The Prime Minister and Spanish Prime Minister Mariano Rajoy wrote an article for the Spanish newspaper Expansión on competiveness.
The European Union was formed in the aftermath of bloody conflict. Decades later, it helped entrench democracy across our continent and, as the Berlin Wall came down, it took on a renewed role: to bring together east and west Europe. Today, after the economic shocks of 2008, its over-riding purpose has changed again. We both agree: that purpose is to deliver jobs and growth across Europe, most importantly by unleashing the true potential of the single market. From peacemaker to jobs creator – growth must now be the EU’s number-one focus.
Five years ago, our economies were on the brink. The UK had suffered the deepest recession of all the major nations. Spain had been brought low by a continuous loss in competitiveness, the accumulation of imbalances and a financial bubble that burst. Government borrowing and debt hit our people hard, from Zaragoza to Birmingham. Of course there were significant differences in our economic circumstances – the UK is outside the Eurozone while Spain is a founding member. But our economies shared structural problems, like excessive debt and low competitiveness, that unaddressed would have led to long-term economic ruin.
Now, after tough decisions and sacrifice, things have begun to change. In the UK, a jobs-led recovery has created more than a 1,000 jobs a day. Spain is set to grow by 3.3 percent this year – amongst the fastest in the Eurozone – and is registering record-high job creation – with more than half a million new jobs in the last year.
We draw one clear lesson: countries that clean up their public finances, put welfare on a sustainable footing, deliver ambitious structural reforms, and make work pay, create more jobs and restore hope for a better future. We have done that individually, but we will benefit more if we work together to deliver a European Union that has growth, jobs and innovation as its raison d’être.
The truth is that the status quo in the EU simply isn’t good enough. We need to make the EU much more competitive and translate the momentum of structural reforms at national level into reform in the EU. We want to focus on 4 areas.
First, Europe must exploit the real potential of the internal market in the sectors where we excel. Both our countries have led the way by opening up closed markets, from construction firms to travel agencies but there are still far too many barriers within the EU that stop businesses offering their services elsewhere. We want to see a ‘passport’, particularly in areas like engineering and accountancy, which would mean that once you have been given the green light to do business in one EU country, you can do business in all. In energy, more countries should match our ambition to connect our energy markets to the rest of Europe – lowering costs for businesses and consumers, and meeting our climate change goals. We know opening up markets works; take airfares, which fell by 41 percent in less than a decade, following the ‘open skies’ agreement – bringing opportunities of holidaying abroad to more people across Europe.
Second, the EU must keep pace with changing technology and consumer habits. Both the UK and Spain are at the forefront of the growth in the digital sector but there are still many untapped opportunities. The EU should benefit businesses operating online – by ensuring that there is a swift and simple system for them to register in another country, get access to an internet domain name and pay the taxes they owe. And the EU should make life easier for consumers to shop online across the single market, ensuring, for example, that they can access their iTunes and Netflix accounts when they travel just as they do at home.
Enterprise and start-ups
Third, we need to make the EU work for enterprise and start-ups. Businesses under 5 years old generate almost 50 percent of new jobs in Europe. So we need to nurture them – making it easier to start up, to get finance, to avoid unnecessary costs and regulations.
An EU Capital Markets Union would offer new sources of financing for Europe SMEs worth millions of Euros and helping to address the excessive fragmentation in the European retail banking sector.
Cutting regulation creates jobs. The number of self-employed in Spain has increased by 180,000 in the last 2.5 years and in the UK, the lowest burden of regulation has seen 760,000 new firms created in just 5 years. Of course, for the single market to function we need a common set of rules but frankly, too often in the past, the EU has got involved in areas better dealt with locally or nationally; while the internal market remains uncompleted in areas like finance, energy or services. The European Commission is beginning to address this – new EU proposals are down 80 percent. But we want to go further, giving start-ups a break from some EU rules in their infancy and introducing a target for reducing the overall burden of EU regulation.
Free trade between Europe and the rest of the world
Fourth, we must turbo charge free trade between Europe and the rest of the world. Ambitious trade deals deliver. Under the EU-South Korea deal, €1.6 billion of annual duties for EU exporters were abolished, exports from Spain doubled and the UK economy is set to benefit by at least £500 million every year.
We must reinvigorate negotiations with the big South American trading bloc and look to the dynamic economies of Asia. Now we have a deal with Vietnam, we should focus on concluding a deal with Japan by the end of this year. And our top priority should be the most ambitious bilateral deal in history: an EU-US free trade deal that would benefit business across the continent – from business services in Spain to car makers in the UK. So we say to all our partners in the EU and the US: let’s make a major breakthrough this year.
Today, countries across Europe face many challenges – from defeating the threat from ISIL, to tackling the migration crisis to providing economic security for our people.
Both our countries share a history as exploring nations that look outwards to Europe and the wider world. We both agree that we must work together with other countries to address these challenges. We agree we need to strengthen our own economies. We agree we need real reform in the Eurozone, while upholding the rights of those members of the EU outside the single currency. We agree that the primary purpose of the European Union must be growth and jobs – and in that, every member must play its part. That is how this organisation can continue to benefit people across Europe. And that is one of the ways we will achieve our central duty as leaders: to make life better for the people we represent.