Transcript Charts for Amex presentation

EU regulation and the UK
economy
John Springford
Centre for European Reform
A fair assessment?
• Patrick Minford: cost of EU regulation of 925% of UK GDP.
• Open Europe, using UK government impact
assessments: 1.02 benefit/cost ratio.
• Impact assessments do not attempt to
quantify the benefits of reduced trade costs
arising from common regulation/mutual
recognition.
• These are not insubstantial.
World Bank ESCAP database
Trade costs between Britain and the EU, the rest of the OECD and emerging economies (IMF definition)
120
115
110
105
EU
% 100
Rest of OECD
Emerging economies
95
90
85
80
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
World Bank ESCAP database
Countries' contribution to falling UK trade costs, annual average, 19962010. Weighted by UK trade.
Non-EU OECD
0
Percentage points
-0.1
-0.2
-0.3
-0.4
-0.5
EU
Emerging economies
Rest of the world
The gains from ‘de-Europeanising Britain’
• If regulation is to count as a cost of EU
membership, two conditions must be
satisfied:
– Costs outweigh benefits – including the extent to
which shared regulations boost trade with the EU.
– The UK would have no such requirements if it left
the EU.
The gains from ‘de-Europeanising Britain’
Levels of product market regulation, OECD
More regulated
3.00
2.50
UK
2.00
EU 15
Less regulated
1.50
EU members
after 2004
1.00
OECD average
0.50
0.00
1998
2003
2008
2013
• EU rules do not appear to impose rigid harmonisation on the union as a
whole.
• Over time, the level of regulation in other member-states has converged on
Britain’s liberal approach, rather than the other way round.
The gains from ‘de-Europeanising Britain’
Levels of labour market protection, OECD
4
More
regulated
3.5
3
Less regulated
2.5
2
Temporary contracts
Individual and collective dismissals
1.5
1
0.5
0
Canada
United
States
New
United Australia Germany
Zealand Kingdom
Spain
France
• Continental European countries embrace markedly higher levels of
employment protection than the UK and other Anglophone countries.
• Employment protection legislation is only slightly more restrictive in the UK
than it is in the US or Canada, and less so than in Australia.
The gains from ‘de-Europeanising Britain’
The British working week: Labour Force Survey, 2013
16
14
12
10
% of workers 8
6
4
2
0
Number of hours worked
• The Working Time Directive has a limited impact on hours worked
• The statutory right to four weeks’ paid holiday a year is probably more costly
to GDP – but a brave government would abolish it.
The gains from ‘de-Europeanising Britain’
The quality of regulatory regimes, OECD rankings
4.0
3.5
3.0
Quality of impact
assessment regime
Better
2.5
2.0
1.5
Ex-post evaluation of
regulations
1.0
0.5
0.0
UK
Australia
European OECD average
Commission
France
Japan
• European Commission’s regulatory regime has a poor reputation in the UK.
• But the OECD ranks its rule-making process higher than the OECD average –
and similar to that of UK and Australia, which the OECD ranks highest.
The gains from ‘de-Europeanising Britain’
• Far from certain that Britain would reduce most environmental standards after
an exit:
• The UK has a more ambitious system of carbon pricing than that
countenanced by the EU as a whole.
• To maintain the current level of access to EU markets, Britain would have to
sign up to many of the EU’s rules.
• As a non-participant in the EU’s institutions, it would have little say over the
rules’ drafting.
• Norway applies 93 of Open Europe’s list of the 100 most expensive EU
regulations, including social and environmental standards.
• In short, the idea that leaving the EU would be a supply-side liberation for the
economy is wishful thinking.