Opportunity for Britain amid European uncertainty

British Prime Minister David Cameron at the European Union summit in Brussels on 9 December 2011 British Prime Minister David Cameron may yet find support in Europe if closer economic union fails to deliver

Last week, the French paper Le Monde opined that there was a logic behind the British setting themselves apart from the movement towards economic and budgetary integration.

"Because they never believed in it," said the editorial. "They do not believe in the European idea. They are strangers to the project."

Later, the German magazine Der Spiegel would use the headline "Bye Bye Britain". It was echoed in the French paper Liberation with "Europe, the British secession". In Italy, La Repubblica wrote of "Europe, the pact without London".

The voices on Europe's streets were perhaps best summed up by Jean-Michel Jarillot from Paris who said: "They (the British) haven't wanted to be in the European Union for a long time now. They were never fully part of it so, if they leave, they are closer to the Americans than Europeans".

The most dismissive aside came from German Chancellor Angela Merkel when she said: "I really don't believe that David Cameron was even with us at the negotiating table".

Divide in the road

It is the view of many Europeans that history divides us. General de Gaulle always thought so. He once said: "In short, the nature and structure and economic context of England differ profoundly from those of the other states of Europe".

Quentin Peel, writing in Monday's Financial Times, quotes a German official who said that when it comes to Europe "our countries are on two different planets". In Germany, the instinctive answer to a crisis is "more Europe"; in Britain, the answer is "less Europe".

To many Europeans, "standing alone" is to be feared and rejected. In Britain, it is a stance that is seen as having served the country well.

If it is to be divorce, then it is a break-up long foreseen and expected. The next president of the European Parliament, Martin Schulz, doubted that "the UK will remain in the EU long term".

We have reached a divide in the road.

Almost certainly, with the same remorseless logic that drove Europe's leaders to embrace fiscal union, so political union lies ahead. Britain will want nothing to do with it.

There is also, too, a driving logic to the British position. If we are to be condemned to the margins, why stay at all?

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Across Europe, there are fears that Germany is becoming too powerful and Britain could yet be seen as a counterbalance to Germany's growing influence”

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We are not there yet.

As the UK's Europe Minister, David Lidington, said: "If you look at the summit conclusions, you'll find very ambitious language there about strengthening the single market, cutting the amount of red tape and regulation on small businesses, on expanding external trade".

All of those are British themes, and the British have allies for a less-regulated Europe, but the eurozone crisis is pulling Britain and Europe in different directions.

However, the crisis holds out opportunities for Britain, too - and its European vision.

Years of austerity

The future of the euro is far from secure.

Last Friday's "fiscal pact" on tax and spending had little to say about the short-term crisis. It was largely a retread of the failed Growth and Stability Pact.

What remains uncertain is what would happen if Italy or Spain, or both countries, needed a rescue.

There are still not the resources in place to calm investors.

Sure, the leaders agreed to lend up to 200bn euros to the IMF to be diverted back to struggling eurozone countries.

They also brought forward the date when the permanent rescue mission, the European Stability Mechanism (ESM), will be up and running. But it remains unclear what funds it has, and where they will come from.

We still do not know how aggressive the European Central Bank will be in buying bonds, and so lowering the borrowing costs of troubled countries.

The path chosen - made in Germany - is for budgetary discipline in the long-term and austerity in the short term.

Countries like Greece, Italy, Portugal and Spain may well find themselves locked in a cycle of decline.

The debt mountains continue to increase. There is almost no growth. The economic gulf between those countries and Germany widens.

The structural reforms, like loosening labour laws, will take years to have impact.

It is far from clear whether many of Europe's people will be prepared to take the German medicine, which involves years of austerity.

In short, German leadership may face a challenge.

Great uncertainty

Across Europe, there are fears that Germany is becoming too powerful and Britain could yet be seen as a counterbalance to Germany's growing influence.

As Simon Tilford, from the Centre of European Reform, pointed out, with debt brakes being written into national constitutions, austerity is being "hard-wired" into the framework of the EU.

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Europe is trying to assert itself on the world stage without realising that influence grows out of economic strength”

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Already Francois Hollande, the main challenger to President Nicolas Sarkozy in France's presidential elections next year, has said he would renegotiate last week's deal.

"Without economic growth," he said, "we will achieve none of the targets on deficit reduction."

Closer economic union is the rallying cry, but if it fails to deliver Britain may appear less isolated.

Then there is the issue of democracy.

No country has yet voted for fiscal union. Handing over powers over national budgets, tax and spending is no small step.

Holding politicians to account for taxes raised and money spent is one of the features that defines a democratic country.

The leaders who signed up to closer budgetary and economic union last week did it out of fear; that without such a step the eurozone might collapse. A disaster too awful to contemplate.

At some stage, they will have to sell this giving away of sovereignty to their parliaments and people. To the question "Who do I hold accountable for the budget?", they will have to provide an answer.

There is growing instability in Europe. Austerity measures, which will only bite harder, are widely resented.

Greece and Italy do not have democratic governments. In Athens, European officials are in the ministries. Greece is, in all but name, an EU protectorate and fuels the almost-daily demonstrations. Sooner rather than later, Italy will want to return to democracy.

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If down the road separation occurs, then Britain needs to boldly sketch out its vision for Europe. It may yet find it can attract refugees from the eurozone to its banner”

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It is a period of great uncertainty, and therein lies opportunity for Britain.

The British insist they are not anti-European. It is just that their European vision is different.

They do not believe in a highly-regulated, centrally-planned bureaucracy They do not believe in a United States of Europe. There is no evidence of popular support for such a dream.

Identity is still tied into the nation state. The British treasure most the single market and a loose affiliation of nation states.

Degrees of influence

It is also true that the lessons of globalisation and the emerging new powers like China and India may be on their side.

In Brussels, it is often argued that only a united Europe can have influence and a place at the top table in such a new world.

It is, of course, a self-serving argument. It is used to justify closer integration. It is also arguably untrue.

In the past two or three years no country has seen its influence expand more than Turkey. Why? It has a strong economy and does not flinch from asserting its influence. No-one would ever say of Canada, a country of 35 million, that it has no voice unless it is part of the United States.

Indeed the irony is that, as Europe obsesses about its role on the world stage, its share of world GDP continues to decline.

Europe is trying to assert itself on the world stage without realising that influence grows out of economic strength.

Germany is the example. Officials have seized on globalisation to justify the dream of closer integration, yet globalisation is eating away at the West's competitive advantage.

The answer may lie in nimble, highly-adaptive, flexible nation states rather than blocs. Britain has an argument.

Here again is the French view as expressed by Le Monde: "There is nothing to be sorry for in what happened in Brussels. An ambiguity has been removed. At heart the British, who joined what was then the EEC in 1973, have only ever been interested in one thing - the single market. The rest of the European project leaves them indifferent, if not hostile."

If down the road separation occurs, then Britain needs to boldly sketch out its vision for Europe. It may yet find it can attract refugees from the eurozone to its banner.

Gavin Hewitt Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • rate this

    Comment number 19.

    Imagine that we had agreed to this fiscal union 18 months ago. and our budgets had to go to Brussels to be approved.

    The Tories could say - it wasn't us - it was Brussels. Austerity is the EU policy we have to follow.

    A central British political argument would be replaced by Brussels dictat.

    Right or wrong, who voted for that ?

  • rate this

    Comment number 18.

    If this decision pushes us to consider continued trade with Europe with greater trade with the rest of the (still growing) "developing" world it can only be a good thing.

    I also think that there's an underlying feeling/perception that while we abide by the dictat rules on all sort of areas from Brussels, many (often including the French) do not.

  • rate this

    Comment number 17.

    Gavin Hewitt says " The answer may lie in nimble , highly-adaptive , flexible nation states , rather than blocs ".
    I strongly believe that , creating nation blocs is like putting all your eggs in one basket , drop it and they are all broken . Smaller sovereign states work much better independently , can diversify , have pride in small achievment that is not belittled by heavy industry .

  • rate this

    Comment number 16.

    Last night I tuned to Russian News 24 cos BBC has biased handled this event however fair to you Gavin Hewitt for your report and its 360 Deg angle. That’s what we the British people want to understand what is good or bad and make a decision afterwards and not be fed with anti Tory rhetoric irrelevant to the reasons that matter the most.

  • rate this

    Comment number 15.

    To all the commentors on here and on other related stories, do you have such a low opinion of your own country that you don't believe we could thrive outside the EU? Of course we can, it will take time to realign our trade but we did it once when we joined the EEC we can do it again.

  • rate this

    Comment number 14.

    I will say it again, 'The destiny of the United Kingdom is in it's own hands.' if we can just strive to get things right during this tough period, we will have the last laugh. This EU tighter fiscal policy is all about self interest. No serious country wants it's tax policies determined by some someone else. I do not see the 17 selling that to their electorate especially in France.

  • rate this

    Comment number 13.

    Britain may yet find it can attract refugees from EZ to its banner - You mean like Italy & Greece? Le Monde: There is nothing to be sorry for in what happened in Brussels. At heart the British, who joined what was then the EEC in 1973, have only been interested in one thing - the single market. The rest of the EU project leaves them indifferent, if not hostile.

  • rate this

    Comment number 12.

    A pretty good assessment.

    Next year will see massive changes and great instability in Europe. We should be preparing for it now.

    There is an opportunity for the UK to establish a new union based on trade and cooperation, whilst protecting full sovereignty in all other areas. France and Germany are hard-wired to try and rule Europe, so we need to have an alternative ready.

  • rate this

    Comment number 11.

    At some point the populations of other EU countries will wake up and realise that this Thursday had nothing to do with saving the Euro and was another step on the EU Project - Federal Europe. The Norwegians recognised this long ago. It will be interesting to see how the Swedes and Danes take it as a populace.

  • rate this

    Comment number 10.

    Sorry, but I don't see that Canada nor Turkey have got loud voices within the global political scene. Turkey of course has gained strong influence in the middle-east, but that's hardly suprising when you see how the governments of many of its neighbours have been thrown into disarray while it exhibits a comparatively model society. My only gripe with this piece.

  • rate this

    Comment number 9.

    No country has yet voted for fiscal union - handing over review of national budgets, tax & spending is no small step, but let's not confuse this with loss of sovereignty. Holding politicians to account for taxes raised & money spent is democracy. To the question "Who do I hold accountable for the budget?", it's still the Parliament that put it forward.

  • rate this

    Comment number 8.

    Hey! A common trading bloc, no more, no less.
    Now THAT'S a workable idea.

  • rate this

    Comment number 7.

    At last a more balanced and interesting UK article.

    Comments like Clegg's 'we'll end up as a pygmy nation' are not only pretty insulting but presume that the UK is not capable of reinventing itself if the electorate decided that we were better out. Less red tape, a kick up our national bottom would do wonders for our nation

  • rate this

    Comment number 6.

    Sometimes as a Europhile I feel that the idea of Europe allows the people of the continent to ignore their history. They are at it again.

    As a Briton I have too many of my kin buried in Europe to allow them to exclude us as I know why my kinsmen came to fill their graves.

    Europe is turning a fiscal deficit which could be solved into a far more disastrous democratic deficit.

  • rate this

    Comment number 5.

    It's time for GB to arrive in the present. The war's over. Accept it once and for all and go on with life. Living in the past was seldom a good advice for building a future!

  • rate this

    Comment number 4.

    UK in or out is a false choice.
    As always to understand the politics requires an understanding of the economics.
    Capitalism has been in crisis for some time but still there is little understanding of why there are crises.
    But economic crisis there is & now the politics is catching up.
    Ideologies such neo-liberalism & social democracy are dead.
    Now democracy itself is shown to be a illusion.

  • rate this

    Comment number 3.

    Le Monde: British set themselves apart. They never believed in EU. German Der Spiegel headline "Bye Bye Britain", echoed in French paper Liberation with "Europe, British secession". In Italy, La Repubblica wrote of "Europe, the pact without London". But here is the KEY statement with which I most agree: British have never wanted to be in EU. They are closer to the US than EU.

  • rate this

    Comment number 2.

    Thank goodness for Gavin Hewitt. I was beginning finally to give up on the BBC. This is from a left of centre moderate who likes and gets on well with his many European friends - and his African, Asian, North and South American and Australian ones as well - but has never seen the point of the EU or, in an age when currency conversion takes place at the press of a button, the €uro!

  • rate this

    Comment number 1.

    It is interesting that all signed up but non have a mandate to do so. All have to go back to the electorate with this and this is where the rub is. In Germany many feel that they do not want to hand over sovereignty especially when that means that they may well have to pick up the tab for what are seen as the failing countries. Other members have similar feelings while the PIIGS are left hanging.


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