By David Seymour

The CBI has tended to take a fairly neutral line to Britain’s relationship with Europe, not wanting to upset the small number of its members who are sceptical about the EU. That changed yesterday. And how.

In his presidential address to the Confederation’s conference in London, Sir Roger Carr spoke out boldly about the importance of the European Union to this country.

While British business must court emerging and fast-growing economies elsewhere, he said, “We must not forget old friends. Europe, however challenged, remains home for half our exports.”

The UK’s relationship with the EU, he said, was one of those in which the sentiment was “can’t live with you, can’t live without you. But somehow the partnership survives.”

Sir Roger, one of this country’s leading businessmen and chairman of two FTSE 100 companies, went on to issue a warning to those who are flirting with taking Britain out of the EU: “Whatever the popular appeal may be of withdrawal, businessmen and politicians must keep a bridge firmly in place.

“As countries of Europe bind together in pursuit of salvation, we in the UK must work harder to avoid the risks of isolation.

“Europe is the bedrock of our international trade. It should be viewed as the launch-pad from which our global trade can expand – not the landmass from which we retreat.

“And if we are to avoid an exit vote in any referendum – it is essential that the voice of British business is loud and clear in extolling the virtues of future engagement. Not as a reluctant participant but as the lynchpin of our wider global trade ambitions.”

His message, he concluded, was this: “Politicians must engage, corners must be fought, battles must be won – but the cold business logic of partnership for self interest must be argued and prevail.”

By Chiara Masini

The Italian economy is in recession for the fifth quarter in a row so is the medicine ordered by Brussels/Frankfurt/Berlin and executed by Mario Monti working?

According to the Italian national statistics institute (Istat), GDP shrank by 0.2% in the third quarter and is down 2.4% year-on-year. But the third quarter decline was less dramatic than in the second (-0.7%) and economists forecast that by the end of the year it will be “just” 2%. This situation is largely caused by depressed demand in the internal market, a trend (“internal devaluation”) heightened by increased taxes since Monti took over the reins as technocratic Prime Minister a year ago exactly.

Without hiding the fact that the situation is difficult, the Italian Minister of Economy and Finance, Professor Vittorio Grilli, claimed during a recent visit to London: “I am optimistic about the recovery of our economy; a lot has been done; and the economic medicine is working – of that we are absolutely sure.” He added: “It is not only our opinion. You see that international bodies such as the Organisation for Economic Co-operation and Development also agree that this is the right medicine and that because of our structural reforms the Italian economy can expect a potential 4% annual growth in the next ten years”.

Of course, even if the remedy is working, the government does not expect immediate recovery, but according to the latest forecasts, Italy’s GDP will start growing again in the second half of 2013. “We have to keep pushing and keep progressing in our restructuring of the Italian economy,” he added. He added that he realizes Italy needs “to convince the markets now that we are making good process and we are achieving results.” Yields on 1-year Italian bonds, once above 6%, are now at 4.89% and the IMF thinks Italy may even overtake France in competitiveness.

Grilli met some City investors, including at UBS, Credit Suisse, Axa and Legal & General. Most of them, he insisted, approved the structural reforms undertaken by the Italian government so far, showing interest in the privatisation of some state companies but expressing concern about the country’s political future after the next elections – due in Spring (March?) 2013.

The minister, a former senior eurocrat, reassured the investors saying that the government has taken care that the reforms accomplished, such as those of labour market, cannot be reversed in the coming years. Monti declared yesterday in Doha: “There are no guarantees about what comes after the Italian elections. But I am confident that we will always have a responsible government.”

By David Gow

Ed Miliband’s comments yesterday – in an interview with the Sunday Telegraph ahead of today’s speech at the CBI conference – have widely and cynically been interpreted as his response to the growing support for Ukip. Or, at the very least, as another stage in his campaign to drive David Cameron’s Tories towards the Right and the political cliff of a split, enabling him to occupy the centre ground in perpetuity. The setting this time is Europe.

But the Labour leader is doing more than this after his party’s wholly opportunistic decision to vote with Tory Europhobes over the EU budget, committing Cameron to an unsustainable position at this week’s summit on the 2014-2020 budget (MFF). He is setting out a thoroughly eurorealist policy stance after the supposedly pro-EU position of Tony Blair produced no historic shift in UK attitudes and indeed, arguably, generated the underlying mood swing that resulted in polls like yesterday’s in the Observer. (56% without acceptable renegotiated terms for leaving, 30% for staying, with only 11% firmly in favour of staying inside the EU: in its current form).

Miliband’s comments about reforming the budget, amending the obsessively pro-austerity focus of economic policy, dealing with internal and external migration and allowing countries to pursue national industrial strategies are pretty unexceptional. So is his talk of building alliances and working together with the EU to make Britain’s voice count in the world. It’s hardly the visionary focus of Roy Jenkins, let alone Jacques Delors. But, then, their world no longer exists.

There’s still a lot missing: what kind of EU does Labour now favour? How can it ensure a renewed contract between the British people and their fellow Europeans? Is an in-out referendum inevitable or desirable? But a hard-headed prospectus for working with other countries to secure long-overdue changes is clearly in the making.

By Peter Wilding

With Boris helpfully goading baying backbenchers, the PM travels to his hopeless Brussels rendezvous this week with no option but to do his worst. However, chances of a compromise deal have increased in recent days from about 10 per cent to nearer 30 per cent, says Downing Street, suggesting the most likely outcome is that negotiations will continue next year. Amidst much harrumphing about the British, Sweden has taken a similar position to the UK and other contributor countries could yet thwart a deal. Cameron could still lead a ‘get real’ budget reform movement but with veto rhetoric so strident and cuts proposals so defiant, biddable allies are wary.

Brinkmanship on Europe is now hard-wired into the Tory soul. Flag-waving foreign policy is limited today to the sugar-rush of Brussels bashing. Cameron is snookered. Already beleaguered by his MP’s, themselves beleaguered by their Farage-seduced members, now Ed Miliband arrives at the CBI to plead sweet reason to business on Europe. As the Telegraph says:

“Like all Labour leaders serious about winning an election, he is straining every sinew to drive Cameron off the centre ground, recognising that flaw in the party’s DNA that makes it long to desert this congested terrain and head off into the distance, towards the Conservative comfort zone. The PM [is portrayed] as a man in hock to his party, at the mercy of Europhobe backbenchers and surrounded by prospective successors all vying to be more Eurosceptic than one another.”

From tomorrow, the PM’s modernising urge to ‘decontaminate euroscepticism’ will go the way of elected mayors. Labour, playing a nimble game, will continue to gnaw away all the more at the Tories’ Achilles heel.

Thus, leadership in foreign policy is being squandered by a coalition continually demanding that the Leaderene’s words of ‘no, no, no’ are converted, twenty years later, into deeds. For a Prime Minister who contends he is acting in the national interest the words of Philip Stephens in today’s FT should be heeded:

“Foreign policy is the pursuit of the national interest and, in the case of a middle-ranking power such as Britain, that requires a base in Europe, a strong relationship with the US and a rules-based international system. The question really, is why so many British politicians find this hard to grasp.”

Update: 
The Cabinet’s lone eurorealist speaks up – “David Cameron believes, as he has always told me…Britain’s place is in Europe. It would be a disaster if we had to leave the European Union… An irresponsible debate weakens Britain’s own interests.”

By Paul Meller

By Quentin Peel

By Shreyaa Chezhian

The catfight in Europe over laws to require quotas for women on boards steps up a gear this week. Vivian Reding, the EU Commissioner for justice, fundamental rights and citizenship, is still pushing a one-size-fits-all quota of 40% for boards across Europe in the latest version of her proposed legislation, a parliamentary roundtable has heard. But it is likely to be legally enshrined and enforced only at national level.

Last week’s roundtable was organised by parliament’s ALDE (Liberal) group to tackle the highly controversial issue of using such quotas to boost the numbers of women in top positions on company boards by 2020.

Reding made it clear that certain features of her plans, rejected by her fellow commissioners, including female colleagues, last month, will remain, including the 40% quota within a ‘reasonable’ timeframe – and application to listed companies only.

“Qualifications must also be decisive criteria for candidates and the quotas will be a temporary law until the ‘problem’ has been solved and they aren’t needed anymore”, she explained.

The commissioner added that member states will play a vital role in implementing quotas, particularly because two thirds of EU governments had taken “no action at all”.

This latest EU gender quota law is due to be presented tomorrow (weds) when Reding hopes it will secure the support it needs, first within the 27-strong Commission and then elsewhere.

The new corporate governance rules require listed companies to report annually on their diversity policies with specific reference to the employment of women. One interpretation of all this activity is that many are clearly busy seeking to increase the regulatory burden the UK government says it wants to lighten by following the lead of Commissioner Reding.

The basic issue is clear. A large proportion of female talent in the workplace opts out early, leaving far too few available to become senior management and board members. The reasons for this are traditionally said to be ‘complex’.

Many studies demonstrate that gender-balanced boards perform better on average than male-dominated ones. And, in an increasingly competitive executive jobs market, the UK must make sure it captures the best talent in corporate leadership. However, at the last count, the proportion of women on boards of FTSE 100 companies stood at only 15.6 per cent. There’s no dispute that Britain has a problem.

To date, however, the UK has opted against rigid enforcement of more diversity. In February 2011, the government released a report written by Lord Davies (former chairman of Standard Chartered), which made several sensible recommendations. These included greater transparency of board-level gender diversity policies and a voluntary 25% quota for female directors by 2015. And this softly-softly approach has so far proven successful. In the last year, the proportion of women on FTSE 100 boards increased by a quarter.

The 2011 report attributed the reasons to lack of flexible working, work-life balance and disillusionment at lack of progress. In keeping with most politically correct reports nothing was said about those who preferred raising their children or made an intelligent assessment that the rat race was not for them. This is not to argue that the other factors are negligible, plainly they are not, but simply a plea for some realistic balance.

Conservative MEP Marina Yannakoudakis, who has campaigned vigorously against the quota scheme, hailed the potential rejection of the proposal by the college of Commissioners as “good for business and ultimately good for women too.” She said an arbitrary system of quotas, backed by the threat of swingeing fines against companies which failed to comply, would have been cosmetic and false.

“This interfering piece of window-dressing would have hampered business and done women a disservice, because it would fail to tackle the root causes of the under-representation of women in top jobs.”
Eight member states, including the UK, with the tacit support of Germany, are reported to have written to José Manuel Barroso, EC President, objecting to these plans. Ms Yannakoudakis observed: “It is clear that many member states are simply fed up with interference in employment law coming out of Brussels.

“Of course there are too few women around our boardroom tables. But the best way to tackle that is to support women at all levels of business, so that they may achieve their full potential on merit.
“In the UK the voluntary system is working and, while some member states have introduced their own system of quotas, it should be down to individual organisations and individual countries to make their own arrangements. Nobody should have a set of rigid rules enforced from outside.”

But a number of countries have already imposed quotas, some backed by sanctions and some not. In Norway a law set a quota of 40% and achieved this by threatening to dissolve non-compliant companies. Norway was highlighted at the roundtable discussions.

A problem with quotas, however, is the question who will next demand ‘representation’. If a numbers game is appropriate for women why not for other under-represented groups? How many directors of FTSE 100 companies are black, gay or religiously devoted? If a quota is appropriate for one protected group why is it wrong to have one for all of them?

It may look good for politicians to force up the numbers on boards but it will not help women in the long run if it is seen to undermine the principle of promotion on merit. If regulation is really necessary it should deal with the much more difficult issues that dissuade women from staying at work and their promotion will then be achieved by their talent and ability.

By David Gow

The EU is hardly endearing itself to its 500m citizens with hypocritical brinkmanship and priggish posturing over the budget for 2012 and 2013. And there certainly will be no winners if today’s “conciliation” talks fail to reach a deal by the midnight deadline – and, instead, collapse as they did on Friday night. That would augur badly for the November 22 summit on a 7-year budget to 2020.

David Cameron is taking a hard line on the shortfall in the 2012 budget, the expansionary proposals for 2013 and the overall size and shape of the 2014-2020 projections (MFF): he wants a real-terms freeze, the Commons a real-terms cut on current levels. The UK’s allies going into today’s talks of EU finance ministers (ecofin) remain steadfast: Germany, France, the Netherlands, Slovakia, Finland, Austria and Denmark.

Cameron is stopping by the Hague today to shore up support from Dutch premier Mark Rutte before heading for Rome where Mario Monti is pressing for the release of €670m for earthquake victims in Emilia-Romagna. (This was approved in principle on Friday but with no clue where the money is coming from.)

But fissures in this alliance are likely before the end of the day as Herman Van Rompuy works behind the scenes to try and secure a longer-term deal. He’s expected to propose shaving €67bn or more off the MFF plan by this evening’s likely first draft of the summit communiqué; Cameron wants more than €100bn and is being warned, not least by Angela Merkel, he may end up on his own. There are plenty of grounds, however, for believing that the entire exercise is political smoke and mirrors. The raging debate simply masks two separate issues: the size of the budget in austere times and, more important, the policies/activities the budget should support. These are being deliberately conflated.

There is a growing consensus that EU monies should – as government and opposition argue in the UK – be spent on R&D, infrastructure, lifelong learning, genuinely poor regions and the like and shift from farm subsidies etc. These are, ironically, the very areas under dispute at today’s talks; many involve long-term investments in cross-border projects. A smaller budget, reduced in real terms, would obviously be unable to help fund them but would continue to subsidise farming (including by big landowners).

In the case of the 2012 budget the EC has identified a €8.9bn (or €7.4bn depending on whom you listen to) shortfall to meet commitments…given by national governments. (The UK’s is €124m compared with €1.9bn for Italy and €1.6bn for Poland!). The Commission has seriously mishandled the negotiations but so have governments. The pitiful outcome tonight is likely to be more deadlock and a failed summit next week. So the budget will simply be rolled over into 2013 on a monthly basis.

By Peter Wilding

With the collapse of the budget talks last week*, Sir Jon Cunliffe, Britain’s ambassador to the EU, is spared the task of assembling a last minute pro-Cameron ‘freeze alliance’. Nucleus understands he was not hopeful. But, politicians and media must not believe that alliance building is always a futile exercise for the UK. Not least because the Franco-German axis is fragile and the US needs the UK to play its part.

Daniel Ben-Ami today (see Must Read) insists that the British view that Merkel is powering forward with integration is wrong. France wants Germany’s money before any rules. Germany wants its rules first before doling out the money. As he says:

“Germany does not want to play the banking union card (possibly because its banks are like Swiss cheese) and prefers to play the card of Europe-wide supervision of national budgets by a European Union super-minister. France opposes that, as it has no desire for German hegemony and is demanding that the banking union be in place first. In this new Franco-Prussian war, the kicks the combatants are meting out to each other are falling on [others'] behinds.”

Meanwhile, Madeleine Albright, Secretary of State under President Bill Clinton between 1997 and 2001, urged Europe to avoid disintegration in order to play its part alongside the US in a dangerous world.

She said: “The US and Europe have more in common than any other places in the world and there are so many issues going on in other places, the point is how strong can the EU be…so we can be partners to each other?” Speaking in Glasgow, she urged Scotland to stay in the UK so that Britain can exercise the kind of influence in Europe that would be in America’s interests.

So what should Britain do? Christophe Leclerc of Euractiv says:

“It would be foolish for the UK to give up its EU seat and rebuild a free trade zone outside the Union. This was the mistake of the 1950s, snubbing the nascent EEC and creating the ill-fated EFTA. In a global world, BRICS countries wish to trade better with the EU, not just Britain. The UK should not just be an EU policy-taker, in a European Economic Area, like Norway. Britain should also not become an ‘associated member’ as some politicians suggested: the EU has many association and cooperation agreements: association is too weak a concept. Rather, it might make sense to recognise the reality of variable geometry.”

Yet again, it is a question of diplomatic imagination. We await how David Cameron deploys new thinking when he makes his scene-shifting speech before Christmas.

*it was 2012-13 budget talks that failed not the talks of the 7 year financial framework.