Column : Central but decentralised

Jan 09 2013, 00:50 IST
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SummaryThe euro crisis is forcing eurozone nations to rethink how they wish to run their currency union. It is also forcing European Union countries that don’t use the single currency, such as Britain, to rethink their relationship with Europe.

David Cameron is planning a keynote speech on UK’s relationship with EU later this month. Here’s what he should say

Hugo Dixon

The euro crisis is forcing eurozone nations to rethink how they wish to run their currency union. It is also forcing European Union (EU) countries that don’t use the single currency, such as Britain, to rethink their relationship with Europe.

We have three main options: quit the EU; move to the edge as the eurozone pushes towards closer union; and seek to stay at the heart of Europe and influence its development in a way that promotes our interests.

There are members of my own Conservative party who would like Britain to quit. There are others who would like us to move to the periphery. But I am determined to make sure that we stay at the centre.

Let me deal, first, with the argument that Britain’s interests would be enhanced if we were no longer in the EU. Being a member costs us money, partly to subsidise anti-competitive practices such as the Common Agricultural Policy; it also requires us to follow a mass of rules, some of which inhibit our competitiveness. But half our trade is with the rest of the EU. It would be madness to cut ourselves off from a rich single market of 500 million people.

Of course, leaving the EU would not automatically mean that we would lose access to the single market. Switzerland and Norway are part of the same free trade zone without being EU members. But the quid pro quo is that they still have to follow the rules of the single market. It is not in our interest to put ourselves in the same position—where we have to do what we are told without any say in drafting those rules. Look at the deal that we negotiated before Christmas to ensure our banks are not discriminated against. We wouldn’t have been in a position to cut such a deal if we hadn’t been at the top table.

What then about retreating to the periphery? This might seem an attractive way of having our cake and eating it. After all, as a response to the euro crisis, the eurozone is considering plans to add fiscal and political union to their monetary union. This will involve treaty changes which everybody, including Britain, would have to approve. We could use our leverage to negotiate the repatriation of certain powers

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