Bulletins

• The Conservatives: beyond "banging on about Europe"?
• EU Commissioner admits EU regulation costs businesses €600 billion a year
• News in brief
• Open Europe events **next event 30 October**
• Open Europe in the news

EU Commissioner admits EU regulation costs businesses €600 billion a year; warns that powerful EU civil servants have blocked attempts to reduce regulation

The EU’s Enterprise Commissioner Gunther Verheugen said in an interview with the FT this week that EU legislation now costs European business €600 billon (£405 billion) a year, on the basis of a new evaluation of the administrative costs of red tape. 

This figure is almost twice the previous estimate of €320bn, and represents 5.5% of total EU GDP.  This is the equivalent of the EU losing the entire output of a medium-sized country like Holland every year.

This is a further indication that the benefits of the Single Market are being outweighed by the costs of the extra regulation intended to create it. The Commission’s own estimate of the benefit of the Single Market is that between 1986 and 2002 it increased EU GDP by €165 billion.  So potentially the costs of the extra EU regulation are now more than thee times the benefits.

Back in 2004 Peter Mandelson told the CBI conference that the cost of regulation amounted to about 4% of Europe’s GDP, or around double the benefit from the Single Market.

Since the instalment of the new Commission team brought in under Jose Barroso in November 2004, there has been a lot of hype about ‘better regulation’ and a more business-friendly atmosphere. 

But in reality, the cost of regulation has continued to increase. In his interview Verhuegen admitted that there was “considerable resistance” from Commission officials to any attempt to deregulate. He said, "There is a view that the more regulations you have, the more rules you have, the more Europe you have.  I don't share that view." He said, “We must combat the perception among citizens that Brussels is a bureaucratic monster, [but] not everyone in the Commission has the same commitment to this objective… We have a problem of democracy, and not only within the Commission, but also in the member states: the administration has more and more powers.” 

In a separate interview Verhuegen told the German daily Sueddeutsche Zeitung that “the whole development in the last ten years has brought the civil servants such power that in the meantime the most important political task of the 25 commissioners is controlling this apparatus.  There is a permanent power struggle between commissioners and high ranking bureaucrats.”

He said things were so bad that “The commissioners have to take extreme care that important questions are decided in their weekly meeting, and not decided by the civil servants among themselves.  Unfortunately it sometimes happens in the communication with member states or parliament that civil servants put their own personal perspective across as the view of the commission".   He concluded that “too much is decided by civil servants".

Verheugen also admitted that even a promise he had made to “simplify” 54 laws this year will not be achieved, saying, “By the end of the year we might have 30”.  But even this may well be optimistic: according to a letter this week in the FT by Dutch Minister of Finance Gerrit Zalm and Danish Minister for Economic and Business Affairs Bendt Bendtsen, “The Commission's plan was to simplify 54 laws this year, but only five have been tackled. That is alarming.”  (9 October)

Head of the EU Commission representation in the UK: euroscepticism is “fuelled by ignorance”.  At a fringe meeting at the Conservative Party Conference the head of the EU Commission’s representation in the UK, Finnish national Reijo Kemppinen, argued that the general rise in ‘euroscepticism’ polled across the EU recently is “fuelled by ignorance, and a lack of knowledge.”  He said, “People don’t know much about the EU and the benefits it can bring,” arguing that the Commission has a job to do in explaining the EU and its policies to people.  When questioned about his remarks by members of the audience, Kemppinen later denied having used the word “ignorance”.  He then went on to concede that he didn’t know as much of the detail of many EU policies as some eurosceptics. (2 October)

EU chemicals regulation will kill tens of millions of animals in testing.  According to the Sunday Times, the EU’s REACH (Registration, Evaluation and Authorisation of Chemicals) regulations will mean that tens of millions of animals will have to face death in laboratory experiments to test the safety of chemical products.  The new laws will set compulsory tests for about 30,000 chemicals that have been on the market since before 1981, when there were no stringent health and safety requirements.  Alistair Currie, campaigns director of the British Union for the Abolition of Vivisection, said: “It is an animal welfare crisis.”  David Cameron has pledged that Conservative MEPs will back the legislation. (Sunday Times, 9 October)

Government admits it is powerless to deport EU criminals. Home Secretary John Reid announced this week that the Government has given up its bid to deport foreign criminals from other EU countries who serve custodial sentences.  He told the House of Commons that “the immigration and nationality directorate has been taking a robust approach to the deportation of European Economic Area nationals, which has been defeated consistently in the courts. We will be changing the law to strengthen the link between criminality and deportation, but in the meantime we are no longer taking unproductive cases to the courts at the taxpayers’ expense, with negative results.”  He also announced that the Government will offer “incentives” of up to £2,500 to encourage non-EU foreign prisoners to return to their home countries.  The Government’s ability to react effectively to the current prison over-crowding crisis has been curtailed by EU legislation passed in May, which states that “Expulsion orders may not be issued by the host member state as a penalty or legal consequence of a custodial penalty” to EU nationals.  Only days after it was passed Tony Blair pledged to “automatically” deport all foreign criminals convicted of a crime worthy of prison.  But as Reid has now acknowledged, attempts to do so have been blocked in the courts because of EU law. As a result, the Government is now resorting to offering non-EU criminals cash to leave the country. 

EU headlight law to increase motorbike accidents?  The UK could be made to go along with a new EU directive which will force all drivers to keep their headlights on during the day. The UK is opposed to the law, which campaigners argue could increase carbon emissions by 3%.  Motorcycling groups have warned that the law will lead to an increase in motorcycle accidents as bikers, who currently keep lights on to increase their visibility, will no longer stand out as much.  Ian Mutch, President of the Motorcycle Action Group, told the Times, “This is EU lunacy at its cynical worst and a red herring that distracts attention from the real causes of accidents between cars and vulnerable targets, such as motorcyclists, cyclists and pedestrians.”  UK Transport Minister Stephen Ladyman told MPs, “I have strongly opposed this but I am increasingly pessimistic. A number of powerful states believe it is a good idea.” (Sun, 11 October, Times, 13 October)

EU will eventually have a single seat on the UN, says UN Deputy Secretary General. The UN's Deputy Secretary General has said he believes the European Commission will in future represent the EU in the United Nations as the voice of the EU worldwide. Mark Malloch Brown noted that the Commission already had a seat on the executive for aid programmes.  He said, “I think it will go in stages. We are going to see a growing spread of that and then steady formalisation of it institution by institution, probably starting in the UNDP or UNICEF first". He said he hoped that "it will happen as quickly as possible", claiming that the European Commission at the UN "tends to be on the good side of issues, so people are kind of quite keen to see it evolve, so it will get there but it is just going to be steady persuasion." He concluded by saying "I'm a huge fan of it." (EUobserver, 3 October)

EU funds passenger tagging scheme.  According to the Guardian, the EU is funding research into a scheme which will make it mandatory for all air passengers to wear electronic tags while inside airports. (Guardian, 13 October)

EU-UK ‘cheese wars’ force small UK dairy out of business.  Following threats by the EU to take the UK to court over hygiene standards in the UK dairy industry, a small UK dairy has been forced into receivership with the loss of 26 jobs after the Commission banned its cheese exports.  The dairy's Director, John Wright, said he would take the Commission to court for destroying his business, arguing that he had complied with Food Standards Agency (FSA) rules and instructions.  He said, “We were just a little company trying to comply with all the regulations being thrown at us.  We've finally been crushed, not due to any fault of our own, but because we've been caught up in a fight between the EU and the Food Standards Agency.  The FSA are happy with us but the EU simply won't accept the scientific argument they've put up. It's left us lying crushed in the middle. It's completely unfair and unjust." (Guardian, Telegraph, 13 October)

EP President dismisses million-strong petition to end travelling parliament; says Sweden “did not suffer enough” in WW2 to understand symbolism.  The President of the European Parliament Josep Borrell has caused anger among Scandinavian MEPs by suggesting that Sweden did not suffer enough during World War II to understand the true meaning of the parliament's Strasbourg seat.  Responding to the million-signature “oneseat.eu” petition, which calls for an end to the monthly trek by MEPs to Strasbourg at a cost of €200 million a year, Mr Borrell said Strasbourg was a symbol of Franco-German reconciliation after World War II, and that "this historic dimension cannot be perceived in the same way in 'some Nordic country' which did not participate in WWII". He was apparently moved to make the remarks by the fact that a Swedish MEP initiated the campaign and many Swedes have signed up to it. (Euobserver, 2 October)

Greece boosts GDP figures by including prostitution revenues. Greece has announced that it will increase its GDP figures by 25% (and escape from the euro’s deficit rules) by including parts of the black economy in the figures.  Manolis Kontopyrakis, the head of the national statistics service explained: "The revised GDP will include some money from illegal activities, such as money from cigarette and drinks smuggling, prostitution and money laundering." The Greek black economy is estimated to be worth up to €60bn.  The Commission has said that the new figures will need to be examined by Eurostat, the EU's statistics agency. (Guardian, 30 September)

Merkel sets 2009 deadline for bringing back EU Constitution. German Chancellor Angela Merkel has said that the EU must have a revived Constitution in place before the 2009 European elections.  She said, "We'll need the treaty before the next European elections…And we'll get down to it ambitiously.  Within our presidency, we'll certainly not be able to resolve the constitutional issue in all its aspects. But we'll aim to bring about fresh awareness among the member countries that we need a European Constitution ...It must be something which deserves the name "constitution" and not merely an institutional set of rules." (Eupolitix, 13 October)

EU fraud roundup

(1) The EU Court of First Instance has rejected German reporter Hans-Martin Tillack's claim that the European Commission punished him for exposing EU fraud by using the Belgian police to snatch his files.  The decision clears the way for the EU-anti fraud office, OLAF, to examine the reporter's contact books - currently in Belgian police hands - in its hunt for an internal leak that helped Mr Tillack break major stories about EU corruption back in 2002.  It also cleared OLAF of allegations of smearing Tillack’s name with bribery allegations between 2002 and 2004.  Tillack criticised the judgment, saying, “It's a licence for OLAF to lie.  It's astonishing that the court allows an EU institution to present rumours as facts. This is damaging to journalists' rights and to the rights of European citizens as well.” (EUobserver, 5 October)

(2) Hans-Peter Martin, an Austrian MEP famous for his campaigns against sleaze in Brussels, has been accused by the EU’s fraud agency OLAF of overclaiming office expenses to the tune of €190,000.  Martin dismissed the accusations as “ridiculous”, claiming that they were politically motivated and designed to punish him for his role in exposing various scams in the European Parliament.  Martin once filmed fellow MEPs signing in at the parliament in order to claim their ‘attendance allowance’ before heading straight back home. (FT, 28 September)

Each morning Open Europe produces a summary of all the top stories from leading newspapers across Europe.  Our team of researchers and linguists search through the press from the UK, Belgium, France, Germany, Italy, Poland, Spain and the Netherlands for the latest news on the European Union.  If you would like to sign up for the service please register on our homepage.

Next event:

Ian Bremmer: "The J Curve", A New Way to Understand Why Nations Rise and Fall

Monday 30 October, 12:30pm - 2pm, St Stephen's Club, 34 Queen Anne's Gate, London

Ian Bremmer is a leading expert on states in transition and global political risk. In a talk to mark the UK launch of his new book, “The J Curve”, Ian will describe how this new analytical tool applies to some of the major foreign policy issues of the moment, with a special focus on the European context.

If you wish to attend, please email Georgiana Bristol

Previous events:

Can the EU be reformed? If so how?

Open Europe held a fringe event at the Conservative Party conference on 3 October titled “Can the EU be reformed? If so, how?”, with David Heathcoat-Amory MP, former Times Brussels correspondent Anthony Browne, Shadow Europe Minister Graham Brady, and chaired by Charles Moore, former editor of the Telegraph. Nearly 200 people attended the event, which was covered on BBC Radio Scotland.

While David-Heathcoat Amory argued that reform of the EU is not possible, Anthony Browne and Graham Brady argued that it is, and sketched out their ideas on how it could be achieved.  Please click here for more details about this and other Open Europe events.

European Institute of Technology a “vanity project”

Times, 12 October

Open Europe was quoted in the Times in a report on the EU Commission’s problems in finding business backing for its plan to create a European Institute of Technology: “Member states do not want what is effectively a vanity project, which the Commission seems to be scaling back already.”

Protectionism in the EU

BBC World, 12 October

Open Europe’s Paul Stephenson appeared on BBC World, discussing EU Commission threats to take France to court over protectionist legislation.

EU red tape bill equivalent to entire Dutch GDP

Express, 11 October

Open Europe was quoted in the Express following revelations by EU Enterprise Commissioner Gunter Verheugen that EU red tape costs European business £400bn a year: “The free market think-tank Open Europe said that the £400bn cost of red tape was the equivalent of the EU losing the input from a medium-sized country like Holland or Sweden every year”.

EU responsible for 75% of the cost of regulation on UK business

Western Mail, 27 September

Western Mail reported on research by Open Europe which showed that 77% of the cost of major regulations passed in the UK since 1998 were wholly or partly driven by EU regulation.