European Commission President Ursula von der Leyen (Image: Getty)
The EU’s own disastrous attempt to overhaul Europe’s payments system was blamed for creating a stagnant market plagued by regulation and a lack of innovation, a financial expert has claimed. The damning assessment could provide fresh ammunition for Brexit supporters, with economist Bob Lyddon arguing that Brussels created many of the problems it is now trying to solve.
The EU – led by European Commission President Ursula von der Leyen – is increasingly calling for Europe to reduce its reliance on Visa and Mastercard and develop home-grown alternatives to the US payment giants. However, Mr Lyddon argues that the bloc’s own intervention in the payments market helped create their dominance in the first place. Writing for Lyddon Consulting, he said: “The European Union itself, not Visa and Mastercard, has undermined Europe’s ‘payments sovereignty’.”
Get the latest politics news – straight from our team in Westminster and more
Invalid email
You agree you are 18 or over. We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and third parties based on our knowledge of you. You can unsubscribe at any time. More Info.
Mr Lyddon said Brussels had created its “typical EU market” through excessive intervention, resulting in “high regulation, high entry barriers, quasi-monopolies, and stagnation of the service at a level of low added-value”.
The economist examined the EU’s Single Euro Payments Area, or SEPA, which was designed to replace national payment systems with a harmonised system operating across the bloc.
But he argued that the project was undermined by the EU’s determination to impose common rules and systems rather than allowing competing services to develop.
Mr Lyddon said the EU’s strategy had left payment providers with little room to innovate, while the voluntary take-up of SEPA was initially slow.
He said: “The EU was driving the market with its regulatory vision, whilst the voluntary take-up of the SEPA schemes by customers was slow.”
Get top stories from The Express sent straight to your phone Join us on WhatsApp
Our community members are treated to special offers, promotions, and adverts from us and our partners. You can check out at any time. Read our Privacy Policy
A crucial mistake was the decision that SEPA payments should initially take two days to complete.
That left the system at a major disadvantage against Visa and Mastercard, where transactions could be completed instantly for the payer and payee.
Mr Lyddon described the decision as “a fatal error in competing with Visa and Mastercard”.
He also argued that the regulatory framework created barriers to the development of new products and services.
He said: “The result was that the possibilities to develop new ‘Competitive’ services… were limited almost down to nil.
“Indeed, none have emerged. The ‘Core’ service remains the only version.”
The result, according to Mr Lyddon, was a market in which providers could compete largely on price rather than functionality or innovation.
He said: “Innovation does not take place. No new competitor products emerge.”
The assessment comes as European officials push for “payments sovereignty” and seek to reduce dependence on the US networks.
But Mr Lyddon dismissed the focus on Visa and Mastercard as a distraction from the underlying problem created by Brussels.
He wrote: “EU authorities calling for a competitor to Visa and Mastercard and referring to geo-political reasons is a distraction technique.”
The analysis provides a striking example of the argument behind Brexit – that EU-wide regulation can constrain competition and innovation while making it harder for individual economies to pursue different approaches.
Mr Lyddon said the problems in the payments market reflected wider failings in the bloc.
“The EU payments market has become an archetype of the Single Market and the Eurozone,” he wrote.
He added: “The EU’s response is true-to-type: more ‘initiatives’ and, no doubt, further regulations and directives.”
Brexit vindicated as EU’s disastrous economic blunder is laid bare
Britain’s decision to leave the European Union has once again been thrust into the economic spotlight after fresh figures showed that the bloc continues to face weak growth, stubborn inflation and serious competitiveness challenges.
The latest figures provide ammunition for Brexit supporters who argue that Britain should not be judged against the EU alone when assessing its economic performance.
But the data also show why claims that Brexit has been unequivocally “vindicated” remain contested.
The European Commission’s spring 2026 forecast projected EU GDP growth of 1.1 per cent in 2026, down from 1.5 per cent in 2025, while euro-area growth was forecast at just 0.9 per cent. EU inflation was expected to reach 3.1 per cent in 2026 following the energy shock caused by the conflict in the Middle East.
The OECD’s latest September outlook, meanwhile, puts euro-area growth at 1 per cent in both 2026 and 2027, compared with 1.1 per cent and 1 per cent respectively for the United Kingdom.
That comparison is politically significant.
It means the UK is not currently forecast to grow dramatically faster than the euro area.
But it also means the long-standing assumption that leaving the EU would automatically leave Britain substantially weaker than its European neighbours cannot simply be demonstrated by pointing to current annual growth figures.
The EU is facing its own economic problems
The European Commission has acknowledged a number of structural weaknesses inside the European economy.
Its spring forecast said weak competitiveness remained a concern and that public finances required attention.
The energy shock has made those problems more visible.
Higher energy prices have pushed inflation upwards while simultaneously reducing purchasing power and increasing production costs for businesses.
The Commission expects EU inflation to fall again in 2027 if energy-market pressures ease, but the immediate effect is a significant squeeze on households and companies.
The euro area faces an additional challenge from relatively weak domestic demand.
Germany, Europe’s largest economy, has experienced particularly sluggish growth in recent years, while other major European economies have also struggled to generate rapid productivity improvements.
This is the background against which Brexit supporters have argued that Britain should not be compared with an idealised version of the EU economy.
Brexit supporters see an opportunity
Supporters of Brexit have long argued that leaving the EU gives Britain greater freedom to pursue its own economic policies.
The argument is straightforward.
Outside the EU, Britain can negotiate its own trade agreements, set its own regulatory framework and make policy decisions without having to secure agreement from the other 26 member states.
The UK has already used some of those powers.
However, the economic benefits of regulatory independence depend on how governments use that freedom.
Simply being outside the EU does not automatically create faster growth.
Britain still faces the practical consequences of having its largest nearby trading partner on the other side of a new regulatory border.
That distinction is crucial to understanding the current debate.
The OBR continues to see a Brexit-related economic cost
One of the strongest arguments against declaring Brexit completely vindicated comes from Britain’s own fiscal watchdog.
The Office for Budget Responsibility’s latest Brexit analysis continues to assume that the post-Brexit trading relationship will reduce long-run UK productivity by around 4 per cent relative to a scenario in which Britain had remained in the EU.
The OBR also assumes that UK exports and imports will eventually be around 15 per cent lower than they would have been under continued EU membership.
Those figures are not measurements of exactly how much Brexit has already cost Britain.
They are assumptions used in the OBR’s economic forecasting framework, based partly on external research.
The OBR itself stresses that there is considerable uncertainty and that it is difficult to isolate the effects of Brexit from other major economic events, including the Covid pandemic, Russia’s invasion of Ukraine and the productivity slowdown that began after the global financial crisis.
That qualification matters.
It means the figures should not be treated as a precise bill for Brexit.
But they also mean that claims that official analysis has established Brexit as an economic success would go beyond what the OBR actually says.
Trade remains the central issue
Britain’s economic relationship with Europe has changed significantly since Brexit.
The Trade and Cooperation Agreement removed tariffs on most goods that meet its rules of origin, but it did not preserve the frictionless trading arrangements that existed when Britain was inside the single market and customs union.
Companies now face additional paperwork, customs procedures and regulatory requirements when trading across the UK-EU border.
For some large businesses, those costs can be absorbed.
For smaller companies, they can be much more significant.
The automotive industry provides a particularly important example.
Reuters reported this month that Britain’s exclusion from a proposed EU “Made in Europe” initiative could create difficulties for the British car industry. The Society of Motor Manufacturers and Traders said UK and EU automotive industries remain highly interconnected, with around €80 billion in annual trade.
The example demonstrates that Brexit has not separated Britain from Europe economically.
Instead, the two economies remain deeply connected while operating under a different set of rules.
The EU also needs Britain
There is another side to the relationship.
Britain remains one of Europe’s largest markets.
EU manufacturers continue to sell enormous quantities of vehicles, machinery, food and other goods to British consumers.
The automotive sector illustrates the mutual dependence particularly clearly.
The SMMT has warned that excluding British vehicles from EU incentives could damage British manufacturers, but it also argued that reduced British demand could negatively affect European producers because the UK remains an important export market for EU cars and components.
That makes the post-Brexit relationship more complicated than a simple story of Britain losing access to Europe.
Both sides have commercial interests in reducing unnecessary barriers.
Britain’s economic performance is not explained by Brexit alone
Another problem with sweeping claims about Brexit is the number of other factors that have affected the UK economy since 2016.
The coronavirus pandemic caused an unprecedented economic shock.
Russia’s invasion of Ukraine pushed up energy and food prices.
The global inflation surge triggered higher interest rates.
The United States introduced major industrial and investment policies that changed international capital flows.
Artificial intelligence is now reshaping investment patterns.
And Britain’s productivity slowdown predates the Brexit referendum.
The OBR explicitly warns that these overlapping factors make it difficult to isolate the effect of the UK’s new relationship with the EU.
Consequently, comparing two headline GDP numbers and attributing the entire difference to Brexit would not provide a reliable economic assessment.
Yet the EU’s difficulties matter politically
Even so, the EU’s economic problems are politically important for Britain.
For years, arguments over Brexit have often been presented as a choice between a dynamic Britain outside Europe and a struggling Europe inside it, or the opposite.
Reality is considerably more complicated.
The EU is dealing with weak competitiveness, demographic pressures, energy costs and the need for greater defence spending.
The European Commission itself has acknowledged competitiveness concerns.
The OECD’s September forecast also shows that the euro area is expected to grow by only around 1 per cent in both 2026 and 2027.
That does not prove that EU membership caused the bloc’s economic difficulties.
Nor does it prove that Britain’s departure caused its own difficulties.
But it does demonstrate that Britain’s economic debate cannot sensibly be reduced to the assumption that every weakness inside the UK is caused by Brexit while every problem inside Europe proves Brexit was correct.
A new phase in the Brexit debate
The political debate is nevertheless entering a different phase.
Almost a decade has passed since the 2016 referendum.
The UK is no longer debating whether Brexit should happen.
Instead, the argument is increasingly about how the country should use its position outside the EU.
That is particularly relevant as the government seeks closer cooperation with Brussels in selected areas.
The current EU-UK “reset” includes discussions around agricultural and food standards, electricity markets and emissions trading.
A House of Lords Library briefing noted that the government is seeking closer connections with the EU while maintaining its stated red lines against returning to the customs union, single market or freedom of movement.
The political question is therefore no longer simply Leave versus Remain.
It is increasingly about what form Britain’s relationship with Europe should take after Brexit.
The danger of declaring victory too early
For Brexit supporters, weak EU growth provides an obvious political talking point.
If the European economy is struggling while Britain continues to expand, they can argue that warnings about Brexit were overstated.
But the latest figures do not establish such a simple conclusion.
The OECD currently forecasts UK growth of 1.1 per cent in 2026 and 1 per cent in 2027, compared with 1 per cent in both years for the euro area.
Those figures show broadly similar growth rates rather than a dramatic divergence.
At the same time, the OBR continues to incorporate a long-term productivity penalty associated with the post-Brexit trading relationship.
Both facts can be true at once.
The EU can have serious economic problems while Brexit can impose additional costs on British trade.
One does not automatically cancel out the other.
What the figures actually tell us
The most defensible conclusion from the latest evidence is therefore more complicated than the headline suggests.
The EU is experiencing genuine economic difficulties.
Growth remains modest, inflation has been pushed higher by energy shocks, and European policymakers are confronting concerns over competitiveness and public finances.
Britain, meanwhile, continues to face its own structural challenges.
Its economy is expected to grow only modestly, while the OBR continues to assume that Brexit will reduce long-term productivity and trade compared with continued EU membership.
The two realities can coexist.
The European Union does not need to be economically successful for every criticism of Brexit to be valid.
Equally, Britain does not need to outperform the EU for Brexit to have created genuine political or strategic advantages in areas such as regulatory autonomy.
Ultimately, whether those advantages outweigh the economic costs is a matter of political judgement rather than something that can be settled by one year’s GDP figures.
What the latest data do show is that the economic gap between Britain and the EU is not developing in the simple direction predicted by either side of the Brexit argument.
Europe has serious economic problems of its own.
Britain has also failed to escape the structural weaknesses that have constrained growth for years.
As the UK government continues its attempt to reshape relations with Brussels, the debate is therefore moving beyond the old question of whether Brexit was “right” or “wrong”.
The more consequential question is what Britain does with the economic freedom it gained — and how it manages the costs created by having a new trading relationship with its largest neighbouring market.
That is a question the latest figures cannot answer on their own.