EU – Economy

This is part of the EU Fact File

Verdict: OUT – EU growth seems to be stalling compared to the UK and other developed countries. The reason is hard to explain – but it could be due to the EURO and over-regulation? However should we in the UK wait and see why and if the EU manage to overcome this? If we left the EU we might be more likely to follow the likes of Switzerland and Australia?

Economy

Normally measured by the Gross Domestic Product (GDP) (1).

In 2015 (just got the latest figures) the UK was the worlds 5th biggest economy (all in billion USD below):

  1. United States: 17,968
  2. China: 11,385
  3. Japan: 4,116
  4. Germany: 3,371
  5. United Kingdom: 2,865
  6. France: 2,423
  7. India: 2,183
  8. Italy: 1,819
  9. Brazil: 1,800
  10. Canada: 1,573

EU and World GDP4:

image

In spite of the EU enlargement the EU GDP has fallen compared to rest of the world.

Looking at GDP in PCT of the World GDP:

image

UK has be relatively stable around 4-5% hence following global growth, whereas the EU total has been falling steadily since 2003 – even before the 2008 crisis – falling behind the UK.

Looking at other G10 countries:

image

Even the US is doing very well even though the 2008 crisis originated here hence they need to grow more to get back to parity.

When looking at the G10 EU countries and other developed countries since year 2000:

image

The UK is gaining more than the rest of top EU countries but the UK also had a larger drop since the crisis in 2006.

Australia and Canada did very well indeed as a commonwealth countries.

Switzerland did very well as a EFTA country.

Japan did terrible but have had many natural disasters the last few years.

People says if the UK was to leave EU then Scotland might leave the UK as well – so impact of this would be (2):

  • Scotland: £153 Billion which is circa $234 Billion
  • Scotland subtracted from the UK figures we get: 2,865 – 234 = 2,631
  • So the UK would still be the 5th largest world economy if Scotland left the UK and still be in the G7

Questions to be asked:

  1. What impact has the slump in oil prices on the Scottish GDP?
    Some hints in article (4) so seems Scotland is stable hence 5th place should be stable in near term.
  2. As the EU is getting weaker from a global point should we not mainly seek to trade with growing countries?
  3. If the EU actually holding us back to grow like the rest of the world?
    The G10 in EU graph looks like the EU is dragging us down…

Good Articles (subscripted)

References (superscripted)

  1. http://knoema.com/nwnfkne/world-gdp-ranking-2015-data-and-charts
  2. http://scottishgovernment.presscentre.com/News/Quarterly-National-Accounts-Scotland-2015-Q1-1bf1.aspx
  3. http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/rel/international-transactions/outward-foreign-affiliates-statistics/how-important-is-the-european-union-to-uk-trade-and-investment-/sty-eu.html
  4. http://www.imf.org/external/datamapper/index.php

Change log:

  1. 20/3/16: Created from main fact file
  2. 20/3/16: Added IMF GDP Excel graph’s

EU – Business

This is part of the EU Fact File

Verdict: OUT – The EU rules are very complicated and favours mainly large companies and penalises SME’s due to complexity. Large businesses are able to move their facilities to Eastern Europe to save on salaries and other costs as proven below. Government procurement seems to be overly complex and results in many of the contracts awarded abroad thanks to UK high level of compliance

This subject is often forgotten as we normally talk about employees rights and right of free movement.

In reality – rights and free movement of persons (person as in a legal entity) also applies to businesses.

This is a bit harder to gauge compared to Employment; although the Commission do have a small business website (1) but this site does just send you around in countless other EU websites where many of these apply to larger corporations as well.

To recap SME how important SME’s are for the UK economy when reading the next chapters:

image

In 2015 the UK SME’s account for 99% of UK business employing 60% of the total UK workforce and brings in 48% of the UK economy.

When talking about peoples and employees rights the EU seems very approachable but when it comes to business it gets very complicated.

So lets looks at advantages for businesses in the EU as such:

What I have been able to pick-up3:

  • Freedom to conduct a business – which leads to:
    • Freedom to exercise an economic or commercial activity
    • Freedom of contract
    • Free competition
  • which again leads to:
    • Freedom of movement (of a businesses)
    • Freedom of establishment (anywhere)
    • Freedom to provide services (anywhere)
    • Freedom to export (goods to other EU countries)

Freedom to Conduct Business

Explained in3:

The essence of the freedom to conduct a business is to enable individual aspirations and expression to flourish, and to promote entrepreneurship and innovation, which in turn is indispensable for sustainable social and economic development

Sounds great but the paper also uncovers the reality:

The freedom to conduct a business in accordance with Community law and national laws and practices is recognised

This means that if you want to do business in Spain for instance you still need to obey the national laws and practices of Spain.

In reality it is vary hard for small business to establish themselves in other countries due to local regulations especially for small business. Large businesses can do it easily as they have access to lawyers and accountants but this would also apply to a non-EU based establishment.

So for business the EU is not one big country but 28 individual countries with very different national laws and practices.

Freedom of Contract

This one is hard to explain but essentially is to have a even playing field for contract law6.

In reality each country still has it’s own laws and it is down to this to justify the contents of the contract.

Essentially in a contract it is not good enough to refer to “EU law” but it needs to refer to a specific law of a country.

Compared to the US where there is only one law this is a very weak area of the EU.

Free Competition

This is another complex area5:

Free competition is a key element of an open market economy. It stimulates economic performance and offers consumers a broader choice of better-quality products and services and at more competitive prices

In reality this has become another layer of laws on top of the national ones7.

One element of competition is public procurement.

Any public procurement above a threshold must to sent out to EU-wide tendering9.

The EU tendering process is regulated8:

The design of the procurement shall not be made with the intention of excluding it from the scope of this Directive or of artificially narrowing competition. Competition shall be considered to be artificially narrowed where the design of the procurement is made with the intention of unduly favouring or disadvantaging certain economic operators

Practically this means that a local authority may need to hire consultant to help them forming a proper EU compliant tendering9.

Additionally reporting is required on awarded contracts for statistical and control purposes12.

The EU procurement rules are created in parallel with a similar one under WTO that include countries like US and Japan. I will not look at what that implicates except surely rules and regulations around government procurement must be getting quite complicated.

Statistical amounts on public procurement are interesting11:

image

The UK provide 24% of all contracts totalling more than France and Germany together!

Several countries are very low so only conclusion is that these countries are not doing as they preach.

Worst case is the UK contracts worth EUR 85 Billion to foreign companies without UK based companies get the same chance elsewhere in the EU.

In a way confirmed by Francis Maude1:

In the same 12 month period while British companies won £432m of EU contracts, French firms won £911m and German firms £3600m.

The UK awards 3% of public procurement by value to foreign suppliers, compared to 1.9% in Germany and 1.5% in France

In a way it makes sense as contracts in English are easier to approach by other EU countries than for instance a Spanish contract (in Spanish!).

The EU is not one country and does not act as one country even with a massive amount of legislation and directives.

Freedom to Provide Services

This is a very complex area4:

This whole field of ‘provision of services’ in the internal market – which has been said to ‘constitute the engine of economic growth and account for 70% of GDP and employment in most Member States’ – has, since the date for implementation of Directive 2006/123/EC on services in the internal market, been the subject of detailed regulation in respect of the activities spelled out in Article 2(2) of that Directive

Freedom of Movement for Employers and Employees in the European Union European Labour Law Journal, Volume 4 (2013), staggering 118 paragraphs, to realise that this instrument reflects a plethora of political compromises, and that no simple framework governing the provision of services throughout the European Union has been achieved through its enactment

So one of the most important areas in the EU is so complex that it is unlikely that small business trying to provide services elsewhere can do this without problems.

Practically in my own business this very true thanks to various tax agreements; vat laws and local regulations. A company cannot provide a service in a country using the same person for more than 183 days a year without getting into complex tax issues, which again is easily solved if you are a large business. Another problem is just to issue a VAT invoice where some countries require specific notes and details on this invoice. Filling out a VAT form in a country varies significantly from country to country and reporting requirements vary also like France requires special reporting for employees from other countries providing services there.

So in theory it is a great idea but practically is is not happening….

The EU will not work until national laws and practices are all the same.

Freedom of Establishment and Movement

Nothing stops a business from closing down in one country and re-establish in another.

What did happen then2:

image

This shows that offshoring to Eastern Europe was bigger than the offshoring to India.

Many businesses have been moving from the UK to former eastern Europe now part of the EU for lower salaries and same access to market 2:

image

Figure 2 shows that the United Kingdom experienced the greatest number of relocated jobs (26 per cent), followed by Germany (10 per cent), and France (10 per cent). Many of these jobs were back room telephone call rooms that went to India. The rest of Europe proved to be a good location for these jobs because of the need to have perfect fluency, without any ‘accents’. In one instance, some telephone call room jobs were relocated to Estonia, but were subsequently moved the following year for because of the need to have fluency. Only 8 per cent of the jobs relocated from eastern Europe, mainly because these countries are close in geographic proximity, have a high level of education and wage levels are much lower than most of their west European counterparts.

In case of a business moving elsewhere the employee can always follow thanks to the freedom of movement for employees – but it will likely be to lower salary…

Freedom to Export (goods)

This allows any company to freely export goods from any EU/EEA country to another EU/EEA country without paperwork.

This applies to most goods but naturally some goods like weapons requires paperwork.

Having said that it is not that simple either14:

  • Separate EU vat returns section on VAT reporting – meaning you have to split your VAT into domestic, non-EU export/import, EU export/import registered party, EU export/import non-registered party
  • Intrastat Supplementary Declaration
  • Sales listing
  • VAT confusion – just try to read and understand the referred page14 on this topic

Questions to be asked:

  1. Is growth in the former Eastern Europe fuelled by companies moving there from wealthy countries?
    This even applies to the EEA zone as well – as I worked in a Norwegian company that was essentially closed and moved to Slovakia!
  2. How can SME’s survive in the EU as the EU laws are so complicated and in addition to this national laws and practices still prevail?
  3. The solution is that the EU becomes one country (like USA) with one sets of laws only – without national laws – but due to cultural differences will that ever be possible?
    Even the USA has got state specific laws – how can the EU overcome this?

Good Articles (subscripted)

References (superscripted)

  1. SME – http://ec.europa.eu/small-business/index_en.htm
  2. Offshoring –http://www.etsg.org/ETSG2009/papers/knell.pdf
  3. Article 16- http://fra.europa.eu/sites/default/files/fra_uploads/fra-2015-freedom-conduct-business_en.pdf
  4. http://www.ellj.eu/pdf_file/ITS/ELLJ_04_01_0033.pdf
  5. Free Competition – http://eur-lex.europa.eu/summary/chapter/competition.html?root_default=SUM_1_CODED%3D08,SUM_2_CODED%3D0804&obsolete=false
  6. Contract Law – http://ec.europa.eu/justice/news/consulting_public/0052/contributions/333_en.pdf
  7. Free Competition – file:///E:/Cloud/Dropbox/Temp/9096813.pdf
  8. Free Competition – http://publicsectorblog.practicallaw.com/what-role-do-competition-law-principles-play-in-public-procurement/
  9. Free competition – https://en.wikipedia.org/wiki/Government_procurement_in_the_European_Union
  10. Free competition – https://www.apm.org.uk/sites/default/files/open/EU%20Procurement%20Guide_May%202012.pdf
  11. Free competition – http://ec.europa.eu/internal_market/publicprocurement/docs/implementation/20140820-staff-working-document_en.pdf
  12. Free competition – https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/436210/ppn-1015-eu-stats-annual-return-2013-and-2014.pdf
  13. Free competition – http://www.out-law.com/articles/2011/november/public-sector-disadvantaging-uk-businesses-in-procurement-of-contracts-cabinet-office-minister-says/
  14. Export – https://www.gov.uk/guidance/trading-in-the-eu
  15. SME – https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/467443/bpe_2015_statistical_release.pdf

Change log:

  1. 20/03/2016: Created page partly moved from main fact file “Employers” subject

EU – Employment

This is part of the EU Fact File

Verdict: OUT – UK Unemployment increased significantly since joining the EU in 1973. Although some can be blamed on various recessions or bad political decisions the picture is consistent and unemployment has never been back down to 1971 levels since joining the EU. Workers rights seems to be based on neighbouring countries like the Nordics (including EEA country Norway) has always been ahead of the rest of EU and Switzerland (EFTA not bound by WTD) is similar to France and Italy nearby. Therefore there is no proof for that the UK would have different workers rights outside the EU and the UK would probably had assimilated itself to workers rights in Holland, Belgium and France if outside EU.

Employee Rights

EU worker has certain minimum rights(4):

  • health and safety at work: general rights and obligations, workplaces, work equipment, specific risks and vulnerable workers
  • equal opportunities for women and men: equal treatment at work, pregnancy, maternity leave, parental leave
  • protection against discrimination based on sex, race, religion, age, disability and sexual orientation
  • labour law: part-time work, fixed-term contracts, working hours, employment of young people, informing and consulting employees

All of the above makes sense as we should not compete between countries on any of the above but provide an equal playing field to everybody.

To gauge the benefits of the EU we ought to compare with the US similar laws. In case the UK had stayed outside the EU we would like have leaned to the US for direction of laws.

Comparison between UK and US8:

  • “At-will” validity: Similar to most countries outside the U.S., at-will employment does not exist in the U.K
  • Non-compete agreements: While non-competition agreements are sometimes included as part of U.K. employment contracts
  • Background checks regulations: U.S. allows most employers to conduct background checks without many hurdles. U.K. allows these checks, but they are only allowed when relevant to the job to be performed
  • Different right-to-work requirements: In the U.S., proving the legal right to work in country is often the responsibility of the employee. Companies can be fined for right-to-work issues, but the price tag is minimal when compared to the penalties for such violations in the U.K
  • Changing employment contract terms: In the US, an employer may change the terms of an at-will employment contract virtually at any time, without consulting the employee. In the UK, employers don’t have anything like that kind of discretion
  • Employment discrimination: There are many similarities between US and UK employment discrimination laws (see comparison below as well)
  • Employer consultation prior to mass layoffs: When proposing to lay off 20 or more employees, a UK employer must consult with the affected employees’ trade union or other representative. The US’s Worker Adjustment and Retraining Notification Act (WARN) covers (generally) employers with 100 or more employees
  • Protections following M&A and other transfers: The US has certain worker-protection laws in place in the event of a merger or acquisition. For example, the WARN act mentioned above requires employers with 100 or more employees to give workers advance notice of certain M&A transactions. UK worker protections related to M&A transactions are comparatively strict and are dictated by the Transfer of Undertakings (Protection of Employment) regulations (TUPE). TUPE applies to all businesses, regardless of size

So main difference here is contract law where you can be an employee “at-will”, where in the UK you would always have a contract even if nothing has been signed.

Anti-discrimination

Lets look at what year where anti-discrimination laws was introduced in the UK and US after joining the EU in 1973:

  UK7 US6
Disability 1995 and 2005 1990
Equal Pay 1970 1963
Race 1976 1964
Sex 1975 1964
Age 2006 1968 and 1975

These are just examples but it seems employment law in the US is not too bad and many laws was introduced before the UK and EU did it.

Working Time

The EU Working Time Directive (WTD) was introduced in 1993, 2000 and 2003. This directive also covers the EEA but not EFTA.

However in reality this is a world wide phenomenon where rankings in less annual hours worked (click to enlarge)9:

image

Blue is EU, orange is Europe non-EU and green is rest of the world.

Being in the EU does not guarantee good working time; just look at Greece.

However Switzerland being outside the EU and not bound by the WTD is doing much better than the EU average.

Norway being in the EEA is bound by the WTD and Japan and Canada is just above the EU average.

Non-Working Time = Breaks and Leave

Many different sources quote1 and 2 we can thank the EU for all the rights we have.

It is hard to prove when we do not have a parallel UK that did not join the EU – so in order to judge this we need to look at other countries outside the EU10:

image

US is a disaster (zero) and Japan/Canada is below average.

Australia and New Zealand is about average even though not bound by the EU rules on this subject.

Norway being in the EEA has to follow the EU rules but seems more to follow what Scandinavia (Denmark, Finland and Sweden) is doing.

Switzerland is following the basic EU rules without having to.

There is no reason to believe if the UK had not been in the EU we would have followed US or Japan but more likely like Norway and Switzerland would have followed what nearby countries does.

Unemployment

Well this was an easy one to looks at.

It is clear since the UK joined the EU in 1973 – unemployment went up to a level not seen since the great depression.

Interesting enough this data is NOT available on ONS and I had to get it off the National Archives as a scanned copy (click to enlarge)2:

Unemployment

The peak in 1985 being bigger than in 1933 is that the UK also had more people in 1985 than in 1933.

But it seems that unemployment after 1975 cannot all be explained by recessions or political issues.

The “official” ONS statistics does not start until 1971 (click to enlarge)1:

image

So joining the EU did not protect us against recession nor bad politics.

It is hard to say if we would have been better off outside the EU but compared to the great depression it could hardly get any worse.

One thing is sure the unemployment rate went up after joined the EU and never came back down to 1971 level again.

The low unemployment in recent time may be due to zero hour contracts and might not reflect reality as per 2016 nearly 800,000 people are on these contracts5.

Additionally5:

In November 2015 there were around 1.7 million contracts that did not guarantee a minimum number of hours where some work had recently been carried out, according to the latest ONS survey of businesses. For May 2015 the equivalent estimate was 2.1 million

Questions to be asked:

  1. The EU does not disallow zero hour contracts – so all the above “workers rights” what is it good for then?
  2. So working time directive WTD does not guarantee low working hours and many countries not bound the rules are doing just as well?

Good Articles (subscripted)

  1. http://www.theguardian.com/money/work-blog/2013/jan/24/europe-legacy-uk-workplaces
  2. http://www.independent.co.uk/news/uk/eu-brexit-uk-referendum-leave-employment-rights-disaster-explained-a6921126.html

References (superscripted)

  1. https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/timeseries/mgsx
  2. http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/rel/lms/labour-market-trends–discontinued-/january-1996/unemployment-since-1881.pdf
  3. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/timeseries/mgrz
  4. http://ec.europa.eu/social/main.jsp?catId=82&langId=en
  5. https://www.ons.gov.uk/news/news/justover800000peopleonzerohourscontractformainjob
  6. https://en.wikipedia.org/wiki/Employment_discrimination_law_in_the_United_States
  7. https://en.wikipedia.org/wiki/United_Kingdom_employment_equality_law
  8. http://www.radiusworldwide.com/blog/2012/2/us-vs-uk-employment-law-whats-difference
    http://www.radiusworldwide.com/blog/2015/7/us-vs-uk-employment-law-whats-difference-part-2
  9. https://stats.oecd.org/Index.aspx?DataSetCode=ANHRS
  10. http://www.oecd.org/els/soc/PF2_3_Additional_leave_entitlements_of_working_parents.pdf

Change log:

  1. 15/03/2016: Created page

EU – Free movement of persons (Former Immigration)

This is part of the EU Fact File

Verdict: OUT – Because in reality it is just too complicated unless you are one big country (like the US). The paper work is complicated and again benefits large multinationals with a HR department that can help their new employees with the paperwork. Also the lack of limitations on net-immigration jeopardises housing and public services and according to the graph below is pretty much out of control. Being outside the EU does not stop us from having 2nd homes in the EU nor living there; we have done that since cheap tourism was introduced in the 1960s as per the Spain example below

This is not about pro/con-immigration but about the impact of being in the EU on immigration.

Free movement of persons is2:

  • working as an employee (this includes looking for work for a reasonable amount of time),
  • working as a self-employed person,
  • studying,
  • being self-sufficient or retired

Free movement applies to the EU, EEA and Switzerland (EFTA).

Immigration

It is incredible hard to find neutral facts in this area due to both pro and con propaganda.

The statistics in this document is mainly based on the Office for National Statistics – ONS.
However this is a low estimate1:

The ONS’s LTIM estimates rely heavily on the IPS, which is an imperfect data source. It is a sample survey, which is voluntary and relies on people outlining their intentions

The population of EU born in the UK stood at just over 3 million in the first quarter of 20151:

image

Contents of the chart is below:

  • EU: Total EU
  • EU14 – purple: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden
  • Accession – red:
    • 2004 – A8 (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia) plus Malta and Cyprus
    • 2007 – A2 (Bulgaria and Romania)
    • 2013 – Croatia

It is clear that since 2004 immigration has exploded.

The total net migration (EU and non-EU) is as per below:

image

Net Migration(3) year-end September 2015:

  • Total of below: 363,000 although ONS states only 323,000 are long-term.
  • EU citizens: 172,000
  • Non-EU citizens: 191,000
  • Where 38,878 are asylum applications
  • No 2015 estimate on illegal immigration (4) – in 2007 LSE estimated it to be 533,000 but this may be incorrect numbers

Foreigners employment(3) in the UK:

  • EU citizens employed: 2.0 million
  • Non-EU citizens employed: 1.2 million

Population comparisons for what is needed per year:

  • York City: 153,717(2011)
  • Derby city: 248,700 (2011)
  • Nottingham city: 310,837 (2013)
  • Leicester city: 330,000 (2011)

Social Security – an Example

So this is not about holiday, where you still need your EHIC and travel insurance5

However to obtain your right it is quite complicated3 just to mention some of forms on social security for workers:

  • A1 – Statement of applicable legislation. Useful to prove that you pay social contributions in another EU country
  • S1 – Certificate of entitlement to healthcare if you don’t live in the country where you are insured
  • S2 – Authorisation to obtain planned health treatment in another EU or EFTA country
  • S3 – Certificate of entitlement to healthcare in your former country of employment
  • U1 – Statement of insurance periods to be taken into account when calculating an unemployment benefit
  • U2 – Authorisation to continue receiving unemployment benefit while looking for a job in another country
  • U3 – Circumstances likely to affect the entitlement to unemployment benefits
  • DA1 – Entitles you to receive medical treatment under special conditions reserved for accidents at work and occupational diseases in another EU country

I have even been asked to fill-out a A1 even though I did not intent to use the local health system as I have a business travel insurance.

Then in addition to this there is local rules like in Spain you cannot do much without a NIE number even when you have a UK NI number.

So the sales pitch is great but when you actually need the help it is not that simple.

In Italy you still pay for emergency services even with a EHIC and a EU passport.

So freedom of movement is not really free…but ask people that actually has done it!

Spain – a pre-EU example

Spain joined the EU in 1986 however immigration started much earlier6:

image

In 1975, there were approximately 200,000 foreigners living in Spain. A slight increase happened in 1986 when Spain joined the EU.

In 1999, there were approximately7 719,647 foreigners living in Spain so not a huge increase from 1975 and 1986.

The large increase around 1999 was due to non-EU immigration mainly from Morocco and South America7.

At the 1981 census there was only 14,752 British people in Spain however the French and Germans seems to have discovered Spain earlier than we did8.

image

So Spain was always open to British expats even before Spain joined the EU.

Questions to be asked:

  1. How can we keep accommodating all these people within the current space at current house building rates?
  2. Even if we managed to build a “new Leicester” every year – how would we manage to find all the teachers, doctors and others for the necessary services to be provided?

Good Articles (subscripted)

  1. Russians in Spain: http://www.expatsblog.com/news/2409135785/russian-buyers-moving-into-spanish-property–
  2. Expats in Spain: http://www.iexpats.com/change-russians-replace-spains-fleeing-expats/

References (superscripted)

  1. http://www.migrationobservatory.ox.ac.uk/sites/files/migobs/EU%20Migration%20to%20and%20from%20the%20UK_0.pdf
  2. https://en.wikipedia.org/wiki/Free_Movement_Directive
  3. http://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/internationalmigration/bulletins/migrationstatisticsquarterlyreport/february2016
  4. http://www.ons.gov.uk/ons/about-ons/business-transparency/freedom-of-information/what-can-i-request/previous-foi-requests/population/illegal-immigrants-in-the-uk/index.html
  5. http://www.nhs.uk/NHSEngland/Healthcareabroad/movingabroad/Pages/Introduction.aspx
  6. Spain – http://focus-migration.hwwi.de/Spain-Update-08-200.5420.0.html?&L=1
  7. Spain – http://extranjeros.empleo.gob.es/es/ObservatorioPermanenteInmigracion/Anuarios/Archivos/Anuario1999_ANEXT99.pdf
  8. Spain – http://www.ine.es/jaxi/Datos.htm?path=/t20/e243/e01/a1981/l0/&file=01013.px&type=pcaxis

Change log:

  1. 12/3: Created page and merged with immigration section

EU – Environment

This section is not complete yet – but getting closer…

This is part of the EU Fact File

Verdict: OUT – Sorry I thought this area should be a “IN” for the EU but wherever I have looked so far the result is negative. For instance if we had stuck to the US EPA car emissions we would have been a cleaner country. Regulations like ETS, subsidies and rules in the EU does not seem to be promoting renewable energy as opposed to countries outside the EU. In reality it seems investment in renewables is governed by GDP growth – we only introduce renewable if the economy can afford it. This is proven by the investment by Germany – the only country in the EU having growth. Also the EU does not enforce a EU wide level playing field proven by several cases of regional taxes – like the UK CPF tax.

Renewables

Renewable energy is a large and complex area but to gauge the impact of being inside or outside the EU we need to look at world figures7.

World CO2 Emissions by Region:

image

Note that EU-28 is not doing better than the US in terms of reducing CO2 emissions. Expanding economies like China and Asia are increasing fast.

Notice the dip around 2008-09 is due to the recession and not really due to improved deployment of renewables.

However looking at investment into some renewables8:

image

image

image

China along being the biggest polluter also seems to be the biggest investor in renewables. EU would look sad is it wasn’t for Germany.

Notice Spain PV additions in 2014 was ZERO due to the Spanish “solar tax” – see below.

It does seem being in the EU does not increase investment in renewables more than any other growing economy.

The biggest investors in renewables seems to be the countries with the biggest growth – especially China.

So to afford expensive investment in renewables we need to grow first as a economy and then trade renewables technology with the biggest investors = China and US.

Germany has been doing well as one of the few countries in the EU having a growth (until 2015).

Nuclear

Due to policies like ETS the UK is planning to replace CO2 generating power plants (coal, gas and oil) with nuclear power.

Strangely enough the EU does not have a nuclear environment policy13:

European nuclear policy is governed by the Euratom Treaty. Therefore, regular EU policy, on for example environment or the market does not apply to issues in the nuclear field. The nuclear policy is mainly in the competence of the member states. In the EU level, DG ENER is the main authority for EU nuclear issues.

This results in some countries like Germany are decommissioning nuclear power plants due to safety concerns, whilst other countries are planning to build new ones. This does not make sense as in case of a disaster; the fallout is rarely local…

Policy

Mitigating climate change is one of the top priorities of EU environmental policy. In 2007, member states agreed that, in future, 20% of the energy used across the EU must be renewable, and carbon dioxide emissions have to be lower in 2020 by at least 20% compared to 1990 levels (3).

In 2009 the Renewables Directive set binding targets for all EU Member States, such that the EU will reach a 20% share of energy from renewable sources by 2020 and a 10% share of renewable energy specifically in the transport sector. By 2014 the EU realized a 16% share of energy from renewable sources with nine member states already achieving its goals.

UK was 5.2% in 2013 as measured in accordance with the methodology set out in the Directive.

Part of the directive includes the ETS as described in detail in a separate paragraph below.

The programme lists nine priority objectives and what the EU needs to do to achieve them by 2020(4):

  1. to protect, conserve and enhance the Union’s natural capital
  2. to turn the Union into a resource-efficient, green, and competitive low-carbon economy
  3. to safeguard the Union’s citizens from environment-related pressures and risks to health and wellbeing
  4. to maximise the benefits of the Union’s environment legislation by improving implementation
  5. to increase knowledge about the environment and widen the evidence base for policy
  6. to secure investment for environment and climate policy and account for the environmental costs of any societal activities
  7. to better integrate environmental concerns into other policy areas and ensure coherence when creating new policy
  8. to make the Union’s cities more sustainable
  9. to help the Union address international environmental and climate challenges more effectively

Emissions

The EU has over several years introduced standards to reduce emissions in cars9.

However the EU seems to have been lenient towards diesel6:

Mistakenly, Europe has allowed diesel vehicles to emit vastly more of the harmful pollutants than petrol vehicles in the same category in its pursuit for somewhat illusory CO2 emission reductions from diesel

Where US is much more strict6:

On balance the USA tend to be ahead of Europe in terms of setting emission limits

Without going into all the numbers it seems US is doing better than the EU in controlling emissions.

Nitrogen oxide emissions:

  • US EPA Tier 2: 0.043 grams per kilometre
  • Euro 6 (2015 models): 0.18 grams per kilometre

So ideally we should stick to US standards rather than the lax EU standards. However UK would not be able to do this as this would be anti-compeditive and favour US made cars.

This ties in with the diesel scandal, which was discovered in the US10 where it was known about in the EU in 2011:

European Commission’s Joint Research Centre published a report which found that all tested diesel vehicles emit 0.93 ± 0.39 g/km and that the tested Euro 5 diesel vehicles emit 0.62 ± 0.19 g/km. This substantially exceeds the respective Euro 3-5 emission limit.[43] In 2013

UK Carbon Floor Price (CPF)

A top-up tax introduced by the LibCon coalition11:

The CPF is a top-up tax: it exists to bolster the existing EU price of carbon. Energy companies already pay to pollute under the EU emissions trading scheme (ETS), buying permits to emit greenhouse gases when they generate electricity.

In reality what happened is the price of ETS is much lower than the CPF essentially making UK coal powered power plants uncompetitive compared to similar plant in rest of Europe – hence resulting in their closure. This “tax” also artificially puts up the power bills in the UK.

This will artificially create a power crisis and we will end-up having to introduce gas fired power plants instead short to mid-term and long term to use nuclear power. Both building these power plants will require massive investment and both types of power generation is not without its problems.

Greenpeace spokesperson Doug Parr says7

“[The CPF is] putting up people’s energy bills for no environmental gain – giving ‘green taxes’ a bad name without achieving anything”.

Similar to the solar tax below EU seems to ignore that energy should be a level playing field and rules should be the same across the EU as some of the power (and plants) may be foreign7:

A higher carbon price in the UK means fewer emissions in this country, which means more ‘carbon permits’ available on the European power market. This basically means that instead of coming from the UK, the emissions would come from the rest of Europe

Spanish Solar Tax

Yes, in Spain they have started to tax solar installations!

This is actually a case of why it does not pay to subsidise energy production above market prices5.

Spain currently has a debt to solar power production of EUR 26 Billion!

The solar energy produced is too expensive and has resulted in overpriced-overcapacity that cannot be resold in the EU or anywhere really.

So in order to recoup the money they have introduced a new tax4.

The tax, however, will make it economically unfeasible for residents to produce their own energy: it will be cheaper to keep buying energy from current providers. And that is exactly the point.

This is completely inefficient and in reality damages the EU as a whole as Spain ought to be the solar power source of the EU.

Also the EU should ensure a level playing field prohibiting individual countries to actually impose additional costs on businesses whether they are domestic or foreign.

UK Pollution Case

20/02/2014: Commission takes action against UK for persistent air pollution problems (5):

The Commission has launched legal proceedings against the UK for its failure to cut excessive levels of nitrogen dioxide, a toxic gas. Nitrogen dioxide is the main pre-cursor for ground-level ozone causing major respiratory problems and leading to premature death. City-dwellers are particularly exposed, as most nitrogen dioxide originates in traffic fumes. European legislation sets limits on air pollution and the NOx limits should have been achieved by 1 January 2010 unless an extension was granted until 1 January 2015

This is in line with policy #8.

Photovoltaic Case

This is a strange case where solar panels were too cheap from China. Instead of subsidise the EU based panels to match the Chinese prices we all end up loosing and having to pay a higher price to save the planet.

From the EU1 and 2:

On 5 December 2013 the European Union imposed anti-dumping and antisubsidy duties on imports of solar cells and solar panels from China. These duties were imposed following investigations that showed that solar cells and solar panels were being imported into the EU at dumped prices and were being subsidised. These imports were causing injury to the European producers of solar cells and solar panels. The duties were therefore imposed to increase the price of these imports to a level where European manufacturers could compete on price.

Emission Trading Scheme (ETS)12

A greenhouse gas emissions trading scheme in the world, and remains the biggest. It was launched in 2005 to fight Global warming and is a major pillar of EU climate policy.

According to the EU Commission this has worked well but that’s what they are supposed to say. However12:

According to UBS Investment Research, the EU ETS cost $287 billion through to 2011 and had an “almost zero impact” on the volume of overall emissions in the European Union and the money could have resulted in more than a 40% reduction in emissions if it had been used in a targeted way, e.g., to upgrade power plants

Questions to be asked:

  1. Is the EU in environment cases becoming a super tanker unable to turn and adapt to technology and market changes without the agreement from 28 countries?
  2. What about indirect pollution and contamination from nuclear power?
    Apparently European nuclear policy is governed by the Euratom Treaty. Therefore, regular EU policy, on for example environment or the market does not apply to issues in the nuclear field. Very odd but maybe explained by France (EDF) is a big supplier in this market?
  3. Environment agreement should be global like the Kyoto agreement. If we in the EU apply regulations and taxes, polluting industries will just move to countries where cost of pollution is less. Does that not tie in with what is happening in our iron and steel industry where it’s closing in the UK but blossoming in China?
  4. The photovoltaic case to a degree proves the reality of the environmental EU policies – first save the business and save the planet later?
  5. Why do the EU interfere in if our cities are sustainable or not (point 8 above)? EU should ideally concentrate on cross-border issues to everybody’s benefit?
  6. The US state of California has very strict car emission rules without being a member of the EU. Why can’t UK do the same?
  7. The emissions scandal “smells” like the EU commission is in the pocket of the European auto industry?

Good Articles (subscripted)

  1. http://www.theguardian.com/environment/2014/feb/20/air-pollution-european-commission-legal-action-uk-nitrogen-dioxide
  2. http://www.huffingtonpost.co.uk/martin-whitlock/ttip-environmental-cost_b_5992732.html
  3. http://www.carbonbrief.org/five-weird-things-about-the-eus-cost-of-energy-study
  4. http://www.renewableenergyworld.com/articles/2015/10/spain-approves-sun-tax-discriminates-against-solar-pv.html
  5. http://www.forbes.com/sites/kellyphillipserb/2013/08/19/out-of-ideas-and-in-debt-spain-sets-sights-on-taxing-the-sun/#112221ab88d9
  6. http://www.hybridcars.com/will-america-avoid-europes-clean-diesel-problems/
  7. http://www.carbonbrief.org/unpopular-but-tenacious-a-guide-to-the-uk-carbon-price-floor

References (superscripted)

  1. http://trade.ec.europa.eu/doclib/docs/2015/july/tradoc_153587.pdf
  2. https://setis.ec.europa.eu/publications/setis-magazine/solar-power/eu-china-reach-amicable-settlement-pv-trade-dispute
  3. https://en.wikipedia.org/wiki/European_Union
  4. http://ec.europa.eu/environment/pubs/pdf/factsheets/7eap/en.pdf
  5. http://europa.eu/rapid/press-release_IP-14-154_en.htm
  6. http://www.eea.europa.eu/data-and-maps/figures/greenhouse-gas-emissions-per-capita-1
  7. https://ec.europa.eu/energy/sites/ener/files/documents/PocketBook_ENERGY_2015%20PDF%20final.pdf
  8. http://www.ren21.net/wp-content/uploads/2015/07/GSR2015_KeyFindings_lowres.pdf
  9. https://www.theaa.com/motoring_advice/fuels-and-environment/euro-emissions-standards.html
  10. https://en.wikipedia.org/wiki/Volkswagen_emissions_scandal
  11. CPF – http://www.carbonbrief.org/unpopular-but-tenacious-a-guide-to-the-uk-carbon-price-floor
  12. ETS – https://en.wikipedia.org/wiki/European_Union_Emission_Trading_Scheme
  13. Nuclear – https://en.wikipedia.org/wiki/Nuclear_power_in_the_European_Union

Change log:

  1. 9/3: Created section 
  2. 10/3: Created separate page
  3. 13/3: Added emissions