“On the 19th September 1946 Winston Churchill delivered a famous speech at Zurich University which proposed the formation of a united Europe. Prescient though Churchill was about the need for political unity to replace conflict in Europe, there was some ambivalence about the part that Britain was, in his view, to play in this development. “We British” he said “have our own Commonwealth of Nations”. In a later speech in the House of Commons in June 1950 Churchill developed the theme that whilst Britain should play an active part in European integration we were different because we had a “unique position in the world” as a member of three groupings; the “special relationship” with the United States, the Commonwealth, and Europe. Churchill had been wounded by the marginalising of Britain as an inevitable consequence of both the rise of the two superpowers of the USA and the Soviet Union and of the gathering pace of the withdrawal from Empire (notably the granting of independence to India). And so he sought to establish a continued special place for Britain uniquely as a player in three supranational alliances. But, as we know, times were soon to change. Shortly after Churchill’s 1950 speech West Germany, France, Italy, The Netherlands, Luxembourg and Belgium formed the European Coal and Steel Community and this was to be followed in 1958 by the creation, by the same six countries, of the European Economic Community itself. The rationale for economic cooperation across Europe became increasingly strong and whilst it was to be 13 years before the United Kingdom joined the Club this eventually happened on 1st January 1973 under the leadership of my distinguished predecessor Edward Heath. This decision was endorsed two years later by more than two-thirds of the British people in a Referendum.

In looking back to the early years of Britain’s participation in the mechanisms of European unity I do so with a real sense of pride. We may have initially been latecomers but, I believe, once we were full members of the EEC and its successors we have not, as a Nation, been unenthusiastic Europeans. And let me say upfront nor are we now! But I believe that we have been and hope that we will continue to be objective and pragmatic in our participation in the European project. The words of Margaret Thatcher in 1988 are as apposite today as they were when she said them:

“What we should grasp, however, from the lessons of European history is that, first, there is nothing necessarily benevolent about programmes of European integration; second, the desire to achieve grand utopian plans often poses a grave threat to freedom; and third, European unity has been tried before, and the outcome was far from happy.”   

In quoting Baroness Thatcher I seek in no way to denigrate those for whom European integration has been as much of an emotional journey as a practical one. Without the passion of the likes of Jean Monnet, Konrad Adenauer and indeed Winston Churchill that journey might never have even begun. But what Baroness Thatcher was saying was that integration is not necessarily benevolent – we need pragmatically to judge every proposed step towards greater formalised unity. And we need to check whether the loss of sovereignty and other consequences implicit in each such step are prices that we are prepared to pay for the benefits on offer. Britain’s’ decision not to join in the single currency was an example of such a case – perhaps the most significant example of all.  It is not just with the 20/20 vision of hindsight that this decision was prudent. But let me be clear about my position of this. Many of us who opposed Britain joining the Euro did not do so out of any narrow nationalism let alone flag-waving patriotism. Nor did we do either so to embarrass our European partners or to suggest that Britain was in some superior way a semi-detached member of the European Union. We did so because in the cold light of day we believed that to maintain control of our own currency ensured that we could much more  easily maintain control of our economy – an Economy that is, on its own, the sixth largest in the World.

It is perhaps timely to remind ourselves that the relationship between a currency and an economy is indissoluble. A currency is so much more than just a transaction mechanism. The case for a single currency across trading partners was and remains irrefutable at a transaction level. To eliminate transaction costs, facilitate movement of capital, encourage travel and tourism, and to generally make life easier and cheaper for businesses and citizens alike a common currency is highly desirable. But a currency is also, and crucially, a financial entity which is used as a tool of economic management. Nations use exchange rates to balance their import/export balances. They use interest rates to apply stimuli to or restraint on Growth. Levels of inflation are determined in currencies and the expansion or contraction of the money supply has to be carried out by these same currencies. The creation of the Euro, an astonishing achievement of pooled sovereignty and an extraordinary and courageous act or unity was also something of a leap in the dark. There were voices at the time who spoke not necessarily against the single currency but in favour of clarifying the fact that it was a decision with implications which went way beyond that of facilitating transactions. In short creating a single currency created also the unavoidable necessity of not just setting interest rates centrally and consistently but also requiring such matters as the level of public spending to be made not at a national but at a supranational level. As we have seen this has led to political and social problems in countries such as Greece and Spain which remain unresolved. The departure of some of the weaker members of the Euro from the single currency because it so restricts their freedoms to manage their problems remains a strong possibility.

The much greater centralisation of economic management required to maintain the viability of the Euro may not be seen as a direct concern of the United Kingdom – but this does not mean that we are just observers. The City of London is Europe’s most important financial centre and we have no intention of distancing ourselves from the economic management of the European Union and placing the City’s position at risk.  Indeed the fact that the UK is not part of the Euro can make us very objective participants in the process by which it is reconstituted and supported. The EU was and is first and foremost an economic Union – we are part of that Union and intend to remain so and to play a full and active part. It is also in Britain’s interest that we do so. The greatest trading block in the world is the European Union and its GDP is bigger by some margin than that of the world’s largest national economy – the United States. It would be absurd for Britain not to be full members of this Union and let me say again that we intend to remain so!

In times of economic troubles it is all too easy to seek scapegoats and it is regrettably the case that a significant minority of the political players in Britain point the finger at the EU. There is nothing new in this – I am not the first British Prime Minister to struggle with the problems of the presence in our country of Eurosceptism – or worse! Let me be clear about my position on this as well. It is right to be sceptical about everything not just Europe. Emotionally I agree with the great French scientist Henri Poincare who said “Doubt everything or believe everything: these are two equally convenient strategies. With either we dispense with the need for reflection.” Recent history surely teaches us that there are fewer certainties around and this is the case with the issue of Britain in Europe. I neither doubt nor to I believe everything the Eurosceptics tell me – nor do I everything that the Europhiles tell me either! And to “dispense with the need for reflection” would be irresponsible. If we add to the benefits of reflection the benefits of open discussion, negotiation and debate then the way forward becomes clear.

As the head of Government in Britain I have a dual role. First and foremost I am of course accountable to the people of Britain. But as the leader of one of the three largest economies in the European Union I have a duty to that Union as well. The British Government cannot duck its European responsibilities and I certainly have no intention of doing so. The EU needs to change in many areas and indeed that process of change is underway. Critics of the Union forget that it is not and never has been static – change is the norm.  Angela Merkel has said “In Europe it is particularly important that we build good relations to everyone who holds political responsibility because Europe can only be built together.” And building Europe requires changing Europe. Changing the relationship between the Union and the member States. Changing the way the Union’s finances are collected, underpinned and spent. Changing many of our processes to make them more accountable and improving the democracy of decision-making. We will work closely with our partners and I pledge myself personally to help build a new Europe that will endure and prosper. In some cases the changes we seek may be specific to the United Kingdom, not least because we are not a member of the single currency union. In other cases we will work with partners to change things in the interest of the Union as a whole. There is much to do and I pledge to help to it as a full member of the EU not as a detached player. To return to Mrs Thatcher in 1988 – she also said “Britain does not dream of some cosy, isolated existence on the fringes of the European Community. Our destiny is in Europe, as part of the Community.”  I am happy to re-endorse that message.

Finally I want to say something about the need to carry our peoples with us. Across Europe there is disillusionment and concern about our economic and to some extent our social circumstances. If we have a good story to tell then we can reassure people. That story must convince the people of Europe that we have their best interests at heart. This will be easier in some parts of the Union than others for obvious reasons especially as and it will require in some cases some further subsuming of national interest in pursuit of the common European goal. This is not an easy message to present in times of strife, high unemployment and low growth. But it is essential that we get the message across. In Britain we must actively campaign to ensure that our people, many of whom who are deeply and understandably sceptical, understand the benefits that Britain’s membership of the European Union brings – not least that we have a stronger voice on the world stage as a member than we would alone as President Obama has recently and quite fairly reminded us! Membership of the world’s largest trading block and the world’s largest single market. Participation with all of our 26 Partners in global talks and negotiations. Participation with our partners on cross border crime and security issues as well as matters relating to the environment and technological development. The pooling of resources across 27 Nations to solve the very real problems of these febrile times. The case is compelling – we must promote it.

I opened my speech to you today quoting the words of Winston Churchill and I will close it with another quote from Britain’s greatest modern leader. He said in 1954 “To jaw-jaw is always better than to war-war.” The European Union was awarded the Nobel peace prize last year because it is a very real example of Churchill’s maxim – or as Jean Monnet put it “It is better to fight around the table than on a battlefield,” In the coming months and years there will no doubt be some battles around the table as we seek to change the European Union together. It is important to reiterate that Britain’s position is that these battles are necessary not because we as a Nation reject the European Union – even less because we want to create some pretext to leave it. It will be because of the fact that if something is truly worthwhile it is worth fighting for. And the prize of continued European unity, economic cooperation and peace is far too great a one for any of us to want to give it up.”

Paddy Briggs

January 2013

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