Government and Institutions

Britain must become the Quebec of Europe to derail EU centralisation


Monetary Policy

Brown's regulatory reforms contributed to the financial crisis

Urgent reforms necessary to preserve key freedoms
Further centralisation of the European Union is inevitable and will continue to threaten key freedoms, unless urgent action is taken, argues a new study from the Institute of Economic Affairs.*

In a groundbreaking analysis, the author** finds that the increasing concentration of power in the EU reflects the economic incentives at work in its institutions. The structure of the EU means that politicians and bureaucrats have a vested interest in ever-greater centralisation because this enhances their influence and prestige.

The result has been a huge increase in EU authority over national and local governments, individuals and businesses.

The number of EU directives increased from 22 per annum in the early 1970s to 98 in 2006. And in the same period, the budget of the EU institutions has more than doubled relative to the GDP of all member states. From 1968 to 2006 the number of staff increased by 85% relative to the population – the total number of EU officials now exceeds 40,000.

The Lisbon Treaty, by transferring more competencies to the EU and reducing the ability of national governments to stop legislation, makes existing problems worse. It will strongly reinforce the centralising dynamic, further strengthening the Brussels bureaucracies.

Following a detailed examination of the EU’s deficiencies, the study sets out a series of reforms designed to counteract the concentration of power:

● make popular referenda obligatory for all Treaty amendments;
● remove the Commission’s monopoly on initiating legislation;
● turn the Commission into an ordinary civil service subordinate to the Council;
● add a second chamber of the European Parliament comprising delegates of the national parliaments to block centralising legislation; and
● create a Subsidiarity Court from representatives of national courts to stop the drift of powers to European institutions.

Individual member states must press for such change through the Council of Ministers.

The UK can play a key role. In Canada, Quebec’s threats of secession have been effective at limiting the power of the central state. Similarly, the UK can exercise a credible threat to leave to force through the reforms necessary to make the European institutions more accountable to the public and more respectful of economic freedom.

*The European Institutions as an Interest Group by Roland Vaubel, Hobart Paper 167, £10.00.

**Roland Vaubel is Professor of Economics at the University of Mannheim, Germany.