An Economic Analysis of a Troubled Relationship, Second Edition
Chapter 2: The costs of EU regulation
The power of the EU to regulate product and labour markets comes from the Single Market arrangement of the mid-1980s. This gave powers to the Commission, with the agreement of the EU governing council of member states under Qualified Majority Voting, to issue directives in these matters. The greatest irony about this arrangement is that it was forced through the EU by a coalition of the UK and Germany; Mrs Thatcher’s UK government of the time was particularly enthusiastic about what it saw as a spreading of competition across all EU markets; Jacques Delors, the EU Commission President, used this enthusiasm cleverly to get the measure through against much socialist resistance from other countries. The UK government was naive in thinking the measure would work to spread competition. What we now know is that M. Delors promised the resisting governments a socialist arrangement to ‘compensate’ for the pressures from the Single Market. No sooner was the Single Market adopted than he announced the creation of a Social Chapter of the Treaties that would ensure the Single Market satisfied social objectives. While the UK negotiated an opt-out from the Social Chapter, outraged at what it saw as a betrayal of the Single Market vision, in due course Tony Blair’s Labour government of 1997 gave away this opt-out, apparently in a bid to promote an image of the UK as ‘pro-European’, though also tacitly agreeing with much of the social agenda.
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