The Conservative-led government has set out a minimalist vision for the UK’s relationship with Europe. It belies a striking lack of vision about Britain’s role, prosperity and security in the twenty first century
Despite the acres of newsprint about whether the UK prime minister was right to exercise ‘a British veto’ at the Brussels European Council last December, there has been little discussion of the ‘big picture’ question that it triggers. What is the Cameron government’s vision for Britain and its place in the world? And where does our membership of the European Union fit in?
In the late 1940s, Winston Churchill famously described Britain’s position in the world as at the centre of three circles – with the maintenance of the British empire at the centre, and the US relationship and Europe overlapping it. Sixty or more years on, the empire has become a commonwealth and the present government should be supported in its efforts to boost this community’s role as a repository of sentimental ties; a symbol of racial equality; and a vehicle for practical cooperation between its diverse members. But it is not a potential trade bloc with real economic clout. Nor has sentiment demonstrably won out over hard calculations of self interest amongst the other commonwealth nations, as shown by the Indian air force decision to ‘buy French’ last month, forgoing the joint-British alternative. The economic relationship with India, for example, has great potential, but the best way to pursue it today is through the proposed free trade agreement between India and the EU.
As for our relationship with the United States, former Prime Minister Tony Blair liked to describe this through the metaphor of Britain as the ‘transatlantic bridge’. Yet the German Chancellor, Gerhard Schroeder, once cryptically commented that the bridge appeared not to be built for two way traffic. Today, with Britain realistically counting for less in Washington than at any time since the Second World War, even the one way traffic seems stuck in a slow lane. President Obama flattered us when he spoke in Westminster Hall last year about our continuing ‘special relationship’. It was an easy compliment, but the reality is rather different. We face an America that is increasingly inward-looking, Pacific facing and cutting back on global engagement.
As for Britain, however much we might still endorse the ambitious foreign policy ends of righting those wrongs to which practical solutions can be found, we can no longer financially afford the means for an active global role. This will remain the case whilst we lack closer cooperation with our European partners in military forces and defence procurement as well as aid and sustainable development.
Britain and Europe
The logic of history leaves us with the third of Churchill’s three circles – Europe. To re-work - inelegantly - Dean Acheson’s famous 1962 quote: Great Britain exchanged an Empire for a Commonwealth fifty years ago, its relationship with America can no longer be counted as so special, but it has yet to find a confident European role.
The present Conservative-led government may argue that this way of presenting Britain’s dilemma is simplistic. They are right in pointing to the radical differences between the twenty-first century and the twentieth; future economic power and political clout lies with China, India, Brazil, and other emerging giants and that Britain with its undoubted global reach and range of interests, can be an influential and effective networker and player in this new cosmopolitan world. But they are wrong in their view that Britain can succeed in this ambition as an independent nation state, that avoids being tied down by what they see as a sclerotic, overregulated, and institutionally obsessed European Union.
Of course, for David Cameron Britain remains part of the EU – as long as anti-European pressures inside his Conservative party do not reach bursting point. In the government’s eyes, Europe is a benefit allowing us to take advantage of political cooperation on matters where we happen to agree. They accept that the Single Market pays trade and economic dividends which Britain would not wish to lose, but would like us to draw the line there.
Buying into the Eurosceptic view that sees the EU (and its entire works) as posing a risk to Britain’s potential ‘nation state’ global role, they perceive Europe as capable of tying Britain down with its shackles. To the Conservative party, the Single Market is increasingly a monster of bureaucratic and over-costly regulation; the free movement of labour denies us control of our own immigration policy; Europe’s social and employment rights, with its ‘health and safety culture’, not to mention the ECHR’s human rights, are the enemy of the freedom and flexibility they would prefer. And so on and so on. There is a big danger here that as a country we are in the process of creating a new myth about Britain’s position in the world. Whereas after the Second World War the power of the historic myth of Britain ‘standing alone’ at Dunkirk kept us out of Europe for three crucial decades, we are now creating a new ‘global myth’ about Britain’s potential global strength and role that may cause us profound damage in adjusting to the realities of our position in the twenty first century.
Forgoing Single Market benefits
The health of the European economy remains absolutely central to our domestic and global interests. The majority of people in Britain think Gordon Brown was right on staying out of the euro, but our absence from its membership has not insulated us from the firm influence of eurozone developments on jobs and growth in our economy. British-based businesses sell a higher proportion of our exports into the Single Market than German exporters do of theirs, partly because the promise of the Single Market has made Britain an attractive base for inward investment since the mid 1980s. Incidentally, this is the only real industrial policy Britain has pursued consistently for the last quarter century. It is the sheer scale and size of Europe’s single market, and the permeation of its economic integration to a level much deeper than that of a free trade area without tariffs, that allows companies based in Britain to specialise and compete in world markets.
We will not strengthen our position in the Single Market by diplomatically excluding ourselves from the room when key economic questions affecting this country future will be decided. For all the paper promises that are made in the new treaty, that is what will happen.
Of course the government is right to argue that in order to rebalance our economy and defend our political interests more widely; we must be stronger in growing markets and more influential in new emerging countries. However the EU should be viewed as a facilitator of, not an obstacle to, this ambition. In trade and economic diplomacy, on questions of security, human rights and sustainable development, is it more likely that the emerging powers of our new global world will pay heed to a Britain that accounts for a diminishing fraction of world GDP, or a European Union that still represents the biggest economy in the world? And if it’s true that Europe puts us in shackles, preventing us from conquering new global challenges, why is it that Germany is the world’s most successful exporter to China and other emerging economies?
In, out or lost?
Behind this suspicion of Europe lies a vision of how Britain can make its living in a twenty-first century global world, which is deeply antipathetic to progressive instincts. It encompasses an offshore British economic future – a deregulated tax haven for mobile capital, a competitive ‘race to the bottom’ that would be a disaster for most working families, but also for the future City of London as a reputable global financial centre with its economic base in the European single market.
This is wholly antipathetic to a European ideal of a modern social market economy – a Europe of responsible capitalism that takes the high road to competitiveness, which combines the opportunity for successful private endeavour with decent regulatory standards, a modern welfare state and essential social investment.
The Coalition would like to think that we can keep the best of both worlds, enjoying the benefits of the Single Market while avoiding any of its obligations or political commitments. There is of course a huge agenda of European reform we need to pursue. But if the government is saying that we stay forever out of any single currency – the (too) slowly emerging Euro Mark Two; that we will have nothing to do with even a reformed fiscally stable union; that we want to take the City out of the reach of Brussels; that we will probably opt out in 2014 of all justice and home affairs legislation, even though it is of great benefit to our security - which member states are going to be our allies? Who else shares this minimalist vision of Europe?
The European Union is an exercise in pooled sovereignty or it is nothing. If we are not prepared to join in and do our bit, we will ultimately make ourselves irrelevant. We cannot indefinitely achieve our national objectives by staying out of the room when we don’t like what is being discussed inside, or of opting ‘out’ of so much that it begins to look as if we might as well not be ‘in’. Is Britain’s twenty first century vocation ‘European’ or is it not? If not, the government will have to provide a totally new rationale and strategy for our role, prosperity and security in the global world.
Roger Liddle is chair of Policy Network and a Labour member of the UK House of Lords
This essay is part of Policy Network's publication The future of economic governance in the EU