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Myth Six: Europe will control our economy

Posted by Richard Saturday, February 12, 2005

Posted yesterday by the FCO on its website, this "myth" rebuttal is perhaps the most dishonest of them all – and that it saying something.

On offer is the "myth": Europe will control our economy”, yet the first issue that the FCO addresses has nothing directly to do with the management of our economy. It simply claims that: "our rebate remains protected", adding, "We keep a veto over the UK's contributions to the EU budget. That means we can block any attempt to end our rebate."

Granted, the rebate issue is important and contentious but in relation to the issue which the FCO itself purports to address, this is hardly relevant. In more prosaic terms, it is as if a big, burly man had just pushed his way into the driving seat of your car, shoving you into the passenger seat, only for him to tell you that you still had control of the radio.

This analogy is perfectly appropriate in the context of the FCO response as, tucked on as the last section of its "rebuttal", it poses the apparently anodyne question: "What does 'economic co-ordination' mean?"

Answering its own question, it states that:

Article I-15 says 'The Member States shall co-ordinate their economic policies within the Union'. This happens in the European Union now. It obviously makes sense for countries within the world’s largest trade bloc to discuss economic policies.
Many times we have explored on this Blog the nature of lies, referring to the three ways by which a lie can be conveyed: act, default and omission. Here, the act is by omission, but the lie is real and palpable.

Yes, co-ordination of economic policy "happens in the European Union now", but macroeconomic issues are largely carried out on a largely voluntary, intergovernmental basis through the European Council – the heads of states and governments – through initiatives such as the Lisbon agenda. This leaves individual member states to decide what, if any, priorities and resources they devote to community initiatives.

The changes in Article I-15, however, are substantial and profoundly important. We warned about these in our Blog at the time amendment were going through and, although the Article number has changed, the provisions remain. The text of the newly numbered Article reads as follows:

1. The Member States shall co-ordinate their economic policies within the Union. To this end, the Council of Ministers shall adopt measures, in particular broad guidelines for those policies.
What that does is move "co-ordination" from the intergovernmental European Council to the Council of Ministers, putting it firmly in the grip of a community institution, placing on it an obligation "to adopt measures", which will be proposed by the commission. This is so far from the FCO's "discuss" as to make their reply a travesty.

Then, crucially, by virtue of the simple reference to "Council of Ministers", without any reference to voting procedures, Article I-23 applies, which states that, "the Council shall act by qualified majority voting except where the Constitution provides otherwise".

Thus, entirely contrary to the implied assertion of the FCO that the EU will not control our economy (noting that, in its rebuttal, it does not actually claim that), the fact is that we have vested control to the Council of Ministers which, acting by qualified majority voting, can over-ride the British government.

As to the "broad guidelines", these are set out in Article I-3, which deals with the "Union's objectives". Article I-3 (3) states:

The Union shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress…
I am not an economist but know enough of the jargon to appreciate that this locks us into a "social market economy", which is the antithesis of Anglo-Saxon "market economics". The Thatcher/Reaganite economic model is effectively prohibited by the constitution, and the Council of Ministers is given the power to enforce that prohibition.

The FCO, in its rebuttal, adds that "co-ordination" does not mean that the UK can be forced to join the euro, nor that we can be forced to change our tax, social security or interest rates. The issue of tax is contentious, not least though the legal adventurism of the ECJ, but the points made are not relevant to the main issue.

Through the constitution, we do give the EU control over our economy.