Euro Focus – Economics drives ‘loveless’ union

What is the role of the European Commission? How much of all new legislation introduced in the UK is initiated at European Union level?

What exactly does the European Court of Justice do?

If you can answer one of these questions correctly, then you must be a seasoned EU watcher.

Two right answers and you are a full-blown EU expert or enthusiast. If you can claim to answer all three, then you are probably either fibbing or the president of the European Commission – or possibly both!

In any event, the ‘knowledge gap’ which exists in the UK vis-a-vis the European Union is considerable and among top people in business is sometimes appalling.

Most people in the UK are more or less aware of how the British government works: a sort of legislative osmosis sets in from school days. And willingly or not, the database fills up over the years.

Where the European Union is concerned, this base is data-less. For the majority of people in the UK, the EU is a remote, amorphous foreign structure run by the descendants of our traditional enemies.

The words ‘Brussels has decided …’ are greeted with as much enthusiasm as ‘The enemy has landed’.

And how does the continent view Britain – especially England?

Well, for centuries the UK has been perceived by its continental neighbours as an aloof island nation which, largely by accident, developed into a great – and for a time the greatest – military and economic power in the world.

An international standard setter in everything from good manners, sartorial elegance, a unique brand of humour and, in a more contemporary vein, accounting and auditing.

But for the country which invented the phrase ‘team spirit’, the concept is mostly absent when it comes to Europe.

Team captain? Yes. Team-player? No thanks.

Ironically, though, in the last 12 months or so the most troublesome member of the EU has begun to assume something akin to a captain’s role.

The downfall of the Santer administration was triggered by inadequacies in financial management within the EU institutions – a field grudgingly recognised as being, if not a British preserve, then at least a special strength.

Britian’s lead

Look to the Germans for engineering, the Italians for design, the French for ideas – but when it comes to financial services, accounting and auditing the Brits usually have the answer.

After all, it is a British commissioner, Neil Kinnock, who has been handed responsibility for the overhaul of financial control.

Reforms are now underway. They form part of a broader UK encroachment in the management of the European Union institutions.

Language, modern management techniques and contemporary attitudes to personnel and training policies all bear the imprint of UK plc.

Still, there remains considerable distance between the UK’s vision of Europe and that held by the other major players. After all, the Community may have been founded to make peace, but the UK joined to make money!

Overall, the European Union is, in fact, suffering from PTSD: post-traumatic stress disorder. In the first place, the after-shocks of the collapse of the USSR are still filtering through in the EU capital.

The EU’s rivalry with the US has undoubtedly heightened since the economic and political bankruptcy of soviet union, but it clearly has nothing of the sinister overtones of the Cold War.

Most importantly, however, the EU is gradually losing – or at least becoming complacent about – its principal historic raison d’etre: peace.

The EU is peaceful. Difficulties in Northern Ireland or in the Basque region cannot compare to the catastrophic situation in the Balkans. But the shambolic end to the Santer regime effectively signalled that building a Europe free of war ‘at any price’ was no longer acceptable.

The accountants’ age

The age of the accountant has arrived and whatever direction the EU takes, it has to be costed. Meanwhile, a number of mostly British-led European accounting networks are being hauled in to provide expertise.

For all the disagreements, the departure or legal separation of the UK from its loveless marriage with the EU is virtually impossible.

As so often is the case with loveless unions, economics keeps the unhappy partners together.

The growing trade between EU member states and, more importantly, the need to develop economies of scale to compete globally oblige the fifteen to remain political bedfellows.

This does not, of course, preclude member states from enjoying a fling on the side – the far side, that is. Where would the UK be without its ‘special relationship’ with the USA and the Commonwealth?

What would the French do without their linguistic empire in Asia and Africa?

Flings closer to home, however, are more problematic. The revival of German interest in Eastern Europe and, more specifically, the economic penetration of the region by German business is the cause of considerable jealousy.

So what’s next? Well, the enlargement of the Union eastwards will doubtless come – but the shape or form it will take is far from settled.

The whole enlargement debate has yet to take off in the UK.

Although nominally a step forward towards a federal Europe, it will probably turn out to be the first nail in the coffin of the United States of Europe ideal. Expansion is likely to result in the political dilution of the Union.

Can you imagine constructive council meetings with 25 or even 30 egocentric prime ministers?

The most immediate issue though is the euro. Ironically, the UK is the only EU member state where the single currency is a subject of discussion at all.

Until it is in the pockets of continental Europeans it will not be a talking point.

Dual pricing will only be of relevance when party revellers reach for their aspirins and their sobering account statements on new year’s day 2002.

But, in reality, the single currency is – like the enlargement process – a step in the direction of globalisation, and the UK cannot afford to be a passive by-stander for too long.

The UK’s future as the world financial centre needs a pro-active approach.

In 25 or 30 years, we shall probably see three or four trading blocks dominating the globe with a ‘globo’ as the world’s single currency.

Indeed, it is not beyond the realms of probability that each of these trading blocks will have just one professional accountancy body.

In Europe that body could eventually be a sort of ICAEU: an Institute of Chartered Accountants of the European Union.

Is the UK going to wait ‘until the time is right’ for this or will the British accountancy profession, by far the largest and the most politically and economically influential in the EU, take the lead?

This article expresses his personal views and not those of the institute Euro focus

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