Labour Conference Blog: Europe, from Crisis to Growth
By Lucy Thomas
At a joint fringe held by BNE, CER and Open Europe, sponsored by JP Morgan at the Labour Party Conference in Manchester on the Eurozone crisis, Douglas Alexander criticised the government’s decision to exercise the UK’s opt out from about 130 pre-Lisbon justice and Home Affairs measures. The panel, chaired by Charles Grant, the Director of the Centre for European Reform, consisted of Douglas Alexander MP, Chris Leslie MP, Mats Persson of Open Europe and was joined by Richard Corbett, a former Labour MEP and current advisor to Herman Van Rompuy.
Douglas Alexander MP, Shadow Foreign Secretary, opened the debate by outlining the need to recognise the depth of the crisis in the Eurozone, adding that the problems in the Eurozone cannot be used as an excuse for Britain’s poor economic growth.
The centre left needs to be careful not to fall into the trap of the right embracing the austerity narrative and the left being pro growth, he said. Growth of course matters but there is also a need for fiscal tightening.
He said that the left needs to make the case for growth and reform. Austerity alone is not enough, nor is growth alone. On the concrete steps taken so far, Douglas Alexander made reference to recent European Central Bank action saying that you “can’t deal with insolvency simply with liquidity,” adding that “Labour supports the recapitalisation of the European Investment Bank.” The EU should also think how to better balance the EU budget (or Multi-annual Financial Framework) to ensure growth for years ahead.
Douglas Alexander concluded that the economic challenges faced by the EU and Eurozone are not justification for questioning Britain’s membership of the EU, when Britain in struggling to secure growth it doesn’t make sense to shrink our export market.
Chris Leslie, shadow Financial Secretary to the Treasury, brought up the “three dimensional chess” in the EU going on between “interventionists” who believe that government should shape the economy, versus those with a more laissez faire approach such as Germany, as well as those with more federalist tendencies and those with a more pragmatic approach.
He welcomed the recent announcement by Mario Draghi on so-called “Ordinary Monetary Transactions”, although highlighted the need for conditions on the use of the European Stability Mechanism to be made in a sensible way. Britain should play a role in that, he said, adding “it’s not that we don’t need rules, but something which is careful not to smother the embers of recovery.”
Finally, Chris Leslie raised the need to ensure that democracy is not “forgotten in the future of executive decision making in the EU.” He said that Labour need to bear in mind that the European settlement risks being undermined if people feel that their economic experiences are being affected by decisions made far away in Brussels.
Phillip Souta, Director of Business for New Europe asked what Labour made of the government’s decision to opt-out of over 100 justice and home affairs provisions (including the European Arrest Warrant) Douglas Alexander said that it seemed the government had acted more out of “party management than national interest.” He stressed the potential danger of such an opt-out asking: “how do we safeguard citizens when something as fundamental as European Arrest Warrant is at risk?”
Richard Kaye from JP Morgan asked about the future of banking union and whether the UK could play a meaningful role in drawing up the plans. Chris Leslie said that the European Commission’s proposals on banking union needed to be “thought through carefully” as taxpayers shouldered the burden of bank recapitalisation. He said in relation to supervisory powers it is critical to determine the degree to which the ECB can vote down non-Eurozone members, and that “supervision cannot be wholly ceded to qualified majority voting.”
Mats Persson, Director of Open Europe, said that the forthcoming negotiations on the EU budget represented a “massive opportunity for Labour to make the case for reforming the structural funds,” so that funds can be better focussed on poorer member states and allow Britain a more targeted regional and generation policy itself.
He said that when talking about austerity, the political classes needed to remember what the alternatives are, i.e. a breakup of the Eurozone or more fiscal union with some cross-border transfer of liabilities, which would have an impact on Britain’s place in Europe. He also said that a recent Eurobarometer poll shows that public support for the European Union in 5 Mediterranean countries and Ireland has fallen from 55% to 25% in less than a decade.
Richard Corbett, an advisor to European Council President Herman Van Rompuy joined the panel, and said that whilst the economic situation was challenging, the Eurozone had managed to prevent competitive devolution and protectionism whilst maintaining a degree of currency stability.