Business perspectives on European competitiveness

27 January 2006

Ernest-Antoine Seillière began by setting out the 2005 scorecard: it had not been a good year for Europe, with low economic growth, an institutional crisis over the constitution, problems with Turkey over enlargement, the British presidency of the EU – "from which we expected a lot but which delivered very little" – and a "dreadful quarrel" about the future EU budget.

The convergence of problems had raised the question among the business community: what is happening in Europe?

UNICE, an organisation representing 20 million companies, had identified two responses within the business world: acceptance that a period of reduced EU efficiency was acceptable and fear that the Union was on the slide. UNICE’s attitude was the latter – that if answers were not found soon, the EU would be seen as a second-rate power, with negative consequences for the business world.

It was clear that the public did not want "more Europe", said Mr. Seillière, but Europe could not come to a halt: if Euroscepticism spread to the point that nobody believed it was important for the EU to progress further, the main achievements of 50 years of European construction would be called into question.

Worse, fundamental policies would be in doubt, including the euro. "It would not be very difficult for Germany or Austria to say it does not work and so out we go," said the UNICE President.

The whole notion of the single market would also be challenged if the Union could not deliver the Services Directive, given that services accounted for 70% of EU GDP. Similarly, in relation to trade policy and other EU-level activities, building a "common attitude" in the Union would become increasingly difficult. Such problems fostered "nationalistic reactions" and it was now up to UNICE to warn EU leaders that if Europe came to a halt, there would be problems in terms of jobs and growth – and then companies would see possibilities elsewhere.

"This is a very serious period," said Mr. Seillière, a former French diplomat and chairman of his family-owned steel producing company in France.

He acknowledged that his language was undiplomatic, but at least the position was clear: "The problems of Europe are being seen as a hot potato and politicians are waiting until it is cooler – but UNICE says this is not the right attitude."

But he was more upbeat about the European Commission’s latest push on the Lisbon Agenda, welcoming the emphasis on education and innovation, which were merging the key issues that drive the jobs and growth initiative.

He hoped that the Spring Summit of EU leaders would endorse the revised approach, which also stresses the need to boost the social dialogue – something the European business community recognised as integral to the EU’s hopes of prosperity: "There has to be a social dialogue to have a future in Europe," he declared. UNICE was ready to play a bigger role with the social partners in pushing the social dialogue.

The Services Directive, a major piece of legislation which could generate 600,000 jobs, was crucial to Europe’s recovery. Failure to deliver would reflect the EU’s incapacity to take a vital step forward.

Another crucial strand was better regulation, but Mr. Seillière was contemptuous of too much emphasis being put on whether France was allowed to reduce its VAT rates in restaurants or whether workers should be forced to cover up in the sun on EU health and safety grounds. People did not understand this approach, and what was needed was "leadership and common sense" to lead to new steps forward in European construction.