THIS week will see the coalition government publish a mid-term review that will look back at its achievements, and set the agenda for the period running up to the next general election in 2015.
In many ways, the coalition has already exceeded expectations by overcoming political differences to still be a fully functioning government halfway through this Parliament. Few believed with any certainty that this agreement between the Conservatives and Liberal Democrats would hold together for so long.
The coalition’s policy document will be able to point to some notable successes – most recently in the positive negotiations on the European banking union that safeguarded the interests of those outside the Eurozone.
Nevertheless, it would be unwise to become complacent on Europe – not least because it is likely to be the defining issue of the next few years. The Eurozone crisis is likely to come to a resolution of one sort or another over this period, while the process of European integration will continue to evolve and will eventually require a new EU-wide treaty to be passed.
The Prime Minister’s speech on the subject later this month needs to outline a strategic vision for the UK in this context. London is the EU’s financial capital, so it is important to make the case for the Single Market and the benefits it brings to the UK and Europe as a whole.
Our politicians and civil servants have a critical role to play in shaping the European debate by engaging early in the legislative process and building alliances with other countries. The recent successful banking union outcome demonstrates that British diplomacy can influence the direction of travel in Brussels.
This will be increasingly important, as other nations opt for greater integration. Ensuring that all voices across the EU – both those inside and outside the banking union – carry equal weight needs to be a fundamental principle for all European institutions.
The coalition will have to work hard over the coming years to make the case for a level playing field to be maintained at the heart of the Single Market. It is the only way to ensure that new regulation supports a business environment conducive to job and growth creation.
Proposals like capping bonuses relative to salary or Solvency II – a review of the capital adequacy regime for the European insurance industry – will need to be carefully considered and will have to undergo thorough impact assessments to ensure that they do not damage the EU’s international competitiveness.
European policymakers must be reminded that they are not acting in isolation. This is a vital task for the coalition government in the second half of its term.
Mark Boleat is policy chairman of the City of London Corporation.