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Open Europe: new campaigning think tank launches

20 Oct 2005
New report finds bringing down EU trade barriers would make households £1,500 better off

Open Europe is an independent think tank set up by some of the UK’s leading business people to contribute bold new thinking to the debate about the direction of the EU. Open Europe will make the case for radical reform based on economic liberalisation, a looser and more flexible structure, and greater transparency and accountability.

Supporters include Stuart Rose, Chief Executive of Marks & Spencer, Crispin Davis, Chief Executive of Reed Elsevier, Simon Wolfson, Chief Executive of Next, and Michael Spencer, Chief Executive of ICAP. Other supporters include Robin Renwick, former UK Ambassador to Washington and a Labour peer, and Sir John Jennings CBE, former Chairman of Shell.

Open Europe Chairman Rodney Leach said: “The French and Dutch ‘no’ votes stopped the EU Constitution. But Europe’s fundamental problems have not been solved. The drive towards deeper integration and more centralisation is continuing. We think the EU needs a radical change of direction if it is to survive. Open Europe will be providing new ideas and making the case for radical reform.”

Derek Scott, Tony Blair’s former Economic Advisor and Deputy Chairman of Open Europe said: “The EU needs economic reform across the board. A good place to start would be bringing down the EU’s trade barriers, which hit the poorest people in Britain hardest, and hurt developing countries. Getting rid of trade barriers could make a typical family of four up to £1,500 a year better off.”

New report finds ending EU trade barriers would make households £1,500 better off.

Open Europe has commissioned new economic research from leading economists Oxford Economic Forecasting – respected analysts who provide economic analysis to the IMF, the World Bank and HM Treasury. Their report finds that:

  • Bringing down the EU's trade barriers and phasing out the EU’s Common Agricultural Policy (CAP) could boost UK GDP by 1.8 %. That's £1,500 extra income a year of a household of four.
  • EU GDP as a whole would rise by over 2 % - the equivalent of over €200 billion.
  • Liberalising trade could also be a means to help the EU make progress towards its Lisbon goal of catching up with the US. The report finds that the EU could get a competitive advantage by moving to free up its trade by signing bilateral deals with its partners. Correspondingly, we argue that the EU should move more quickly than the WTO process, rather than being its slowest moving member. The report finds that if the EU acts first to cut its trade barriers it could gain more than the US. The EU’s GDP would increase by 2 % compared to a 0.5 % increase in the US.
  • The largest gains from reducing trade barriers would be felt by low earners, who (a) spend more of their income and (b) concentrate their spending on the basic goods like food and clothing which the EU puts the highest tariffs on. The report finds that the poorest tenth in the UK would gain six times more than the richest tenth from removing EU trade barriers.
  • Developing countries face the highest EU trade barriers and would see the largest gains from free trade. Under full free trade EU GDP would rise by about 2 %. But African GDP could increase by just under 6 %, and India’s growth could be boosted by up to 5½ %.
  • Counter-intuitively, the report finds France could actually gain more from phasing out the CAP than Britain, because it currently devotes more resources to agriculture - meaning that it could see greater gains if these funds were put to more productive uses. The UK could gain the equivalent of about 1 % of GDP by phasing out the CAP, but France and Germany could gain 1.2 % and 1.3 % respectively.

      Campaigning for reform

      Open Europe is calling on the Government not to agree to the new EU budget unless there is clear progress towards opening up trade and reforming the CAP. Next week Open Europe will be launching a new ‘Open Up’ campaign, asking MPs and MEPs to back our campaign for free trade. We will be surveying MPs’ stances on the issue and publishing the results at the end of next month.

      Notes for editors

      1. For more information ring Open Europe Director Neil O’Brien on 0207 197 2333 or 07973 142775

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