Britain and the European Union

Britain and the European Union:
BY PROFESSOR STEPHEN GEORGE

(Department of Politics, University of Sheffield)

In 1990 I published an article on 'Britain and the European Community' in European Access.¹ In it I contested the view that the Thatcher government's position marked a discontinuity from previous British policy, pointing to strong elements of continuity between the position taken by Thatcher in her Bruges speech (October 1988) and the positions taken by previous British governments. I argued that there had been some change in British positions, but that it was a steady evolution of policy rather than the sharp discontinuous change that sometimes results from a change of government.

In 1996 I published a piece in European Access on the British White Paper for the 1996-7 IGC², in which I extended the argument of the earlier article, arguing that the general position adopted by John Major was barely distinguishable from that of his predecessor.³ Successive British governments had been developing an alternative to the teleological federalist discourse which dated from the origins of the EC, and which was still used to talk about the EU, but was not subscribed to in practice even by its main advocates.

The consistent positions that had been taken up by successive British governments, I argued, were not to be explained solely in terms of domestic political constraints. In general, 'the extent to which British policy in the EU is driven by domestic considerations is regularly overstated in the press, as is the extent to which Britain is isolated in its positions'.⁴

I argued that the isolated position of the Conservative government on social policy was driven by domestic political considerations, and that the opt-out from the social protocol at Maastricht had been a tactical mistake by the government, which was driven by John Major's need to placate sentiment within his party. On many other issues covered by the IGC, however, the British position as set out in the White Paper was not driven by short-term domestic political considerations, was consistent with the long-term policies of successive governments, and was not markedly out of line with the positions of other governments.

Since then there has been a change of government. Does the record of New Labour on the EU change my underlying argument about the consistency of British policy and its determinants?

New Labour, New European policy?:
New Labour's fundamental objectives in the EU, as outlined by the Prime Minister, differ little from those of the Conservatives except on social policy, and even there not as much as might at first appear.

During the election campaign in 1997, Tony Blair said that Labour wanted 'a Europe where national identities are not submerged, and where countries co-operate'.⁵

Ahead of his first European Council in Noordwijk, he outlined his priorities as being: completion of the internal market; enlargement to East and Central Europe; reform of the CAP; to promote competitiveness and greater flexibility in labour markets; and to improve foreign policy co-ordination between the large states.⁶ None of these would have been unacceptable to the Conservatives. Although Labour made an early declaration that they would sign the Social Protocol at Amsterdam, thereby allowing it to be reinstated in the treaty as a Social Chapter, Blair also made it clear at Noordwijk that he would oppose any new measures introduced through the Social Chapter that would damage competitiveness.⁷

This emphasis on competitiveness did not prevent Labour from signing up at Amsterdam to the inclusion of an Employment Chapter in the revised treaty, something that the Conservatives would not have done. The Amsterdam European Council also agreed to hold a special 'Jobs Summit'.

Ahead of that summit, Blair joined with two other social democrat Prime Ministers, G�ran Perrson of Sweden and Romano Prodi of Italy, in calling for an emphasis on the role of the Single Market in job creation, the importance of removing barriers to employment in small and medium-sized enterprises, and the need for better training. These measures were adopted, in a package that emphasised co-operation between Member States rather than transferring powers to supranational institutions.

This package should have been acceptable to the Conservatives, as it was consistent with their vision of a 'Europe of nation states', and it furthered some of their long-standing objectives such as the development of more flexible labour markets and reversing the trend towards higher taxes on labour.⁸ It is unlikely, though, that it would have been agreed by John Major's government.

As I argued in my 1996 piece, the social opt-out by the Major government was driven by domestic political considerations, and was a mistake even in the Conservatives' own terms. By taking part in the negotiations over proposals under what would have been the Social Chapter of the Treaty, the British Government would have been in a better position to protect business interests than by remaining outside. But on the same basis as they opted out of the Social Chapter, the Conservatives would not have been in a position to accept the Employment Chapter, and would probably have refused to participate constructively in the jobs summit.

As already noted, New Labour objectives on competitiveness and flexible labour markets are little different from those of the Conservative government. Blair and Cook were not keen on the idea of an Employment Chapter, fearing that it would impose new expenditure obligations on the EU budget, thus increasing the burden on net contributor states. However, where John Major would almost certainly have opted out, or vetoed the Employment Chapter, the Labour government was able and willing to go along with the strong sentiment that the EU had to appear to be doing something about unemployment.

By opting in, Labour was able to work with other governments that were concerned about the possible implications of an Employment Chapter, particularly the German government, to ensure that the employment stimulation measures that were taken did not prove to be damaging to their view of the way to tackle unemployment, and to ensure that no new spending commitments were added to the budget.

A social democratic Europe:
The election result in Germany in September 1998 meant that the three largest EU Member States had social democratic governments for the first time in the history of the EC / EU. It also brought to thirteen the number of social democratic governments among the fifteen Member States. The emerging EU is social democrat.

It is sometimes suggested in Britain that New Labour is as out of step with the general mood of European social democracy as the Conservatives were with the general mood of European Christian Democracy. It is true that there are differences, but these should not be exaggerated.

In a speech to the Congress of the Party of European Socialists in Malm� in June 1997, Blair told Labour's social democratic colleagues from the other Member States that they had to modernise or die. They had to accept radical welfare reform and the need for labour market flexibility.¹⁰

It is significant in this context that Persson and Prodi joined Blair in the initiative to influence the Jobs Summit. All social democratic parties are engaged in a process of rethinking the role of the state in the contemporary world, and provided that it resists the temptation to lecture, New Labour can play a constructive and influential role in that debate in a way that clearly would not have been possible for the Conservative government.

Yet while Labour is on the inside of one forum that will be influential in determining the future direction of the EU, that of social democratic parties, it is excluded from another, that of Member States that are part of the single currency.

The single currency:
There are good economic reasons why the non-committal attitude of the Major government was a rational response to the single currency. The British economy differs in fundamental ways from those of the continental European economies. Britain has a greater volume of high-technology exports; its economic and business structure is more oriented towards services; it has a smaller agricultural sector and larger gas and oil sectors; it has a larger financial sector; it earns more from overseas investments; its currency is more closely linked to the US dollar than to any European currency; and its economic cycle is more in synchrony with that of the USA than with that of continental western Europe. Britain also has a lower level of unfunded pension commitments than other states; and there are far more people holding variable-rate mortgages, which increases the impact on households of changes in the short-term rate of interest.¹¹

For these reasons, it was not possible for the Labour government to rush into a commitment to join the single currency. In addition, there were strong political reasons. Although the Labour Party is generally supportive of closer links with the EU, there is a clear majority in the country as a whole opposing entry to the single currency. Labour has committed itself to holding a referendum on the issue before taking Britain in, and needs to convert public opinion if it is to win that referendum.

However, both the Prime Minister and Chancellor of the Exchequer seem to have been impressed by the extent to which the new Euro-11 group of Finance Ministers from the states participating in the Euro promises to emerge as a leading decision-making forum on monetary matters. Exclusion is certainly perceived as damaging to Labour's hopes of taking a leading role.

Conclusion:
British objectives have not changed greatly under Labour from those of previous governments. However, the Labour government has a better chance of realising those objectives than its predecessor. It is not so tied by internal party political constraints. At the same time, the sentiment in the EU seems to have come round more to the British position since Maastricht. At the Amsterdam European Council there was no great appetite among any of the Member States for pursuing federalist objectives. As Andrew Moravcsik and Kalypso Nicolaides say:

... national politicians, interest groups, and individual citizens increasingly doubt that the vision of a centralized, uniform, undifferentiated Europe, let alone a 'United States of Europe', is either desirable or feasible. Among EU member governments at Amsterdam, only Belgium and Italy consistently adopted anything resembling the traditional position; neither Germany nor the Netherlands was nearly as unambiguous, not to speak of France, Britain and the others.¹²

Moravcsik and Nicolaides argue that European governments and publics have always wanted 'a European structure that solves practical problems while undermining state sovereignty to the minimum extent possible'.¹³ However, if this is so, many governments have tended to shroud what they have been doing in a rhetoric of federalism, and the determined efforts of successive British governments to provide an alternative conception of the nature of the enterprise have always been rejected. For whatever reasons, that alternative discourse may now have seen its time come.

The new government is working in a more favourable environment than its Conservative predecessor, and because of the prevalence of similarly pragmatic social democratic governments in the EU, it is in a better position to pursue longstanding British objectives through co-operative means.

The way in which the Labour government handled the employment chapter and the jobs summit is indicative of what can be achieved if the British government of the day can convince its partners that it seriously wants what is best for the EU, and remains engaged rather than voluntarily standing on the sidelines. However, the great test for Labour remains the single currency, where the domestic political constraints are tighter than in other policy sectors, and where the legacy of previous decisions means that standing on the sidelines is precisely the present position of Britain.

Notes:
^1. George, Stephen
Britain and the European Community European Access, No.6, December 1990, p7-9

^2. George, Stephen
'A partnership of nations': The British Government's White Paper on the Intergovernmental Conference
European Access, No.3, June 1996, p7-9

^3. The argument is developed at greater length in:
George, Stephen
An awkward partner: Britain in the European Community, 3rd ed.
Oxford University Press, 1998
Chapter 8: The Major Governments, p231-74

^4. See note 2 above, p8

^5. Financial Times, 22.4.97

^6. Financial Times, 23.5.97

^7. Financial Times, 24-25.5.97

^8. Financial Times, 20, 22-23.11.97

^9. Financial Times, 7-8.6.97

^10. Financial Times, 17.12.97

^11. Baimbridge, Mark (et al.)
Economic and Monetary Union in Europe: A critical British perspective
New Political Economy, Vol.2, No.3, 1997, p492

^12. Moravcsik, Andrew/ Nicolaides, Kalypso Keynote article: Federal ideals and constitutional realities in the Treaty of Amsterdam in

The European Union 1997. Annual Review of Activities, p32
Blackwell, 1998
ISBN: 0-631-21190-X

^13. ibid., p33

Contact:
Stephen George
Jean Monnet Professor
Department of Politics
University of Sheffield
Elmfield
Northumberland Road
Sheffield
S10 2TU

Tel: +44-(0)114-222-1652
Fax: +44-(0)114-273-9769
E-mail: s.a.george@sheffield.ac.uk