• Text size      
  • Send this article to a friend
  • Print this article

The changes in store in the other union

The 2014 poll that ends up making the most difference to Scotland's economy might not be the Yes/No question on the country's independence on September 18, but the European elections on May 22.

Despite their low profile (and usually low turnout), the elections to the European Parliament and subsequent changing of the guard in the all-powerful European Commission have potentially major consequences for the Scottish economy.

The direction and effectiveness of the drivers of the European single market have vast powers over the economic fortunes of the majority of Scotland's overseas customers. This matters whether Scotland is a brave new state or a reaffirmed part of the UK.

Prime Minister David Cameron has asserted that "almost half of all regulations affecting our businesses come from the EU". But it is largely a matter of how you define "affecting". Eurosceptics rate that influence much higher. Ukip says 75% of all UK laws are Brussels-derived, while the apolitical British Chamber of Commerce put it much lower, at 15%.

In any case, 2014 will see a thorough reshuffle in Brussels, with not just the parliament but also the make-up and presidency of the commission and the council all set to change.

Familiar faces from the crisis years, including commission president Jose Manuel Barroso, council president Herman Van Rompuy, high representative for foreign affairs and commission vice-president Baroness Ashton, are going for good. Others, such as economics commissioner Olli Rehn and internal market and services commissioner Michel Barnier, are stepping down to allow them to be nominated for president by their party groupings.

To succeed, they must defeat other Brussels frontrunners, including former long-serving Belgian prime minister Guy Verhofstadt, the even longer-serving Luxembourg PM Jean-Claude Juncker, and the mainstream socialist's anti-austerity candidate, Martin Schulz, a German former bookseller and president of the European Parliament.

Also being eyed for the top job are Irish Taoiseach Enda Kenny (said to be Cameron's preference), and possibly Lithuanian president Dalia Grybauskaite, a potential first female president for the EC, despite her declared desire to stand again in Lithuania.

The UK's - or possibly the rest of the UK's - candidate to replace Baroness Ashton as commissioner will most likely be former Cabinet minister Andrew "plebgate" Mitchell.

The new UK commissioner's portfolio won't be the one that the City and its Scottish satellite industry (200,000 jobs) might once have hoped for, such as the internal market or economic and monetary affairs, given the UK's commitment to standing outside the eurozone.

This year will demonstrate whether the eurozone can continue the austerity course it has chosen over the alternatives: inflation, default and debt forgiveness, given the unreformed condition of big players like Italy - which was hoping for but did not get debt mutualisation, and whose banking sector faces heavy pressure from the eurozone's new banking union regime.

The three-dimensional chess game of assembling a new European Commission that balances north and south, left and right, large and small country is difficult enough, especially in an expanded EU that, since the crisis and the eurosceptic resurgence, has become more self-conscious about its democratic deficit.

This time, vommission choices will be subject more than ever to scrutiny from the European Parliament, thanks to a vaguely worded requirement in the Lisbon Treaty that the make-up of the executive, ie the commission, must "take account of the European elections".

It is not clear exactly what this means, but the commission would certainly be expected to change its membership to reflect the election results.

Almost all commentators expect the May election to reflect the credibility crisis which has played havoc with popular trust in European institutions. According to the commission's own polling agency, 60% of European citizens "tend not to trust the EU" — up from 32% five years ago.

The elections are expected to pack the 751-member assembly with euro-hating would-be wrecker "pirate" parties of right and left. These range from the French Front National to the Dutch Party for Freedom to Ukip to the Italian Five Star Movement and Greek leftists Syriza, who are all set to make big gains. Even the Germans now have a eurosceptic party, Alternative For Germany, born out of resentment at the national government's continual funding of bailouts to what they see as profligate southern countries.

As these insurgent parties agree on very little, there is not much chance they will coalesce to shake the entire edifice of Brussels power as they would like. But their power to add inertia to an already slow-moving political system may frustrate business people who want Europe to revert to the competitiveness goals of the failed 2000-10 Lisbon Strategy.

The ambition of at least matching the companies of the global leaders, the United States and the Bric countries (Brazil, Russia, India and China) in dynamism, innovation and growth is now enshrined in the EU's new multi-annual financial framework (MFF), Europe's reduced €960 billion (£796 billion) seven-year budget, launched this month and continuing until 2020. Reflecting the new realities, the MFF is an inflation-adjusted 3.5% smaller than its predecessor, although its "competitiveness for growth and jobs" strand is increased by €34bn, or 37%.

These momentous mood changes and potential further changes in Europe have so far impinged less on Scottish politics and press than hypotheticals about the terms of Scotland's entry into the EU, and whether Brussels would demand a commitment in good faith to an independent Scotland eventually joining the euro as the price of the "seamless transition" envisaged in the Scottish Government's White Paper on independence.

Admittedly, there is a lot to discuss. Would an official Scottish commitment to eventually joining the eurozone be the price of smooth transition, and would that be a problem for the credibility of the "sterling zone"?

Michael Shackleton, a former EU official, now professor of European institutions at Maastricht University, said: "Scottish entry would come at a price, and one of the prices Scotland would have to pay would almost certainly be saying that in principle they wanted to join the euro like every country that has joined since 2004."

This could be the year when substance replaces slogans in Scottish discussions of Europe. Despite vague pledges in the White Paper to participate in the Europe 2020 growth agenda (digital technologies, youth employment, renewable energy and so on) and helping to bring the EU "closer to its citizens", Scottish Government ministers have so far had nothing substantial to say about how it would use a seat at Brussels' "top table" to promote Scottish interests.

To what end would it use its bargaining chips of oil and whisky, and where does it stand on the wider north-south debate on austerity and debt reduction? Would Scotland champion the right to independence of Europe's many other ancient, subsumed nations, from Catalonia to Transylvania?

The Scottish Government will have to forego platitudes and engage in the big debates to be considered a serious potential player of the European power game, which is as hardball as it is complicated.

And the process of laying out a feistier Scottish political personality in Europe may have started.

In a speech on Scotland and the EU at Lund University in Sweden last month, Cabinet Secretary for External Affairs, Fiona Hyslop, ventured to slip the odd barb about "ensuring that institutions of the EU do only legislate where there is clear value-added from common measures" into a hymn of praise for European ideals.

The closeness of the European and Scottish independence polls in 2014 may ensure that discussion about European affairs in Scottish public life will go deeper than making distinctions between abstract Scottish Europhilia and "little England" xenophobia, instead engaging Scots more closely in debates on economic policy in Brussels.

Not least because of the withdrawal of Scottish correspondents, these issues receive less coverage in Scottish media than they did 10 or 20 years ago.

In a year where Scots are thinking about the country's relationship within one union, it would be a welcome benefit if it persuaded us to widen the debate and consider our role in the larger union which impinges so much on our lives and our businesses.

Contextual targeting label: 
Local government

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

205121