David Gauke is a former Justice Secretary and was an independent candidate in South-West Hertfordshire at the 2019 general election.
For too long, the UK was viewed with pity by many Europeans.
The Leave vote; the Brexit impasse; the premierships of Boris Johnson and Liz Truss. Whether with sympathy or otherwise, European observers asked what had gone wrong in Britain.
At one level, it is something of a relief that these questions are asked less often today. This sadly is not so much that we have become a roaring success (we haven’t), but that concerns about economic performance and political stability are now being asked about the two largest EU economies.
Germany – once the economic powerhouse of Europe – has the worst economic performance of any G7 country compared to its pre-pandemic position. It was once admired for its strong manufacturing industry – particularly by those who think that making things counts for much more than providing services – but now struggles to cope with high energy prices and Chinese competition. It also has more to lose if President Trump imposes tariffs on EU imports.
Chancellor Olaf Scholz faces defeat in the General Election on 23 February. His coalition was never stable but has now collapsed. He will limp on until he is likely replaced by Friedrich Merz, leader of the CDU with the centre-left SPD as junior partners in a new grand coalition. If the Merz government fails to deliver for the German people, the far-right AfD will be a growing force.
France also faces its political and economic challenges. On the economy, it is not so much about growth but about fiscal sustainability. Its debt and deficits are too high and it lacks the political will to do anything much about it. Michel Barnier tried but, as a consequence, became the shortest serving Prime Minister of the Fifth Republic. Populists of the left and right are able to block any attempts at fiscal discipline and hope to force out President Macron. The political centre has been hollowed out and it is not impossible that both candidates in the next Presidential election run-off will be from the extremes. At some point, the patience of the bond markets may wear thin.
Europe’s problems are not limited to Germany and France. Populism is on the rise in much of the continent. Far-right figures sympathetic to Vladimir Putin already hold office in Hungary and Slovakia with Czechia likely to follow next year; the election in Romania has been disrupted by Russian influence in Romania. At a time when more support for Ukraine is needed, Europe is ill-placed to provide it.
With struggling economies, political instability and division on a war on its borders, the EU is not looking as impressive compared to the UK as it was. For some, it reinforces justifications for Brexit. The UK, it is said, is better off out, no longer “shackled to a corpse” but free to make our own way in the world.
As a political argument, it may have some force. We joined the Common Market in the 1970s at a time when the major continental economies had long out-performed the UK. It was an era of extraordinary economic success for the six original signatories of the Treaty of Rome with their living standards rising far faster than ours.
In contrast, much though the 2016 vote to leave the EU is viewed as a cry of pain from those left behind, it was a period in which the UK was performing relatively well compared with much of the EU. We had not been directly entwined in the Euro crisis and one of the biggest drivers for the leave vote was that our economy was creating so many jobs that we were sucking in high levels of immigrant labour from the rest of the EU. At the very least, the perception of much of the public was that the UK performed economically relatively well compared to the EU. That perception gave voters the confidence to support Brexit.
It is therefore no surprise that Leavers point to the EU’s problems and argue that they justify Brexit. It is an argument that will have some impact, but here are five reasons why it should not.
First, we should not kid ourselves that just because we are out of the EU we are immune from difficulties that occur in the EU. I argued earlier that, at one level, it is something of relief that the UK is no longer viewed with pity by others because those others now have their own problems but when it comes to issues of economic and political stability, this is not a zero sum game. If a major European economy faces a crisis, we will still be affected. We should not get too carried away with the schadenfreude.
Some argue that we are heading for another Euro-crisis and that the Eurozone will not be able to hold together. We have heard that before, and the EU has shown sufficient political will to withstand worse crises in the past. Nor should we forget that the EU relationship we rejected did not involve membership of the Euro.
Second, and related, Brexiteers argued that outside the EU, we could commit ourselves more fully to other parts of the world. Where exactly? Trump’s America does not look like a reliable partner. China is an important part of the world economy, but no one argues that this is the answer. The trade deals available with the rest of the world of marginal economic benefit. The reality is that Europe will continue to be our most important market. The fracturing of globalisation since 2016 only strengthens the case for a closer relationship with the EU.
Third, Europe faces real problems but we should not overstate them. Economies like Spain and Poland are growing strongly. The European Parliamentary elections earlier this year saw populist parties doing well but the largest grouping was that of the mainstream centre-right. A new European Commission has been appointed and approved by the European Parliament with little fuss.
Fourth, a legitimate response to many of the issues that Europe faces would be closer integration not further fragmentation. EU competiveness would benefit from more integrated capital markets and making it easier to provide services cross-border. The military isolationism of President Trump should encourage greater cooperation at a European level (not necessarily at the EU level) on defence matters. Tackling illegal immigration is most effectively done on a multilateral basis.
Fifth, a focus on Europe’s difficulties can result in failing to appreciate the value of, say, membership of the EU single market. The point about membership of the single market is that, as a member, we had very good access to a very large market on our doorstep. That is a very good thing. Of course, if the rest of the single market is growing at 3 per cent a year, that is better than it growing at 1 per cent a year because it will be an even bigger market. But even if it was stagnant, it is a very big market that covers a very large proportion of our trade. Putting up barriers to trade with that market is still a mistake.
French Prime Ministers can come and go, and the German economy could continue to stagnate, but the EU relationship will still continue to be vital for us. For those of us who believe that our economic and geopolitical interests require a closer relationship with the EU, our task may be made harder by the political and economic difficulties facing Germany and France, but the fundamental case is stronger than ever.