery of the wider world and its dynamics.

Many young people “get it”: the EU-obsession and referendum hypnosis has not worked so powerfully on them. But my worry is that the trance will linger, leaving us entrapped in a slowcoach Europe, incapable of change and condemned on a treadmill of “ever closer union” to low growth and appalling unemployment, all this overseen by a bureaucracy deaf to its faults and blind to any prospect of solution.

This crushes hope, when the wider world offers so much more.