Do the EU treaties inhibit a Labour Government? Much of the debate focuses on industrial policy. Could a Labour Government nationalise an industry? (Yes!) Can it subsidise companies? (Not if this inhibits European companies from entering a market.) Could a Labour Government introduce a minimum wage? (Yes!).  A more interesting question is around Macro-economic policy. Here are my notes on the Stability & Growth Pact (SGP).

On industrial policy, the New Statesman, now behind a paywall, says,

An analysis of Labour’s 2017 manifesto found that all its policies would be permissible within EU state aid rules, although two of the proposals, a National Investment Bank and regional energy companies, would need to be structured carefully. We can also go further than the 2017 manifesto if we wish. For instance, we could support the growth of co-operatives through the tax system, take ourselves to the top of the league table on investment in skills, put workers on company boards, buy public stakes in private companies in a sovereign wealth fund, and build houses using public bodies – all within single market rules.

On Macro-economic policy, the Stability & Growth Pact commits its signatories to keeping to an annual public finance deficit of 3%  of GDP and a public debt to GDP ratio of 60%. This may impact a Labour Government as it did governments of all three colours from 2008 to 2017.

Some links

  2. Here’s Left Foot Forward  last year (2017)
  3. And here’s the Commission’s page.

I was curious as to whether the EU Withdrawal Bill would in fact remove the UK from this treaty.

The Stability & Growth Pact is in fact based on EU Council Regulations and so withdrawal from the EU will mean withdrawal from the Stability & Growth Pact. Wikipedia implies it is an independent treaty. The Stability & Growth Pact has preventative and corrective arms. The preventative arm is a monitoring control and the UK complies with this part of the regime. The preventative arm involves instructions from the Commission and eventually sanctions; the UK is not a party to this regulation. The EU cannot instruct the UK government on Macro-economic policy. The UK was in default of the agreement from 2008 to 2017.


I have mirrored the Tarrant & Biondi paper , “EU State Aid Laws and British assumptions: a reality check”, on this site. It is a review of the state of EU Law as it might have applied to Labour’s 2017 election.

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