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17 October 2013

Commissioner Barnier: The UK in the EU Single Market - Opportunities and challenges

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Speaking at the London School of Economics, Barnier said that to opt out of rules on financial services "would be to open a Pandora's box". "You can't reform a club if you have given in your membership card", he remarked.

The Single Market seems to be the one thing most people in the UK agree is a positive feature of the EU. And for good reason - it is its beating heart. But the Single Market does not happen by itself. In the same way as any good system, it needs rules to make it work. Over the last five years we have mainly focused on recovering from the financial and economic crisis. The priority now is to return to sustainable growth.

The Single Market is of massive importance to the UK economy. To the tune of between 31 and 92 billion pounds a year. Some 3.5 million British jobs are linked to the single market. That’s around one in every 10 jobs in this country. And the EU is the UK’s most important trading partner by far. And British companies know how important it is for the UK to keep its place at the European Union table. The CBI recently did a survey of its members and nearly 80 per cent of firms say they want the UK to stay in the EU.

A single market can only work if the rules are applied fairly and consistently, right across the EU. Take the example of the services sector. The UK has long argued that the single market for services has to be deepened. You are one of the key promoters of doing away with protectionism. In this respect, the UK and the European Commission are very much singing from the same hymn sheet. But while we have the same objective, we might not always agree on the means to get there. We take the approach that countries themselves should look at the rules that might be an obstacle to free movement. This process of having experts from one EU country review the rules and procedures in another is proving very effective...

Another challenge that is often put to me from the UK is opt-outs. I’ve often read that the UK would like to use the ‘emergency brake’ procedure more. To prevent you from having to accept regulations you do not support, particularly in financial services. But you have to understand there is no such thing as a single market and a separate financial services market. They cannot be prised apart. 

To opt out of rules on financial services would be to open a Pandora’s box. Every Member State has its own priorities. Its own areas of particular interest. If each of them was to put on the emergency brake, we could end up with a situation where: Germany opts out of legislation on carbon emissions; Italy fails to open its professions up to competition; Poland decides that its loss-making shipyards should continue to get state support indefinitely. I am sure you get the picture.

The UK is not a special case in wanting to protect its golden goose. But neither is it in Europe’s interest for the City of London to lose its place as one of the world’s top financial centres. And it’s not our intention.

Of the hundreds of pages of rules that have been re-written over the last four years, there is only one on which the UK has ultimately been outvoted. And that was on bankers’ bonuses. The fact we usually manage to find a compromise is not only a sign of the UK’s skill in negotiating. But also of the general desire among the other EU member countries - and the Commission, as well as the European Parliament - to meet London’s expectations in an area that is so important to it...

I do understand concerns about the impact [of Banking Union] on non-euro countries, especially the UK with its huge financial sector. We have no intention of marginalising those outside the euro area. Or leaving them behind. Nor do we intend to undermine our Single Market. The UK and other non-euro countries have obtained the safeguards they need, in particular as regards voting arrangements. And the Commission will continue to play its independent role outside the euro governance structures. Watching out for the interests of the EU28 and not just the euro 18.

The UK is entering a decisive period. Taking a stance on its relationship with the rest of the EU. Starting with the campaigns for the European Parliament elections next May. And the UK general election the year after that. Finnish Prime Minister Jyrki Katainen said last January that the EU without Britain would be like “fish without chips”. I thoroughly agree. In terms of your focus on competitiveness. Your role in shaping the single market. Your strong history of free trade and wider global outlook.

The UK brings so much to the European family. As Commission President Barroso said during his State of the Union speech last month, “if you don’t like Europe as it is, improve it”.

You can’t reform a club if you have given in your membership card. You could try to live within the single market but outside the EU. But if you did, you would suffer the Norwegian syndrome. This means having to contribute to the budget and implement all the agreed rules. Without having a real part in designing them. And still be stuck with all the rules on financial services. The single market that the UK supports so strongly could become very different without you at the negotiating table. It is your choice of course, but it is my very strong hope that you will not allow that day to come.

Full speech

© European Commission

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