Brexit's three silver linings for the EU
Europe can turn UK departure to its advantage
by Kalin Anev Janse
Thu 29 Sep 2016
I was saddened by the UK decision to leave the European Union, as I deeply believe in the benefits of unification. But Brexit can be an opportunity for Europe.
Competition for top spot in the world economy is fierce, and Western economies risk losing relevance. In this race, size increasingly matters. Without the UK, the EU will still be the world’s second-largest economic bloc, with GDP of $13.4tn.
Breaking away from this union, and its 444m often highly skilled citizens, represents a risk. By 2050, the European economy is projected to make up only 9% of the world economy. This puts the clout of any individual country – even that of relatively big players like the UK – into perspective.
The Brexit negotiations will be a period of uncertainty for the UK. For example, it is unclear whether Britain will still benefit from EU programmes to stimulate investment after it leaves. The European Investment Fund committed €2.5bn to 144 UK venture funds for the period 2011-15, representing 37% of all venture funding raised in the UK.
Europe can use this uncertainty as an opportunity and turn the situation to its advantage.
First, many companies and banks will want to stay in the EU – to tap into Europe’s talent pool, access the EU market without import duties, and use the EU 'passport' for financial services. Locations such as Frankfurt, Paris, Dublin, Amsterdam and Luxembourg stand to gain, and some London-based companies are scoping out these cities already. If a few companies decide to relocate, an entire ecosystem of lawyers, consultants and other service providers could follow.
Promotion agencies for European cities and chamber of commerce chiefs should promote the benefits of Europe. In particular, they should visit fast-growing markets in Asia, the Middle East and Latin America. Local and national policies should support these efforts to encourage 'leaders of tomorrow' to base their operations in the EU.
Second, Brexit should be the trigger to start thinking about smarter integration. The UK never was enamoured with the euro or many other integration plans, such as the Schengen agreement, banking union, and taxation harmonisation. With its departure, such initiatives can be implemented more quickly and better.
Smarter integration means the EU needs to be strengthened where collaboration offers clear benefits – in areas such as immigration, defence and the single currency. On the other hand, it means that competences must be handed back to local authorities when there are no clear benefits to implementing them at the European level. Such competences often concern tangible issues and can attract much negative media attention. Addressing such cases effectively will give citizens a greater sense of democratic control.
Last but not least, the benefits of the single market must be explained in plain terms, and focus on regulation with direct benefits for the people. Successful implementation of such initiatives should boost popular support for the EU. A good example is the abolition of roaming costs. Other easy 'wins' would be the equal treatment of companies such as Netflix, Airbnb and Uber.
Such highly visible steps would create a deeper common market, directly benefit EU citizens, and allow companies to prosper.
Kalin Anev Janse is Secretary General of the European Stability Mechanism. This article reflects his personal opinion and is based on a longer piece entitled 'How Brexit could boost the European Union'. To read the full article, click here.
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