UK/EU at 40 – The UK’s relationship with Europe has always been complicated and 40 years of EU membership haven’t made it any less so
In the latest in a series of exclusive articles for Endeavour Public Affairs to mark the 40th anniversary of the UK becoming a member of the European Union, Stephen Booth argues that restoring the Single Market to the centre stage would serve both to ensure that all EU members have an equal status and help give Europe the fresh economic impetus it desperately needs. More fundamentally he argue that the EU needs to reflect the new reality that not all of Europe’s nations are destined for “ever closer union” and that this is not a threat but a result of the democratic preferences of individual member states.
Stephen Booth is Research Director of Open Europe, a think tank based in London and Brussels.
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As David Cameron set out in his hotly-anticipated Europe speech, there are good reasons for the UK to seek to remain within a reformed EU. The three most compelling are full access to the Single Market, voting rights and influence over the terms of trade within the Single Market, and retaining its sizeable influence over EU foreign policy. However, without fundamental reform of the EU’s architecture and individual policies, it will become increasingly difficult to make the case for UK membership.
The crux of the current debate regarding the UK’s future relationship with the EU can be traced back to the Maastricht Treaty. That agreement established the road to economic and monetary union, from which the UK obtained an opt-out. There followed domestic arguments about whether the UK would or should eventually join. Although this debate has now been settled and no mainstream politician would advocate the UK joining the Single Currency, in the meantime, the EU continued to develop with new treaties and enlargement. All the while, despite a lack of democratic legitimacy, the fundamental principle of “ever closer union” went completely unchallenged – eventual euro membership is an obligation for all new member states, since only Denmark and the UK have formal opt-outs.
No one can predict the eventual fate of the euro, but the current, albeit spluttering, direction of travel within the Eurozone towards closer economic and political integration presents a fundamental and existential question for the wider EU: what should be the glue that binds its member states together? The two obvious candidates are the Single Currency and the Single Market. It is the eventual outcome in the battle between these competing visions for the EU’s future that will likely determine whether Britain stays within or leaves the EU.
For the UK, it is vital that the primacy of the Single Market is restated. This need not preclude greater Eurozone integration but it does require formal recognition that those outside the Single Currency should enjoy strong minority rights in EU decision making. For example, the European Central Bank wants to set limits on euro transactions by clearing houses if they take place outside the euro area – this not only potentially damages the City of London but also undermines Single Market laws allowing firms to set up a business anywhere in the EU. For UK membership of the EU to work, it cannot end up in a situation whereby it is ‘in the EU, but governed by the Eurozone’. The precedent set in the agreements on the fledgling ‘banking union’, which provide non-euro countries with voting safeguards, illustrates that the EU can be flexible if the UK makes the case for it.
The next step would then be to look at areas where the EU needs reform, including where powers might sensibly return to the member states. Firstly, there are areas where this should apply to all member states. For example, EU-level regional spending should only exist to help the poorer member states. The richer members should fund their own regional development without central direction from Brussels. Other candidates for reform in this category are the Common Agricultural Policy and energy policy, where member states should be given more flexibility within an EU-wide framework. Europe needs to be more business-friendly and needs to compete globally – the Single Market is its biggest asset in this race. The aim should be less bureaucracy and greater competitiveness for all. The UK’s success in securing allies in favour of a reduced EU budget shows that reform is possible.
Secondly, there are other areas where there could be greater differentiation between euro and non-euro member states. For example, it may make economic sense for there to be greater coordination of labour market policies within the Eurozone but this could be an opportunity for the UK and other non-euro states to take a step back. For Eurozone countries to stand behind each other’s banks, common supervision and regulation of finance is the logical flipside of the coin. For non-Eurozone members, national regulators need to have greater responsibility and accountability as they are responsible for ensuring their national governments avoid costly bank failures.
Restoring the Single Market to the centre stage would serve both to ensure that all EU members have an equal status and help give Europe the fresh economic impetus it desperately needs. More fundamentally, the EU needs to reflect the new reality that not all of Europe’s nations are destined for “ever closer union” and that this is not a threat but a result of the democratic preferences of individual member states.
Published: Monday 15 April 2013
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