Osborne: EU needs 'major reform' to avoid falling behind

Published on Wednesday, 15 January 2014 11:39
Written by Daniel Mason

Europe is "falling behind" fast growing economies such as India and China, chancellor George Osborne warned today – as he called for reform of the EU and treaty changes to boost competitiveness and protect British interests.

In a speech to a conference organised by the Eurosceptic think tank Open Europe, Osborne said the European economy had "stalled" over the last six years while its competitors had raced ahead.

"Make no mistake, our continent is falling behind. Look at innovation, where Europe's share of world patent applications nearly halved in the last decade. Look at unemployment, where a quarter of young people looking for work can't find it."

Osborne also repeated a statistic cited regularly by German chancellor Angela Merkel that Europe accounts for 7 per cent of the world's population, 25 per cent of its GDP – but 50 per cent of welfare spending.

"We can't go on like this," he said, arguing for reform at domestic and European level.

"If we in the EU are going to solve our competiveness problem we need to think big. If we are going to create jobs and provide economic security, we need major reform."

As examples he said it was "urgent" to complete a transatlantic free trade deal with the United States, and that the EU should "get on with" completing the single market in services, energy and digital.

The chancellor added that the EU treaties were "not fit for purpose" given developments in the eurozone in the wake of the financial crisis. "They didn't anticipate an EU where some countries would pursue dramatically deeper integration than others."

To protect British interests, he said: "Instead of make-do-and-mend, we should make the treaties fit for purpose."

In response, Labour's shadow foreign secretary, Douglas Alexander, claimed the Conservative party leadership was "spending more time negotiating with their backbenchers than negotiating with Europe to deliver real reform".

"David Cameron's approach to the EU has been shown to be not just bad policy, but also a bad part management strategy, with nearly half of his own backbenchers just this week demanding more," he said.

Earlier this week 95 Conservative MPs wrote to Cameron calling for the UK parliament to be given a veto over all EU laws. The prime minister has already pledged to hold a referendum on EU membership in 2017 if he wins the next general election.

"Instead of threatening exit, David Cameron and George Osborne should be focused on delivering reform in Europe," Alexander said. "Reform in Europe not exit from Europe represents the right road for Britain."

But the leader of UKIP, Nigel Farage, insisted it was "utter bunkum" to claim that the EU could be reformed from within. "The EU's anti-democratic thirst for power shows no sign of abating," he said.

Meanwhile Katja Hall, chief policy director at the CBI, said the benefits of the single market far outweighed the costs and membership remained "fundamental to future growth and jobs".

But she added: "The chancellor sets out a compelling case for reform to ensure Europe stays competitive. We need an EU that is more open and outward looking and must protect UK influence as the eurozone integrates."

Separately, the chief executive of car manufacturer Ford's operations in Europe told the Telegraph that the UK would be "cutting its nose of to spite its face" if it left the EU.

Steve Odell said that to trade with the EU from outside, the UK would still have to comply with European regulations but "without a voice in the process", and suggested that Ford would reassess its presence in the country. 

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