Berlin Declaration for Business - Business for New Europe

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Berlin Declaration for Business - Business for New Europe

Berlin Declaration for Business

Published by Business for New Europe, March 2007

on the occasion of the EU’s 50th anniversary


Executive Summary

• The European Commission, President Jose Manuel Barroso has called for a Berlin

Declaration to mark the 50 th anniversary of the Treaty of Rome, which established

what is now the European Union.

• The achievements of the European integration in half a century have been

numerous and profound. In particular, the EU has been an economic success, with

the creation of a single market which has reduced barriers to trade and opened up

opportunities for the free movement of goods, services, capital and people across

the continent.

• As part of the EU since 1973, the UK economy has benefited enormously from

the Single Market, and the UK’s business sector has taken advantage of new

economic opportunities.

• The expansion of the EU to eastern Europe has brought further economic

opportunities, along with the extension of democracy and the rule of law to

previously Communist states.

• With 50 years of economic success behind it, Europe must address the

contemporary economic challenges, which includes a shift towards the service

sector and the rising importance of innovation.

Europe faces growing competition from markets such as China and India, and

must be equipped to deal with this.

• The EU must continue with its agenda for change to fully capitalise on the

economic situation of today. This agenda includes strengthening the Single

Market, embracing better regulation, bolstering the Services Directive and

maintaining the battle against economic nationalism.

• It is time for the European Union to return to its central mission, of promoting

prosperity and opportunity. On order to achieve this, it should be guided by the

following principles: openness, leadership, competition, fairness, accountability

and devolution.

This paper was commissioned by Business for New Europe and written by Nick Kent (March

2007).

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Introduction

“[It would] on balance be to the real and ultimate interest of the UK that the Common Market should

collapse, with the result that there would be no need for the UK to face the embarrassing choice of joining

it or abstaining from it”.

Foreign Office briefing to Ministers about the Brussels talks on a common market in Europe, 1955

“[Britain cannot afford ] to be excluded from 20% of our trade by the formation of a common market

between six European countries, which might be joined by others and which, as a unit, would inevitably

represent increased competition and bargaining power against us in third markets”.

Federation of British Industry, 1956 1

The origins of the EU lie in peace through economic co-operation. Created by the Treaty

of Rome in 1957, the European Economic Community (EEC) set out to free up trade

between its members by abolishing tariff and other barriers to trade between them. But

the EEC went beyond that conventional ambition of greater free trade and sought to

create in its common market an area that was not distorted by anti-competitive practice

and in which there was free movement of goods, people and capital. Crucially, the Treaty

was more than just an ambitious statement of principles because it included the

machinery for achieving these goals.

The birth of the European Economic Community on March 25 th 1957, when

representatives of six European countries signed the Treaty of Rome, was a moment of

great importance and not just to the initial members. Britain held back from any

involvement on the advice of the Treasury and the Foreign Office and whilst politicians

generally hoped the Common Market would fail, business leaders were more far-sighted.

The Federation of British Industry representative, Peter Tennant, realised that Britain’s

failure to get involved in the emerging EEC might well mean that “we will be faced some

10 or 15 years hence with a decision to join the club on its terms and at a high entrance

fee.” 2 He was to be proved painfully correct and Britain’s image and status in Europe

have suffered from early political hostility to the EEC.

Fifty years on, Europe is again at an important juncture. After the failure of the European

Constitutional Treaty to win popular backing in France and the Netherlands, Europe’s

leaders have been forced to “pause for reflection.” The core goal of the EEC’s founder

members, of a Europe where barriers to trade and to free competition are no more, has

still not been fully realised. In fact, fear of the consequences of globalisation has

encouraged a revival of economic nationalism in Europe. After the triumphant

enlargement of the EU in 2004 to take in most of former Communist Europe and the

accession of Bulgaria and Romania on 1 st January 2007, further enlargement to include

Turkey is stalled, in part because of fears about immigration.

2007 will see not only the 50 th anniversary of the Treaty of Rome but also the retirement

of some of Europe’s dominant political figures of the last decade. The departure of Tony

Blair and Jacques Chirac and the recent election of new governments in several Member

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States, including Germany, Italy, Poland and Sweden, will change the political

atmosphere in the EU.

Against this backdrop of instability and uncertainty within the European Union and of

political change in Member States, Commission President Barroso has suggested that

2007 would be a good time to look once again at what the EU is for and where it is

heading. Mr Barroso has called for a declaration similar to that issued after the

conference of Messina in 1955, which laid the foundations for the creation of the EEC

two years later, to be agreed not just by the Member States but also by the Commission

and the Parliament. He believes that this document should not be an exercise in looking

back but “a declaration that looks to the future.”

As a business-based organisation, we believe that the central role of business in the EU

must not be forgotten. The EEC was primarily an economic project and although the

European Union is a very different organisation today, it is vital that EU leaders

recognise in 2007 the critical importance of maintaining and building on the economic

successes of the past fifty years.

We believe that the proposed European declaration of 2007 is an opportunity to focus the

EU on the problems of today and the challenges of tomorrow rather than on the goals of

the past. In this paper BNE sets out its vision for a renewed European Union, one

designed to create a Europe that is bigger, stronger and more outward looking. But most

importantly of all, an EU which can raise the performance of the European economy for

the benefit of all.

3


Europe: A Success for Business

The EU has been a success for business not just in Britain but across Europe. Britain

joined the EEC late in 1973. A key reason for joining was because our economy had

fallen behind those of the EEC members. For example, between 1950 and 1973 our

national income per capita increased by 2.5% a year. In France and Germany, over the

same period, it increased by 4.1% and 5% respectively. 3 Two other key indicators tell a

similar story: Britain’s share of foreign direct investment (FDI) in Europe declined

alarmingly while we were outside the EEC – from 40% in 1958 to just 15% in 1973. It

has risen since we joined to 28%. 4 German annual productivity growth was more than

double that of Britain between 1950 and 1973: we matched Germany in the period 1973

to 1995 and have outperformed her since. 5

For much of the twentieth century the major barrier to trade between nations was the

existence of import levies of various kinds. Such tariffs were often set at a high level to

price foreign goods out of domestic markets. The first task of the EEC/EU was to remove

those tariff barriers between member countries; this was completed by the end of the

1960s. Yet many barriers to free trade remained and these were often hidden. Three

examples demonstrate how the UK economy suffered from such restrictions:

• in 1985, a lorry driver going from London to Milan had to carry up to 80 separate

documents to get through customs and other border formalities;

• British-made chocolate was virtually banned from sale on the continent because most

other countries did not regard it as chocolate at all;

• the German beer market was largely closed to beer exports from other countries

because of national laws on alcohol purity.

It was these kinds of hidden barriers to trade that the Single European Act set out to

tackle through 282 separate legal measures. The price of this Single Market was the

harmonisation of existing rules and regulations in many areas of economic activity at a

European level. Although this was a process that was both contentious and timeconsuming,

the benefits more than justified the complexity and difficulty of the task.

The creation of the world’s largest single market of 500 million people has seen the

scrapping of 60 million customs clearance forms, the replacement of the myriad of

documents needed to transport goods across the EU with just one and the replacement of

27 sets of national (and often conflicting) testing and safety regulations with a single set.

The EU has challenged the restrictive practices that protected so-called national

champions from fair competition. Cheaper telephone calls, low-cost air travel, the

flexibility to recruit across 27 countries and lower energy costs have all helped

businesses, large and small.

The overall benefit of the single market over the last decade has been a £588 billion boost

to EU GDP – equivalent to £3,819 per British household. EU GDP in 2002 was 1.8%

higher than it would have been without the creation of the single market. 6 The European

Commission has calculated that 2.5 million jobs have been created by the Single Market,

4


not least because exports to third countries have increased since 1993 as a proportion of

GDP 7 .

The fact that the EU is a rule-based group is fundamental to its value to business.

Protectionism can only be tackled if there are powerful bodies policing trade and

investment. The European Commission has considerable powers to intervene in crossborder

competition issues. It is through the Commission’s referral of the French beef ban

to the European Court of Justice and the Court’s ruling that such a ban was unjustified,

that the ban was lifted. British beef is still banned by many non-EU countries, including

the United States, and we have no mechanism for overturning this form of protectionism.

The rule of law in the EU creates a stable platform to do business across 27 states and a

level playing field for all.

The political structures of the EU have created a powerful block in the World Trade

Organisation and elsewhere. Despite difficulties in certain sectors, the EU had been a

powerful force for deregulation and market liberalisation around the globe. The political

and economic influence of the EU is vastly greater than that of any individual European

country.

What some might see as the political process of enlargement has had sizeable economic

benefits. The benefits of the 2004 enlargement on the economies of new Member States

have already been seen. Poland is expected by the OECD to experience a second

successive year of GDP growth of 5% in 2007 in response to joining the EU.

Infrastructure improvements resulting from EU structural funds should provide a further

boost in the longer-term. In fact, growth rates in 2006 in all the new Eastern and Central

European members exceeded 3%, and 10% in Estonia and Lithuania (World Bank data).

This sort of growth spurt is the result of the increased opportunities for growth and

development the EU provides. It is not a new phenomenon; when Spain joined the EEC

in 1986 annual trade growth increased from around 8% to 42% in a year (OECD). It is

easy to see why countries outside the EU regard joining it as so desirable.

British business leaders have seen first-hand the benefits of economic integration.

Vodafone was founded in Britain in 1984; it launched its mobile telephone service the

following year. From 19,000 UK subscribers at the end of 1985, through its expansion

into international markets in 1993, Vodafone has expanded to reach over 10 million

customers in 1999 and an incredible 198 million today. The rapid development of

Vodafone could never have happened without telecommunications liberalisation in the

EU. Where Europe led, the rest of the world followed, creating new opportunities for

European-based companies like Vodafone to turn themselves into global businesses.

The existence of strict national controls on aviation made it virtually impossible for new

entrants to establish scheduled services from major airports but bmi - founded before the

Second World War as a company which provided RAF pilot training – was part of the

successful campaign for deregulation at the European level. Successive waves of reform

removed state controls on routes, prices and carriers resulting in an open skies policy

across the EU. This Single Market in aviation, far from leading to the closure of airlines,

5


the loss of regional routes and lower safety standards as the detractors claimed it would,

has led to an increase in the number of passengers, of airlines and of routes. bmi carried

10.5 million passengers in 2005; up from one million passengers in 1979 and it is now

the second largest scheduled carrier at Heathrow with 11.2% of the slots. Greater

competition has led to lower fares as well as more choice with the percentage of

European flights being low-cost having more than trebled since 2001. 8

The benefits of EU membership to its Members are felt in both political and economic

terms. The abolition first of tariffs and then of other barriers to trade and investment has

enabled considerable economic growth from which Europe’s citizens and businesses have

benefited. But there is more to do. When the EEC was created trade was mostly in goods;

today services are of increasing importance. For both Continental Europe and the UK

new economic challenges present themselves, like the decline of manufacturing, the

growth in services and new competition from emerging economies. EU leaders need to

understand these challenges before they can formulate an agenda to tackle them.

6


The Economic Challenges of Today

“It took just 40 years for the first 50 million people to own a radio. Just 16 years for the first 50 million

people to own a PC. But just 5 years for the first 50 million to be on the Internet”.

Gordon Brown MP 9

Since the Second World War the economies of the world have opened up, creating a

global economy. Tariff barriers have reduced by over 90% since the General Agreement

on Tariffs & Trade in 1947, air transport costs have fallen by about 80% over the same

period and sea transport costs by around 70%. 10 Businesses across the world have seized

the opportunities created by the reduction in the costs of international trade. The volume

of world trade in goods is about 16 times what it was in 1950 although world output has

risen by only five-and-a-half times. 11

It is not only the movement of goods that has been freed up; capital flows have been

liberalised as well. This process accelerated in the 1980s and 1990s; from 1998-2000

foreign direct investment expanded by almost half of global GDP per year according to

the IMF. 12

As the big changes since 1945 confirm, economies do not stay static. And when

economies change, business and society has to change. The developed world is now in

the post-industrial age where change is faster, deeper and more fundamental. Economies

have to adapt swiftly to changes in demand, workers have to be more flexible in terms of

skills and governments have to respond speedily to update the regulatory environment.

The economic and social trends of the last quarter century in Europe are clear: a longterm

decline of manufacturing and with it a decline in unskilled work; the parallel growth

in the service sector; the increasing importance of innovation in maintaining growth; the

ageing of the European population; the rising demand for public services; and the growth

in demand for higher skills and for part-time employment. More recently, we have seen

the development of out-sourcing to off-shore locations as first manufacturing and then the

service sector has sought to cut costs.

Something else is clear too: Europe has not always kept up with its competitors. As the

Treasury affirmed in an important study of the challenges facing the European economy,

“despite the benefits from European economic integration, over the past decade Europe’s

economy has underperformed compared to its main competitors”. The challenge of the

next 25 years for Europe is not just to respond to multiple changes in the global economy

but to improve its relative performance as well.

The decline of manufacturing and the related decline in unskilled employment will

continue, indeed it may accelerate. Over the next quarter century Europe’s share of world

output will fall as China catches up and then overtakes Germany; within a decade China

could have the second largest economy in the world after the USA. Other Asian

economies will also expand their output. 13 7


The global economy will continue to integrate leading to – perhaps surprisingly – greater

fragmentation of production. Manufactured goods will often be assembled in one country

from parts made in several other countries. Trade in intermediate goods of this kind

already accounts for around 30% of world trade. 14

The emerging economies of India and China have become increasingly dominant in

certain areas – China for manufacturing (80% of the toys sold in the USA are made there)

and India for call centres and back-office services (80% of the world’s largest 500

companies outsource at least one function to Indian companies according to a DTI study).

It took Britain 100 years to double its GDP after the industrial revolution, America 50

years but China only 10 years. 15

While increased competition from emerging economies like India and China represents a

long-term challenge to the EU’s relative prosperity, nearer to home we also face

competition from the former Soviet Union and Warsaw Pact states. Growth in the former

Communist states of Eastern and Central Europe outstripped that of the EU15 from the

mid-1990s (HM Treasury). Between 1993 and 2003 the EU’s trade with the new Member

States grew by 275% – and that was before they joined. 16

The growth of the service sector will continue in Europe and elsewhere but in a new

development we will see far more trade in services. At present, only 10% of services are

traded, compared to over half of manufactured goods. 17 The recently agreed Services

Directive is a welcome but incomplete attempt to open up Europe’s restrictive services

sector. Much more radical steps are needed to free up services so that they can compete

cross-border in a fair way. The out-sourcing of services to lower-cost economies

represents a potentially significant challenge to EU nations. The number of call centres in

India rose from 40 in 1999 to 1500 in 2004. This is hardly surprising when wages for call

centre workers are 85-90% less than those of their counterparts in North America or

Europe. 18 India also has the advantage of the English language and its position in the

world’s time zones.

Part of what is driving the outsourcing of services is the improvement in skills in

emerging economies. In the past, China and India could not compete in the provision of a

skilled workforce that is changing. Call centres have moved to India partly because it

now produces more IT graduates than the UK. Innovation and skills are of increasing

importance in the post-industrial economy but Britain (and much of Europe) suffers from

a shortage of graduates in the critical subjects of science, technology, engineering and

mathematics. The Leitch Report on skills in the UK found that only 26% of first degrees

awarded in 2003 were in these subjects, compared to 38% in Korea, 32% in Germany and

29% in France. 19 The same report argued that the demand for science and technology

workers would rise by between 18% and 30% over the decade 2004-2014 compared to

just 4% for all other professions. 20

Innovation tends to account for half of total productivity growth so it is crucial to better

economic performance. Whilst China has spent less than the EU Member States

historically on business research and development, Japan and the United States have

8


spent much more. Europe has a long way to go to catch up with the US and Japan and its

procedures for granting patents are five times more expensive than those in the USA and

twice as slow. 21

The regulatory burden is a significant factor not just in business costs but in company

decisions about where to locate. In the UK the time taken to start a business is half that

of the EU average but still far greater than the United States. The problem in Europe with

starting companies is symptomatic of the lack of an entrepreneurial culture in much of

Western Europe. However, Europe has been making some slow but significant progress

on this front. The average time taken to start a business in the EU has fallen by about half

in the last three years according to the President of the European Commission but 25 days

is still uncompetitive compared to the US’ five days.

That entrepreneurial problem can be seen in several European countries where

participation in the workforce is strikingly low. Europe’s ageing population and the costs

it will impose will be an even bigger burden on those in work if the EU does not meet the

challenge of raising participation in the workforce by those of working age. Employment

rates of below 60% (found in Belgium, Greece, Italy and Poland for example) are too low

to sustain the demands on public expenditure as the population ages. It will be hard to

meet the Lisbon agenda target of 70% being in work by 2010.

Two of the fundamental developments to have taken place in Europe in recent times are

the collapse of Communism across the continent; and the growing awareness of the threat

of climate change. The former the EU has responded well to, taking in most of the former

Communist states and by doing so helping to consolidate the gains for democracy and

human rights. Europe has led the way on tackling climate change, most notably in the

agreement that was reached on cutting emissions at the European Council in March 2007,

but the scale of the challenge is only just beginning to be understood and the implications

for business will be profound. Whilst there is great support in the business community for

addressing the environmental challenge, there is a danger that panic-driven measures will

not be effective in halting and then reversing climate change but will instead undermine

our economic competitiveness and with it our ability to afford necessary environmental

policies.

In facing these challenges to Europe’s economy, there is a danger of the EU falling

behind. While successful, the Single Market has not been as successful as it could be. It

was predicted to raise EU GDP by 4.5% and to create 1.8 million new jobs; performance

in creating jobs was better at 2.5 million but growth was considerably lower than

expected at 1.8% (Commission study 2003). This underperformance has been

compounded by the mixed performance on the Lisbon Agenda. Not only have key

Lisbon targets not been met, those targets are not sufficient for Europe to maintain its

competitive advantage.

9


There is no room in Europe today for complacency thinly disguised by empty rhetoric

about the competitive challenge of the emerging economies. Radical action is needed to

make the EU fit for the economic battles of the twenty-first century.

10


The Agenda for Change

“What we are attempting is not some one-off package to give growth and employment figures a bit of a

boost. No. What we are attempting is the whole scale modernisation of our continent.……... Not just to

help Europe survive the era of globalisation, but to thrive in it, and shape it according to our own values”. 22

European Commission President Barroso

All of the first eight articles of the Treaty of Rome refer to creating a more competitive

and prosperous common market. It was this aim of economic integration that was the

core of what the EEC was established to do. Despite the growth of other areas of activity

– notably in the fields of environmental policy and foreign policy cooperation – making

Europe’s economy stronger is still the central purpose of what is now the European

Union. At times Europe’s politicians seem to have forgotten that.

The first priority of a reform agenda must be to strengthen the Single Market. The

Commission’s current review of Single Market progress is of vital importance; it should

be a UK Government priority to influence this review so that its outcome is a renewed

drive to remove barriers to trade and enterprise in Europe.

The Commission’s 1985 White Paper, the setting of a target date of 31 December 1992

for completion of the internal market and the personal determination of the

Commissioner responsible, Lord Cockfield, all contributed to the success of the first

major attempt to create a true Single Market. The EU badly needs a similar burst of

energy and commitment focused on a practical list of measures that would free up

business in Europe.

In the 1980s the main concern was the hidden barriers that had been enacted by

individual countries to protect their home markets. A fresh bout of Single Market

measures should focus not on creating more regulation but on reducing existing

regulation. We welcome the Commission’s plan for a 25% cut in European regulation but

there must be a commitment to prevent the development of further regulation. In future,

regulation should be appropriate to the level of risk and be regularly reviewed. The riskaverse

culture in Western Europe must be robustly tackled, with the Commission taking

the lead in influencing politicians and pressure groups. The European Commission has

the potential to be part of the deregulatory solution.

More needs to be done in Member States to implement EU legislation more effectively

and with less “gold-plating.” It is dismaying that while Member States have endorsed the

target of 25% cut in EU regulation they rejected such a target for themselves. 23 Although

estimates of the amount of all British legislation originating in the EU are often

exaggerated (the actual figure is around 10% according to the independent House of

Commons Library), the British government could do more to make clear when they bring

forward legislation that concerns business whether it is implementing EU policies and

why it is necessary to do so in that particular way.

The biggest gain to economic competitiveness in Europe would come from the creation

of a true market in services. Whilst the recent Services Directive was welcome, it must be

11


seen as just the first step. Europe needs a bold Commission prepared to oppose unfair

competition and economic nationalism.

The critical importance of innovation to the kind of advanced economies we have in

Europe with our high-value industries and skilled jobs is now better understood in

Member States as a result of the Lisbon process. But the right way to address improving

Europe’s relatively poor performance in turning innovative ideas into products and

services is not necessarily to create a largely symbolic European Institute of Technology.

This could just be seen by existing universities as an unwelcome rival. Far more useful

would be to focus efforts on the EU’s notoriously slow patenting system which is five

times more expensive than the US system and twice as slow. 24 Research and

development funding should be spent on improving the capacity of EU Member States to

carry out basic research and to support improving competitiveness. The opportunities in

the recycling of waste and other forms of environmental technology should be another

priority area.

The mid-cycle review of the EU budget in 2008 is a significant milestone. It is vital that

reform of the CAP accelerates after 2008. More progress has been made in reducing

production subsidies than is often realised but it is nowhere near enough. Apart from

reducing the dependency culture in agriculture and releasing resources for higher priority

areas, reform of the CAP is essential if we are to achieve a world trade deal in the Doha

round. Primarily CAP reform is dependent on political leaders having the courage to face

down small (but vociferous) lobby groups; it will be an important test of political

leadership.

As the history of the EEC/EU shows, enlargement has been a powerful driver of

economic growth as well as political change in Europe. Although the “mega”

enlargement of 2004 is unlikely ever to be replicated, enlargement should continue with

Turkey ultimately joining the EU. The importance of Turkey joining is well understood

in British political circles but vital though it is to cement the already close ties that the

EU has with Turkey and to consolidate the advancement of Turkish democracy,

economic factors should not be overlooked. Turkey will be an important new market for

EU goods and services and its relatively young and growing population could fill crucial

gaps in the European workforce at a time when the rest of the EU will be experiencing an

ageing and shrinking population.

None of these things can be achieved without leadership – not just in Brussels but in the

Member States. As President of the Commission in the 1980s Jacques Delors provided

the leadership that enabled Lord Cockfield to deliver the Single Market; similar vision is

needed today. Since the EEC was founded in 1957 there have been three great steps

forward – the single commission (1965), the Single European Act (1986) and the

successive waves of enlargement (1973-2007). The EU could be on the verge of a similar

move forward, following in the pragmatic tradition of previous reforms, to create a

stronger, more efficient Single Market based on a dynamic entrepreneurial culture. That

goal is achievable; the question is whether EU leaders have the courage and the

inspiration to deliver.

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Berlin Declaration for Business

Business for New Europe was established to make the case for a European Union which

responds to the issues and problems of our times. Our focus is on creating a Europe that

is a good place for people to do business in – not just because we think it is a good thing

for business to be successful but because a strong economy will deliver a stronger

society. Economic failure does not lead to higher wages, more flexible hours of work or

longer holidays. Economic success is the foundation upon which both opportunity and

welfare rests.

Whatever else Europe may need to do, we think it is above all, time for the European

Union to refocus on its original central mission - promoting prosperity and opportunity.

That is why we have drawn up a set of principles for a new Europe, one which is

informed by our analysis of the successes and failures of the EU.

Principles for a New Europe

We believe that a new vision for Europe must be based on certain principles:

1. Openness – a Europe that is open to trade with the rest of the world and which rejects

protectionism. The EU must grow its markets through open and fair competition,

bringing down tariff barriers, removing quotas and scrapping subsidies. There must be no

return to the economic nationalism of the past.

2. Leadership – Europe must use its wealth and influence to advance the well-being of

mankind. On the environment the EU must take the lead in tackling climate change. It

must continue to take the lead in developing the frameworks necessary, such as cap and

trade, to reduce European emissions; and on the world stage influence and inspire both

the developed and developing worlds to follow suit. The EU must be a responsible global

partner, working for peace, security and development across the globe

3. Competition – a Europe which embraces free market economics with vigour. The EU

must be built on a belief in the free market, recognising that free market economics offer

the best way to create wealth and jobs. The structures, policies and enforcement

mechanisms of the EU must all reflect the centrality of this principle to the success or

failure of the EU.

4. Fairness – with free enterprise comes employment and opportunity. The EU must

value all its citizens, fostering a culture of fairness and respect amongst the peoples of

Europe. It is in the interests of fairness that social protection should be affordable for

business and citizens in terms of the tax burden it creates.

5. Accountability – a Europe which is democratic and accountable, not just to

governments but to its peoples is essential. The EU must continue to be open and

transparent in its methods of working. Expenditure must be restricted to what is

13


necessary, be protected against fraud and be fully accounted for. The political structures

of the EU must give a voice to small as well as big countries but not allow important

decisions to be avoided or unnecessarily delayed.

6. Devolution – nothing should be done at the European level that can better be done by

nation states. The EU has succeeded where rights and obligations have reflected the

aspirations of the EU's peoples - like the Single European Act which built on the central

aim of breaking down barriers to free trade.

A New Vision for New Times

The EU needs to use these principles in order to construct a European Union fit for the

twenty-first century. That means delivering on the ambitious Lisbon agenda for economic

reform, modernising and stream-lining decision-making and reorganising European

agriculture to meet today’s needs.

The European Union grew out of the desire for peace and stability in Europe after the

Second World War. Visionary statesmen sought to create an organisation that would

break down the barriers to trade and by doing so also dismantle the cultural barriers

between nations that had contributed to conflict in the past.

Their vision was inspiring, practical and forward-looking. It has brought great rewards to

the people of Europe. From six nations in the West it has spread a wave of freedom and

economic opportunity across Europe to the borders of Turkey and the Ukraine. Twentyseven

nations now share common goals of free trade, the rule of law, respect for human

rights and a better global environment. The EU has achieved far more than any of the

Member States could have achieved alone.

Fifty years on, Europe faces new threats to stability and prosperity. The uncertainties

about global security, the potential catastrophic consequences of climate change and

above all the development of globalisation – vividly demonstrated by the competitive

challenge posed by China and India - provide new tests for Europe to meet. Just as we

needed a visionary agenda in 1957 to break with the failures of the past, so we need

leaders with the foresight to offer fresh solutions to the European and global challenges

of today and tomorrow.

We urge other business leaders to join us in calling on the leaders of the 27 EU Member

States when they meet in Berlin on 24 and 25 March 2007 to adopt the principles for a

New Europe so that the Europe of the next fifty years continues to be successful in

building a prosperous and free Europe.

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Footnotes

1 Both quotations are cited in This Blessed Plot: Britain & Europe from Churchill to Blair, Hugo Young,

Macmillan, 1998, p.91 and p.97.

2 This Blessed Plot, op cit, p.97; the FBI later became the CBI.

3 Cited in Full Steam Ahead, Ian Taylor MBE MP, Britain in Europe, 2001, p.4.

4 Ibid, pp.3-4.

5 Ibid, p.4 and OECD, www.oecd.org/statistics/productivity.

6 The Internal Market - Ten Years without Frontiers, European Commission, 2003, p.4.

7 European Commission, http://ec.europa.eu/internal_market/top_layer/benefits_en.htm.

8 20:20 A review of 20 years of deregulation in European aviation, bmi, June 2006.

9 Gordon Brown MP, speaking to the Government Leaders Forum, Scottish Parliament, 31.01.07.

10 Cited in, Long-term opportunities and challenges for the UK: analysis for the 2007 Comprehensive

Spending Review, HM Treasury, 2006, pp14-15.

11 Figures cited in The Economist, ‘Trade Winds,’ 08.11.97.

12 Foreign Direct Investment Trends & Statistics, IMF, 2003.

13 Long-term global economic challenges and opportunities for Europe, HM Treasury, March 2005,

pp.23-4.

14 Long-term global economic challenges and opportunities for Europe, HM Treasury, March 2005, p.33

15 Cited by Bill Rammell MP, Minister for Higher Education, in the House of Commons, 08.02.07, col.

337WH.

16 Long-term global economic challenges and opportunities for Europe, HM Treasury, March 2005,

pp.14-15.

17 Cited by Bill Rammell MP, op cit, col. 337WH.

18 Figures from The UK Contact Centre Industry: A Study, Department of Trade & Industry, 2004, pp172-

184.

19 OECD Science, Technology & Industry Scoreboard, 2003, p.51.

20 The Supply and Demand for Science, Technology, Engineering and Mathematics Skills in the UK

Economy, Department for Education & Skills, RR775, 2006, p.12.

21 Long-term global economic challenges and opportunities for Europe, op cit, p.59.

22 Commission President José Manuel Barroso, Lisbon, 06.02.07.

23 ‘EU move to cut regulatory burden on business runs into roadblock,’ International Herald Tribune,

19.02.07.

24 Long-term global economic challenges and opportunities for Europe, op cit, p.59.

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