When Britain joined the European Community in 1973, its then prime minister, Edward Heath, was optimistic about the country’s membership and the prospects for national prosperity derived from rolling back the economic and political frontiers of Britain. Joining the European project was expected to generate a cross-fertilisation of knowledge and information that would enable Britain to be more efficient and more competitive in gaining access to markets worldwide. Despite the undoubted economic benefits from entering the EU, the British political leadership today, as well as a large majority of the British public, do not share that same original level of optimism. The bleak economic environment both at home and in continental Europe has enhanced an already strong sense of euro-scepticism. Should Britain maintain focus on Europe or is it time to say good-bye?
Britain has never been a warm supporter of the European project. Despite failed attempts by British pro-European pressure groups like the Britain in Europe movement led by Tony Blair in the 1990s, the country’s commitment to Europe has always come along with a series of caveats. From the Schengen agreement to the Charter of Fundamental Rights of the European Union, the Area of Freedom, Security and Justice, the Prüm convention and most obviously the Economic and Monetary Union, Britain has won numerous concessions and opt-outs that no other EU member state can match.
The rationale behind this constant push for exemptions stems historically from an intrinsic Eurosceptic stance by Britain’s political elite, which became more pronounced during the years of Thatcherite opposition to proposals for increased centralisation of decision making in Europe in the late 1980s. Conservative Britain’s belief has always been that there should be nothing more to Europe than a free trade and open competition market, allowing for smaller government and less regulation.
The current crisis in Europe has exacerbated what many British politicians have long felt: (a) a strong scepticism of further devolution of power to a Brussels super-state and (b) triumphalism about not joining the euro. This has created an opportunity for David Cameron to question the benefits of further committing to a seemingly failing European project and to take a step back from discussions for a renewal of the EU treaty with tighter fiscal rules for member states. The premise was that a series of concessions for the City of London had not been accepted by France and Germany last October.
The markets, however, want Britain in Europe. They believe that the European Central Bank is the only competent authority that can act as a credible lender of last resort, offering them a crucial safety cushion for their investments in this turbulent time. In that sense, George Osborne, who is a creature of the markets and wants financial stability, is in favour of further integration if that can restore confidence and financial security back home. But what such a move would require is a very difficult caveat with little political support domestically.
Given Britain’s own economic troubles and political uncertainties, staying out from a more integrated Eurozone at this point in time is actually not a bad idea. Britain needs monetary and fiscal independence to stimulate its economy and to respond decisively to the consequences of the economic crisis at home. The country cannot afford to transfer large scale resources to other troubled countries of Europe, something that further integration would have certainly required. Moreover, given the Eurosceptic ideology that dominates the minds of the current British government, any deal on a European fiscal framework would be a dangerous compromise that could jeopardize Europe’s efforts to put an end to unsound economic policy practices of its member states.
Europe today needs four things. First, it requires political focus and diplomatic stability in order to harmonize member state fiscal policy practices. If Britain were to move closer to the Eurozone today, this would only add complexity and unnecessary bottlenecks to the Eurozone’s efforts.
Second, Europe needs strong economic partners who can retain control over sectors where they have traditionally acted as global leaders. Britain is a European leader in the services sector and a global leader in financial services. Despite the international money markets’ aspirations for a centralized lender of last resort at European level, the regulatory trade-offs from such a decision are too high to ensure that the majority of City’s financial service providers would not move their operations to other parts of the world. Maintaining leadership of this sector in the geographic territory of Europe is of paramount importance today, when the linkages between money markets, diplomacy and political power are stronger than ever before. And any hopes on restructuring the global financial architecture to bring politics back above economics require the positioning of this industry’s operations within the boundaries of the political control of Europe.
Third, Europe needs partners with geopolitical leverage. Britain is widely recognized as a world leader in managing crises and in fostering diplomatic relations with countries around the world, perhaps a heritage from its imperialist past that has granted it a unique identity in the eyes of political leaders globally, especially the Commonwealth countries. At this particular point in time, Europe can benefit from Britain’s leverage only if Britain protects its ‘unique’ image in the world, retains some degree of monetary and fiscal independence but is committed to the political vision of Europe.
The above do not suggest that Britain should say no to more Europe. Nor should the Eurozone close its doors to member states which refuse to commit to a further fiscal and political integration at this particular point in time. The key lies in a multi-speed Europe, where relationships and responsibilities among different member states are restructured and adjusted to the strengths and opportunities that each country can offer.
Multi-speed Europe is already a reality. From the Eurozone to the EU, the EFTA and the EEA, different countries have different rights and responsibilities vis-à-vis the European project. But today there is a golden opportunity to bring the multi-speed Europe discussion forward, given the momentum for radical reforms the global financial crisis has created. Britain can steer this process, in a complementary way to the efforts of the Eurozone members to restructure their union, and in a context whereby multiple speeds are not generated to divide Europe but to reap the maximum benefits from each country’s comparative advantages.
For all this to happen, political leadership and commitment is required at home. Unfortunately the conservative forces of Britain are not famous for such attributes. Britain therefore needs to urgently restore confidence in its progressive centre-left political forces. These are the forces that have historically pushed for improved relations with Europe, gaining respective economic benefit takeaways for the country of Britain. Can the British centre-left come forward with a clear agenda on Europe? This is the big question that needs to be addressed, a prerequisite to any political transformation domestically that will determine Britain’s future in Europe in the years to follow.
This column is part of the ‘Britain in Europe’ debate jointly organised by the Friedrich-Ebert-Stiftung London and Social Europe Journal.
All Content
Dimitri,
You miss something very important in the history of the UK’s relationship with the EU and why it is different to that of the rest of the EU. In the rest of the EU, the people “bought into” some level of poitical union at the start. They may be questioning now as to what that really means, but this is new, dating say, from the French and Danish rejections in the Constitution referenda. In the UK, that case was never sold to the people. At the start, the Heath government deliberately lied ( it is a matter of historial record, with at least one ex-minister on tape) and called it ” The Common Market “, knowing that it was a political project. Over the years, there has never been public support for transfers of powers to Burssels. Even as late as Maastricht we were told that “ever closer union” were just some words in a treaty, not meaning anything.
So, it is not the UK political elite who are EU sceptic – overall, they are much more pro-EU than the people. The EU sceptic noises you hear from them is due what remaining political constraints the people can apply. Mis-understand this, and you will understand nothing about the dymanics of the UK’s relationship with the UK.