‘Business as usual’ will just bring more calls to leave

Antanas Guoga is Lithuanian MEP, entrepreneur and Public CIO to the Mayor of Vilnius

The EU can’t pretend Brexit isn’t happening, charging on with business as usual in the hope this crisis will pass. We have to be proactive. Europe has to reform itself to survive. The Greek crisis already showed the very clear need for change, but the EU seems not to have heeded even such a loud wake-up call. Moreover, the EU has, over the last few years, demonstrated its ineffectiveness in dealing with the refugee crisis, failed to reduce unemployment, and still not created a truly functioning single market. Brexit is the Union’s last chance. Europe’s citizens are angry, and are failing to grasp the EU vision.

I am inclined to agree with the overall vision of President of the Alliance of Liberals and Democrats for Europe (ALDE) Group, Guy Verhofstadt – who has now been appointed to represent the European Parliament in the forthcoming Brexit negotiations. We need to clean up the institutional chaos created after decades of compromises that have resulted in a “Europe à la carte” based on opt-ins, opt-outs and derogations, and introduce two kinds of cooperation – “full membership” and an “associate status”.

A new set-up could be used as a framework for future cooperation between the EU and the UK. There are a number of good proposals for how to solve the refugee crisis and deal effectively with cases of financial irresponsibility, and there are interesting suggestions for how to ensure Europe’s defence and fight against terrorism. The new institutional set-up should make the Union more effective on issues where citizens see the added value of European cooperation.

The main challenge, and the point of departure from “business as usual”, is how to take on board the views of the EU’s critics. The distance between the so-called “elite” and citizens is expressed
through the results of referendums like June’s vote in the UK, and the success of populist parties and individuals. This can’t be eliminated by building walls, creating ghettos for immigrants or other similar ideas. Changing the EU’s institutional set up may be necessary, but the EU needs first of all to reinforce the values and spirit that have been at the heart of the EU for decades and remain the core idea of the Union – the creation of the single market. This project must be put on a super-fast track as one of Europe’s biggest priorities, because it will benefit both businesses and consumers.

A competitive economic strategy is needed to ensure EU member states’ economies grow closer to one another; to converge rather than diverge. This is the only way for the EU to progress and
compete with the US and fast-growing foreign markets. The other ingredient is less government interference in the economy. The EU must stop funding uncompetitive businesses that survive only
thanks to its donations. It should also stop funding numerous unaccountable bureaucracies and unreformed social systems. Change can’t be boosted by subsidies and protectionism – it requires the empowerment of the market and investment in innovation and skills.

It’s time to dust off Mario Monti’s report on the single market re-launch, introduced in the wake of a global economic crisis. Today, its vision is crucial to solving the EU’s unity crisis. The “new
frontiers” described in the report, notably the digital sector, aren’t the future anymore; they are the present. For market reforms to succeed, it’s crucial to show concrete examples of how the single
market works for citizens, consumers and SMEs. Citizens need the real belief that they can control their own lives and can afford a European standard of living – something many people see, but only outside their own households. As long as businesses are forced to spend vast sums on administration costs instead of increasing wages, we can’t expect living standards to pick up. But we have to be realistic about what we can achieve. We need a fully-integrated single market as well as a “convergence code” with minimum and maximum standards on socio-economic policy, such as labour market reforms and pension reforms.

Brexit is a greater challenge for the EU than for the UK. Britain itself will be fine. The country has the capacity to deal with the referendum’s consequences, and Brexit may not have the hugely
negative impact so often predicted. That said, these are early days. Yes, the referendum hurt the value of the pound sterling; yes, it may be a challenge to attract talent to tech jobs in London.
Overall, though, I have faith that Britain will be able to make even better bilateral trade deals with rapidly-emerging markets and other countries such as the United States or Australia. Sadly
– perhaps ironically – the UK was one of the EU single market’s biggest proponents. Watching the British leave scares me that EU reform will mean just another discussion, not the delivery of
real change. The clock is ticking. Citizens of other member states won’t wait long before turning to pro-leave politicians in their own countries.

I try to stay confident that the EU is capable of reform. Before the Brexit vote, I wrote a letter to the leaders of the Leave campaign offering a bet of €1m that the UK would remain, such is my belief in the value of the EU. That’s also why I have since written numerous letters to British tech and car companies inviting them to consider relocating their businesses to Lithuania for restriction-free access to the European single market. The job to remove barriers and eliminate protectionism in the single market becomes crucial if we want more innovative jobs in the EU. This, in turn, will convince citizens to believe in the value of integration.

The EU’s leaders must urgently boost economic growth, tackle terrorism together and reduce youth unemployment. I truly hope that its efforts won’t be yet another series of cosy chit-chats, but instead will bring forward a new reform plan and produce a credible European vision. Otherwise, “business as usual” will inevitably bring similar exit referendums.