Osborne: Don't force UK choice between euro or EU exit


Chancellor George Osborne: "Getting the economics right is absolutely necessary to persuade people of the merits of the EU"

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The UK could be forced to quit the European Union if the organisation does not reform, George Osborne has warned.

The chancellor said it was essential to "protect the collective interests of non-eurozone member states" while the rest of the EU forged stronger links.

Without such reform, the UK might "face a choice between joining the euro or leaving" the EU, he said.

The 28-member group also had to do more to ensure economic competitiveness with rivals like India and China, he added.

Labour said David Cameron's "weakness" regarding his party was preventing reform, while the UK Independence Party said the prime minister had repeatedly "caved in" to Brussels.

Mr Osborne's speech followed the Conservative leadership rejecting a call from 95 of the party's MPs to allow Parliament to block EU laws which damage the national interest

'Simple choice'


There is no shortage of combustible material around at Westminster - and particularly for the Conservatives - when it comes to Europe.

So George Osborne seemed to go out of his way in this speech to avoid wandering around with a box of matches.

He stuck to the big picture theme on Europe for the Conservatives: European countries need to pull their fingers out because of the threat of global competition, and their club, the European Union needs a shake-up to boot.

And in big picture terms, he has his party with him. It's the nitty gritty, the how and the when, where strongly held views differ.

Labour reckons David Cameron and George Osborne are spending more time negotiating with their backbenchers than negotiating with Brussels.

But Labour still has its own big decision to make - would it offer a referendum on EU membership if it won the election?

Earlier this week Foreign Secretary William Hague said the EU's rules had to be followed by all its members and the MPs' veto plan was unworkable.

But addressing the think tank Open Europe and the Fresh Start group of MPs, set up by Conservatives keen to see reform, Mr Osborne said he understood the need for change, especially given further economic and political integration by EU countries within the eurozone, aimed at preventing a repeat of the recent crisis.

He warned: "If you cannot protect the collective interests of non-eurozone member states, then they will have to choose between joining the eurozone, which the UK will not do, or leave the European Union."

He also said: "I believe it is in no-one's interests for Britain to come to face a choice between joining the euro or leaving the European Union.

"We don't want to join the euro, but also our withdrawal from a Europe which succeeded in reforming would be bad for Britain. And a country of the size and global reach of Britain leaving would be very bad for the European Union."

'Status quo risk'

The Conservative Party has promised an in-out referendum on EU membership - following a renegotiation of powers with Brussels - before the end of 2017, if it wins a majority at the next general election.

Mr Osborne said: "The biggest economic risk facing Europe doesn't come from those who want reform and renegotiation.

European Commission President Jose Manuel Barroso EU chiefs have warned against "scaremongering" over immigration

"It comes from a failure to reform and renegotiate. It is the status quo which condemns the people of Europe to an ongoing economic crisis and continuing decline."

Mr Osborne argued there was a "simple choice for Europe: reform or decline".

He said: "There are those who throw their hands up and say 'We can't reform Europe'. To them, I would say that we have already proved that wrong.

"Take the EU budget. Last year, the prime minister negotiated the first ever real-terms cut... Far from being a lone voice, we were working with like-minded countries like Germany, the Netherlands and Denmark."

Mr Osborne talked about how the 2008 financial collapse had exacerbated the EU's problems, but argued: "We knew there was a competitiveness problem in Europe before the crisis.

"But the crisis has dramatically accelerated the shifts in the tectonic economic plates that see power moving eastwards and southwards on our planet."

He said too much money was going on benefits across the continent: "Europe accounts for just over 7% of the world's population, 25% of its economy, and 50% of global social welfare spending."

'Utter bunkum'

Start Quote

The Conservative leadership seems to be spending more time negotiating with their backbenchers than negotiating with Europe to deliver real reform.”

End Quote Douglas Alexander Shadow foreign secretary

In a question-and-answer session following his speech, Mr Osborne said the Conservatives were "having a grown-up conversation" on Europe, adding: "I would rather be in a party that's addressing these issues for the future than a party that's burying its head in the sand."

But, for Labour, shadow foreign secretary Douglas Alexander said: "The Conservative leadership seems to be spending more time negotiating with their backbenchers than negotiating with Europe to deliver real reform.

"All of us know change in Europe is needed, but the tragedy is that David Cameron's internal party weakness is preventing him from approaching the need for reform in a sensible way."

UK Independence Party leader Nigel Farage called the idea that the UK could lead reform within Europe "utter bunkum".

He added of Mr Cameron: "The EU is not going to suddenly turn around and be dictated to by a man...who has given away any leverage in the negotiations he may have had by declaring his support for EU membership."


The CBI business group said Mr Osborne had set out a "compelling" case for EU competitiveness.

But European Commission President Jose Manuel Barroso warned of "scaremongering" about the right of EU citizens to live and work elsewhere in the union following recent suggestions by David Cameron that restrictions should be considered in future.

He told the European Parliament that the principle was "good for all of us that enjoy freedom in Europe and have an open idea of Europe and not a narrow, chauvinistic idea of the protection of the different countries".

Earlier on Wednesday, it emerged that the Home Office has delayed a report into the issue amid reported disagreements in the coalition.


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  • rate this

    Comment number 1048.

    Why this us and them re Europe? For me, countries like Germany, France, Netherlands, Belgium, Spain, Ireland have been some of the most stable nations in the past 50 Years. They have no interest in being part of an 'inefficient' Europe. We should be actively working with these to assure reform from within. Cameron cannot do this as he is hamstrung by a party who have eyes only for the exit door.

  • rate this

    Comment number 723.

    I don't care if the EU reforms. I want the UK to re-assert its sovereignty, and behave according to its own desires and beliefs about what sort of country it wants to be.No need to blame the EU's agenda or intransigence for this- just blame the last two decades of weak UK government accepting things they should have refused. DC-stop trying to manoeuvre into a state of grace and get your job done.

  • rate this

    Comment number 526.

    As long as his words are rhetoric, I agree (about reform and non-Euro member rights). But the UK should not be threatening or even considering exit, it should be working with other political parties in other EU member states to ensure such reform of the EU, because it does need to be reformed, but not by leaving it. For me, the EU has to get it right so that the UK can join the Eurozone.

  • rate this

    Comment number 243.

    Whenever some news comes comparing Europe with India and China, we people tend to shout "We no need to race to Bottom". Open your eyes and see the fact. India and China are no more at bottom, they are in race with us they already crossed us, People who still say India and China are at bottom are really in Victorian Colonial era, May be still thinking as UK as super power under Winston Churchill

  • rate this

    Comment number 201.

    George Osborne needs to visit India and China and observe the standard of living there (along with the inhumane levels of inequality). Of course they do well- they have no minimum wage and most have never even heard of such a thing as an employment contract. Higher GDP through slavery? This country needs to wake up and realise that high GDP and high standard of living are not the same thing.


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