L is for liberalisation

A wide range of products on sale in this supermarket

A fine piece by Dan O’Brien in the Financial Times last Friday about economic liberalisation in the EU. You need a subscription to be able to read it on FT.com, so I’ll give you the gist of it here.

The central argument is that economic liberalisation within the EU goes on, despite the No votes in the referendums on the constitutional treaty. Of course, the point was not that the constitutional treaty embodied, in itself, liberalisation but rather that economic liberalisation is in itself an integral part of the integration of Europe and, if that political integration were to be halted or even reversed, then the same might happen to its economic counterpart.

(An early discussion of the link between federalism and economic liberalisation, by W B Curry, can be read in the archives here.)

A quick fact shows what is going on. There were almost 5,000 cross-border acquisitions of companies last year, a two-thirds increase on 2003. There are a few high profile cases that attract political attention, but behind the scenes companies are getting on with the business of business. The absence of the constraints imposed by national borders makes it easier for them to generate wealth and thus better for those who work for them and for those who invest in them.

The new takeover directive will make it even easier for businesses to grow by acquisition in future.

But if Europe is not obstructing the purchase of companies, is it still protectionist in terms of goods and services? Again, the statistics say no. EU imports continue to grow, and in 15 out of the 25 member states, imports as a proportion of GDP are now a record high. That’s not the behaviour of a protectionist trade bloc. There have been one or two high profile cases like Chinese textiles or shoes, but they are the exception and not the rule.

A third piece of evidence cited is the extension of full access to home labour markets by three new countries, Portugal, Spain and Finland, to workers from the most recent accession states. The trend towards economic liberalisation remains.

Don’t be misled by the newspaper headlines. No, read pieces like this one by Dan O’Brien and you’ll be much better informed.

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