Never mind the Tories – What will Labour do about Europe?

Over on the Guardian's Comment is Free section, we argue:

When talking to diplomats, policymakers and journalists from around the EU, by far the most common question I get is: "What do you think the Tories will do on Europe?"

That question may soon have to be revised. It may not be the Tories, but the Labour party that will decide Britain's place in Europe – possibly even pushing it out altogether.

Much can happen before 2015, but there is a possibility that the Tories could suffer defeat at the polls at the next elections. Then Brussels' biggest fear – a sweeping Tory-led renegotiation of the UK's EU membership terms – will not materialise, at least not any time soon. Instead, either as part of a Lib-Lab pact or majority government, the ball will be in Labour's court. So what will Labour do?

In its 2015 election manifesto, the Conservative party could well promise renegotiation followed by a referendum on the result. It's far from set in stone, but increasingly likely. Tory scepticism on Europe as an issue may not allow David Cameron to get away with less. Labour effectively has two choices in how to respond:

Option one: Gamble on Europe not being an electoral issue.

The thinking is that the EU always ranks low on the list of voters' concerns. National elections are never fought over Brussels. This is only partially true. Europe is a low priority if presented as a single issue – but the fact is, it's not. To varying degrees, it permeates other issues such as the economy, general trust in politicians and, most importantly, immigration (which consistently ranks high) – something that is likely to be established by the current government's "balance of competences" review. Labour could try ducking the question in a campaign, but if the Tory party manages to successfully tap into the public's growing hostility towards the EU status quo – and with the eurozone's demands for greater integration unlikely to go away – it could really hurt Labour.

Option two: Promise a referendum of their own and so neutralise the Tories' pledge.

The Labour party is unlikely to promise a public vote on a renegotiated EU deal – in large parts, they have already rubbished the idea – so it will have to be a straight in/out vote. The plan would be to call a referendum shortly after the elections, campaign for a yes, win the vote and move on to other business.

This would be a massive gamble. The experiences of François Hollande in France and Mariano Rajoy in Spain show that political honeymoons are rare in today's EU politics. And heaven knows what Europe and the British economy will look like in 2015/2016, with the Greek bailout package set to expire, for example. If the referendum coincides with, say, a major new drive for more EU integration, with fresh demands put on the UK; and with a large number of Tories campaigning to leave (more likely in opposition), the British public may be pushed over the edge. It would then be Labour that unintentionally pulls the UK out of Europe.

There may be some options in between, such as promising a referendum on forthcoming treaty changes – or pledges to pursue some milder reforms – but that will not sound overly convincing. And even leaving aside the referendum issue, Europe could hit Labour like a steam train: in a few years' time, the free-standing "fiscal treaty" is meant to be incorporated into the EU treaties. Will Labour nod that through, given that it effectively codifies the Bundesbank-style austerity, much criticised by Ed Balls and co? Will it veto Germany's plans for a fiscal discipline commissioner, if they materialise? How will it relate to the evolving eurozone banking union and potential accompanying treaty changes? Will it tear up the coalition's EU "referendum lock"? The more the eurozone agrees to do in common, the harder it will be for the UK to stand still. In fact, the eurozone crisis means that the status quo is no longer an option for Britain.

The problem is that, fundamentally – and much like the Tory leadership itself – it does not yet appear that Labour knows what it wants for the UK in the multi-tier Europe that is developing. The previous Labour administration's policy of simply sitting in the "euro waiting room" and hoping the public would come along for the ride is no longer credible. However, the wing of the party that said it always opposed euro membership has yet to articulate what its alternative plan is.

There are a lot of good and clever people on Labour's front benches. So far, it has suited Labour to treat Europe as a coalition piñata. Not for much longer. Labour now has the chance to develop a coherent and positive European vision and a plan of its own – designed around a flexible model for EU co-operation, in which Brussels does less in the UK, but does it better. Bank on the status quo or Tory splits, and both the party – and Europe – may be in for some unexpected surprises.