It is time to stand up to Tory euroscepticism

Disengagement or withdrawal would be disastrous for British influence and interests.

Something fundamental has changed in the nature of the British debate about Europe over the last 15 years. The last time the Conservatives were in power the division in the party was between those, like John Major, who wanted to remain “at the heart of Europe” and those who sought to renegotiate our membership in order to repatriate large areas of policy from the EU.  Today, the dividing line is between those who want to pick apart even the foundations of the single market and those demanding complete withdrawal.  Damaging disengagement is the new consensus within the Conservative Party – the only disagreements are about scale and timing.

The need to restate the case for our membership of the EU has therefore never been more pressing.  It has also never been more difficult.  The eurozone crisis has undermined confidence in Europe’s ability to act as a force for stability and prosperity, and the instinctive and understandable reaction of many is to pull back.  But the crisis has also revealed the extent of our interdependence with Europe.  The idea that political disengagement will insulate us from the economic problems of our continental neighbours is pure fantasy.  Our national interest lies in arguing for a reformed EU from the inside.

Globalisation has provided many opportunities for businesses and individuals alike, but it has also brought new challenges that even the largest and most powerful countries cannot solve on their own.  Climate change, global economic instability, cross border crime, nuclear proliferation, terrorism and energy security all pose significant risks for our society and our way of life. Dealing with these issues requires international cooperation on an unprecedented scale.

What is needed is joint decision-making and legal enforcement of the kind pioneered by the EU given that global agreements have fallen woefully short of the mark. Compare the success of the EU in driving up environmental standards in Europe with the failure to get sufficient agreement on halting climate change at a global level. Compare the deepening of trade ties within the European single market with the more limited progress made through the World Trade Organisation.

That is why the anti-European arguments espoused by different wings of the Conservative Party deserve closer scrutiny than ever before. The extreme wing of the Conservative Party advocates complete withdrawal from EU membership and the negotiation of separate bilateral trading relationship that would provide access to European markets.  The two examples most commonly cited are Norway and Switzerland.  Both countries certainly have strong economic ties to the rest of Europe, but neither enjoys anything like the freedom from EU laws and regulations that anti-Europeans want us to believe.

Norway belongs to the European Economic Area, which gives non-EU countries access to the single market.  But in exchange for that access, Norway has to adhere to the rules of the single market, including those relating to social and employment policy.  The only substantive difference is that its government has no say over how those rules are formed. It even has to contribute to the EU budget.

Switzerland has a little more flexibility with its mix and match approach defined through a series of bilateral agreements. But the essential principle is exactly the same - the more access it wants to the single market, the more EU legislation it has to transpose without having any say over its content.  For both countries the "democratic deficit" and loss of influence are a result of their non-membership.

The supposedly more moderate and modern wing of the Conservative Party would like to reduce our membership of the EU to a purely trade-based relationship. In this vein, Liam Fox recently argued for a return to the Common Market arrangement the UK first joined in 1973.  Taken literally, this would mean unscrambling the entire single market programme and allowing our competitors to re-impose non-tariff barriers against us.

More broadly, there are great dangers in unpicking the largest internal market in the world.  If we asserted as a matter of principle that countries only have to stick to the rules they like, some might choose to opt-out of limitations on state aids, the requirement to offer public contracts to competitive tender or any among thousands of other market-opening rules required by the EU.  The single market would start to unravel and British exporters would suffer.

The UK is a large member state and should be a strong proponent for an open and reformed EU. That can only be achieved by being at the heart of the Europe, not stranded on the sidelines. Even against the backdrop of the eurozone crisis, it is vital that pragmatic, pro-reform, pro-Europeans now make their voices heard and underline the risks of damaging disengagement or withdrawal that would undermine British influence and interests.

David Cameron speaks at a press conference following a European Union summit at the EU headquarters. Photograph: Getty Images.

Emma Reynolds is shadow housing minister and MP for Wolverhampton North East.

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George Osborne's surplus target is under threat without greater austerity

The IFS exposes the Chancellor's lack of breathing space.

At the end of the last year, I noted how George Osborne's stock, which rose dramatically after the general election, had begun to plummet. His ratings among Tory members and the electorate fell after the tax credits imbroglio and he was booed at the Star Wars premiere (a moment which recalled his past humbling at the Paralympics opening ceremony). 

Matters have improved little since. The Chancellor was isolated by No.10 and cabinet colleagues after describing the Google tax deal, under which the company paid £130m, as a "major success". Today, he is returning from the Super Bowl to a grim prognosis from the IFS. In its Green Budget, the economic oracle warns that Osborne's defining ambition of a budget surplus by 2019-20 may be unachievable without further spending cuts and tax rises. 

Though the OBR's most recent forecast gave him a £10.1bn cushion, reduced earnings growth and lower equity prices could eat up most of that. In addition, the government has pledged to make £8bn of currently unfunded tax cuts by raising the personal allowance and the 40p rate threshold. The problem for Osborne, as his tax credits defeat demonstrated, is that there are few easy cuts left to make. 

Having committed to achieving a surplus by the fixed date of 2019-20, the Chancellor's new fiscal mandate gives him less flexibility than in the past. Indeed, it has been enshrined in law. Osborne's hope is that the UK will achieve its first surplus since 2000-01 just at the moment that he is set to succeed (or has succeeded) David Cameron as prime minister: his political fortunes are aligned with those of the economy. 

There is just one get-out clause. Should GDP growth fall below 1 per cent, the target is suspended. An anaemic economy would hardly be welcome for the Chancellor but it would at least provide him with an alibi for continued borrowing. Osborne may be forced to once more recite his own version of Keynes's maxim: "When the facts change, I change my mind. What do you do, sir?" 

George Eaton is political editor of the New Statesman.