In his big speech on Europe, the UK’s prime minister said unnecessary regulation was stifling British competitiveness. But would-be isolationists ignore the reality that separation also raises impediments to growth. Take the much-maligned Schengen border accord, for example.
Rampant bureaucracy comes high on the list of hates for self-respective europhobes. In more measured terms, David Cameron argues for EU reform because of his understandable dislike of red tape. On Jan. 23 the UK prime minister said he wants to get rid of “spurious regulation which damages Europe’s competitiveness”.
The EU – in common with all complex organisations – bears a sizeable administrative overhead. But that’s only half of the story. As barriers to trade were dismantled, economic value has been added by the billion.
More Europe, moreover, can mean less bureaucracy and greater competitiveness.
Take border controls, for instance. Thanks to the Schengen accord, one can travel from Sicily to the North Cape of Norway and from Warsaw to Lisbon without a passport. But the UK stays out of Schengen.
Separation may produce some benefits. Illegal immigration might be a trifle harder, though Schengen countries are yet to be swamped with scrounging hoards. Crime rates in England, in fact, are higher than in Germany. The cost of UK border bureaucracy, meanwhile, is palpable.
About 195 million pounds per year is spent checking passports of the estimated 67.4 million visitors arriving from Europe, according to a Breakingviews calculation. In addition, according to UK government figures, business passengers lose about 50 pounds an hour to wait in line. Holidaymakers lose the equivalent of five pounds an hour. Even if you assume it takes just six minutes to pass the checkpoint, that’s an annual bill of 100 million pounds.
Then there is the cost of lost opportunity. Visitors can go to 26 Schengen countries using one visa that costs 50 pounds. A trip to the UK involves another visa, priced at 78 pounds. Beside Britain, Germany attracts twice as many visitors from Hong Kong and China and three times as many Russians. If the UK caught up with Germany on Russian and Chinese visitors, it would earn tourist revenues of at least 1.2 billion pounds a year according to a Breakingviews analysis.
It may be too much to expect the UK to conduct a rational debate on EU topics. The emotions and prejudice are hard-wired. But though red tape may tie up valuable resources in Brussels, it is a self-inflicted bind for Britain too.
This article was initially published as a Reuters Breakingviews comment on 31 January 2013.