Criticism of the EUsEconomic PerformanceThe most obvious criticism to make ofthe economic performance of the EU isthat simply put ithasnot been that impressive. From 1957 to 1973, at which time the UK joined the EC, the averageannual growth rates of Germany, France, the Netherlands, and Italy were all in excess of 4.5 percent and the average annual growth rate of the Inner Six (the previous four countries in addition toBelgium and Luxembourg) was 4.9 per cent. In contrast, the UK grew at an average rate of 2.8 per cent over the same time period. However, this high growth in the EC was largely a result ofreversing the destruction of the Second World War rather by virtue of EC membership (this can beseen in the high growth rates of other war-damaged nations who were not in the EC such asSwitzerland, Sweden, and Norway). Between 1980 and 2012 on the other hand, the UK grew at anannual rate of 2 per cent and the Inner Six grew at an average rate of 1.6 per cent. During thisperiod the EUs share ofglobal GDP consistently declined and now stands atapproximately 25 percent.A number of reasons have been suggested forthe EUs relatively anaemic economic record, thefirstof which concerns its trade policy. As previously mentioned, extra-EU trade is governed by the EU,not individual member states, who impose a common external tariff on non-EU imports (in 2012the average rate was 5.5 per cent but with enormous variety). It has been suggested that it is thisexternal tariff, and subsequent reduction in extra-EU trade, that has caused growth opportunities tobe missed by economies in the EU. Ithas acted to restrict itsmembers ability to trade with therestof the world, whose impressive growth, stimulated initially by the GATT agreements andsubsequent trade liberalisation andlater by globalisation, has outpaced that ofthe EUs73.The centralisation and bureaucracy of the EU have also been said to dampen economic growth. Asthe process of political and economic integration in theEU has accelerated, there has been a paralleltrend regarding centralised decision-making that decisions are being made increasingly far fromthe people they affect and that the EUs principle of subsidiarity, the principle that whereverpossible decision shouldbe takenas closeto affectedcitizens aspossible, isbeing paidlip serviceonly. While the creation of a customs union removes trade barriers that can prevent thespecialisation of nation states, which Adam Smith identified asthe source of prosperity, this benefitis only applicable if open trade would not otherwise exist, otherwise the benefits of greater size areless apparent. The optimal size of a nation can be thought of as a trade-off between the harnessingeconomies of scale in the provision of public goods and the increasing difficulty of governing anincreasingly heterogeneous community that is not suited to a one-size-fits-all approach to policy74.Of the 10 wealthiest countries in the world, on a GDP (PPP) per capita basis, the single one with asignificantly large population is the United States of America75, which benefits from a level ofdecentralisation not commonly found across the globe76. A further criticism levelled at some of theregulations and directives imposed on member states by the EU is that they are wasteful orineffectual. One of the most debated EU regulations, on the issue of whether or not it contributes tothe EUs relatively inflexible labour markets, is the Working Time Directive (WTD), which coststhe UK 4.2 billion annually77, despite UK workers having the choice to opt-out of the 48-hourweek.Despite being one of the most lauded achievements of the EU by pro-integrationists, theintroduction of the euro has certainly not been an unqualified success. Critics of the currency unionargue that the structurally divergent economies of the EU are not suited to the demands of a singlemonetary union, especially in the absence of a corresponding fiscal union. Productivity differencesbetweenthecoreandperipheryeconomiesoftheEurozone,exacerbatedbyhigherpricesineconomies such as Spain and Greece caused by the spending boom that access to the lower ECBinterest rates stimulated, were reflected in a competitiveness gap between the two which, in lieu of an exchange rate adjustment, resulted in large andgrowing current account deficit inthe economies of the latter. Additionally, peripheral economies found their access to cheap financing greatly expanded after their ascension to the euro and so governments, banks, and households all took on high levels of debtwith disastrous consequences during the sovereign debt crisis

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