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European Union: Fixit or Brexit?

We have recently witnessed the toe-curling spectacle of the Nobel Peace Prize being given to the European Union for its contribution to world harmony. I was hoping the award ceremony would be held somewhere like Athens or Madrid, preferably at a youth centre, but it is to be held in Stockholm, well north of the EU disenfranchised.

An EU without the UK would be a poorer place
- Martin Webster

Quite on what basis the EU can lay claim to such an honour is a mystery to me. It is true we have had peace in Europe for a few decades, albeit with some notable exceptions, but that would have happened with or without the EU. Believe it or not, there have been a number of periods of non-war in Europe before the EU was even a glint in the eye of the federalist fanatics.

This claim is no different to somebody like Robert Mugabe claiming to have introduced the internet to Zimbabwe – a complete overstatement of the importance and effectiveness of politicians. At least Mugabe did not foist the euro on the rest of the world. If anything, the EU’s mongrel currency has been the primary agent in causing a distinct lack of harmony.

Naturally, the European Council (headed by democratically unelected Herman Van Rompuy – that is why Europe is stuck with him, like it or not) noted that the Nobel committee rightly reminds how ‘‘the Union and its forerunners have for over six decades contributed to the advancement of... democracy.’’ You can accuse the EU of many things, but acting as torchbearer for democracy is surely not one of them. Who are these people trying to kid?

It appears they are not kidding the UK Government any longer. An “anti-EU nonsense” stance has hardened considerably recently. The latest in a long line of EU nonsense is a demand by the Commission for a 6.85 per cent increase in the EU Budget. They do this while they pontificate austerity on the rest of us. The hypocrisy is breathtaking, with one eurocrat lamenting they are not mere “burger flippers”. At least a burger flipper adds to GDP, whereas champagne socialists thwart it and consume what’s left.

No wonder David Cameron said “I have not put in place tough settlements in Britain in order to go to Brussels and sign up to big increases in European spending”. This resonates with Margaret Thatcher who said: “We have not successfully rolled back the frontiers of the state in Britain, only to see them reimposed at a European level”.

This encapsulates why the EU position so often jars with that of the UK (at least when Labour is not in power). In essence, the EU has socialist tendencies (Commission President José Manuel Barroso is, after all, an ex-enthusiastic leader of a Maoist group) based on a belief that the state should be interventionist.

This is complete anathema to the UK middle ground, which believes in small government and private enterprise as the key towards economic recovery.

For the EU, both good times and bad are the ideal time for closer integration.

In the UK, there is no general understanding as to why the EU should be anything more than a common market (which is what the UK electorate was sold when joining the EEC). Indeed, the EU has been effective in promoting free trade. The expensive and bureaucratic ancillaries that come with it are not needed, and not wanted.

Cameron is now being hailed in some circles as a potential latter-day Moses, leading his downtrodden people from Brussels, across the parted Channel, to freedom at the white cliffs of Dover. He has promised an in/out referendum on EU membership. A cynic might argue that the EU treats referendums as ‘populist’, and in that spirit Cameron (as head of an EU state) has the authority to remove the UK from the EU without the unnecessary expense of consulting the electorate – he can subsequently re-introduce democratic principles into a state which is ready to receive them.

However, those who hope for such an outcome are likely to be disappointed. Cameron’s objective may simply be limited to gaining repatriation of powers from Brussels to London and to help steer the EU towards a more effective course aimed at economic recovery.

It ought to be possible, if the EU reins in its unfortunate tendencies towards unnecessary power grab. That would not be such a bad outcome. As a resident of an EU country, I see the UK as providing the perfect counterbalance to EU extremism. We have seen it, for example, in respect of the financial transaction tax – clearly something in Malta’s favour. (To an extent, the UK can do the heavy lifting for us). Arguments against are just as useful as argumentsin favour, when in pursuit of optimal outcomes.

An EU without the UK would be a poorer place. EU politicians have a job on their hands to reverse the growing conviction that the UK outside the EU would be a richer and freer place.

Curmi & Partners Ltd are members of the Malta Stock Exchange and licensed by the MFSA to conduct investment services business. This article is the author’s objective and independent opinion. It is based on public information and should not be viewed as investment advice in any manner. The value of investments may fall as well as rise and past performance is no guarantee of future performance.

Mr Webster is head of equity research at Curmi and Partners Ltd.

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