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Friday, March 28, 2014

UK and Germany present united front in favour of EU reform

In a major coup for David Cameron, Chancellor George Osborne has penned a joint op-ed in the FT with his German opposite number Wolfgang Schäuble. Both argue for the need for EU reform (including services liberalisation) and for safeguards for non-eurozone states in the face of further eurozone integration - all areas of potential consensus we flagged up in our recent 'Anglo-German bargain' briefing.

On the acceptance of the different needs of non-euro and euro members, and therefore the need for safeguards, they say:
“As the euro area continues to integrate, it is important that countries outside the euro area are not at a systematic disadvantage in the EU. So future EU reform and treaty change must include reform of the governance framework to put euro area integration on a sound legal basis, and guarantee fairness for those EU countries inside the single market but outside the single currency.”
Getting explicit German support for this view and providing a united front on this issue is an important step forward for the UK and for Cameron's EU reform agenda. While Germany has previously hinted at willingness to support the UK on this issue, this is certainly a step up. It also brings Cameron closer to ticking off one of the key targets he recently put forward in what was probably the most important article nobody spotted. Open Europe has long argued that safeguards against further eurozone integration are crucial and that they will play a key role in determining the new set up and balance of the EU.

That being said, the UK government should not be complacent about where it now stands in terms of its reform agenda. While this represents progress, there is some way to go. This provides an important opportunity and a good base for the UK to begin testing specific reform proposals on other EU governments and electorates. After all, while Germany is the largest and possibly the most important partner to get on board, the UK also needs to convince the rest of the EU. While teaming up with Germany should broadly help on this front there is one constraint - not everyone buys into Germany's vision of the new eurozone with significant central oversight and limited share of liabilities. However, as the banking union shows, Germany has so far been adept at influencing the construction of new eurozone structures in its own image.

Possibly a more surprising inclusion is the joint support for services liberalisation, of which they say:
“We must complete the EU’s single market, especially in services, open up to international markets and conclude reforms to the euro area.”
Again, we've been advocating this for some time - we estimate that it could be worth up to €294bn for the EU's economy. Traditionally, Germany has been one of the staunchest obstacles to such service liberalisation, due to its many protected professions. As such gaining its public support is another big coup for Cameron and a positive step for the EU economy.
One final interesting point is noted by the FT:
"Mr Schäuble told Bruges’s College of Europe on Thursday that he wanted negotiations on a revised treaty to start straight after the European Parliament elections in May."
This is equally as important as all of the above for Cameron given that some of the biggest doubts around his push for EU reform and referendum have been on the time-frame of the negotiations. There is clear hope that discussions around treaty changes will begin in earnest after the elections (although in an ideal world they would have been part of an open and transparent debate within the elections). 

Overall the approach isn't perfect - it still speaks of a two-speed Europe, suggesting all member states are heading in the same direction, which is not the case - but it is a big step and an important one for Cameron. It is now vital that he seizes this opportunity to push a wider EU reform agenda.


Idris Francis said...

Had neither Osborne nor the Germans seen what Frau Merkel said when she came recently to tell us what we might be allowed to do - that there is no question of any signficant reform in the directions we want?

christina speight said...

This is a load of nonsense. No way is the single market going to be reformed, no way any powers will come back to the UK; no way will be bit a jot or a titt;e nearer true freedom and independence.

Open Europe is trying to kid us that unanimity can be reached with 28 countries. SO all will stay as it is UNLESS we use Article 50 to QUIT and THEN freely negotiate

And as Idris says we've been told to shut up already by Schaeuble's boss.

Anonymous said...

Nobody has yet explained the legal mechanism by which EUSSR inmate nations are allowed to renegotiate the terms of their imprisonment without declaring they are plan a break out.

Open Europe -- which sells itself as a font of knowledge regarding the EUSSR -- has avoided this question like the plague.

Why is that?

jon livesey said...

I know you are reporting this very well, but I think it is worth pointing out that Schauble knew very well what he was doing when he co-wrote this piece with Osborne.

Diplomacy has its own language, like Bridge bidding, and article like this are not published on a whim or without thinking the consequences through.

Schauble isn't just doing Osborne a favour. Schauble has obviously thought far ahead and has decided that sending a message that he and Osborne see eye to eye is a good move for Germany as well as for the UK.

jon livesey said...

Just on a question of accuracy, when Merkel came to London, what she actually said was that she was going to disappoint both sides.

That is, disappoint sceptics looking for radical reform, but also disappoint those who were "hoping that I will deliver the clear and simple message here in London that the rest of Europe is not prepared to pay almost any price to keep Britain in the EU"

Her English isn't perfect, but if you pay attention, she isn't saying no reform.

Anonymous said...

EU agreements, deals, rules, laws, directives, market convention and promises...

They will do what they want when they want and will use the EU to enforce their pronouncements.

Reform? They can stick it.


Anonymous said...

There is no chance that the constitution, (lisbon treaty), would be reopened, so any negotiations would only be for more regulations not less.

Denis Cooper said...

"Overall the approach isn't perfect - it still speaks of a two-speed Europe, suggesting all member states are heading in the same direction, which is not the case."

Well, at present it is still the case; there is no member state heading in a different direction, or the opposite direction, unless you know of one which has escaped my notice; it's just that some are moving in the same direction more slowly than others, so maybe "multi-speed" would be a better description than "two-speed".

Anonymous said...

The thing is that out of 17 trading blocs around the world, only the one is held back by ever closer political union, there is no reason for it whatsoever, a brexit would be the best for us with or without our negative trade balance with the eussr.

Anonymous said...

Again, no mention f the legal mechanism by which any EUSSR inmate nation can renegotiate its terms of imprisonment -- particularly the "Ever closer union" requirement without invoking Article 50 and saying they're leaving, or re-negotiating full treaty negotiations.

Maybe Open Europe doesn't understand how the EUSSR works?

Anne Palmer said...

Looking at what is to come from the EU (TTIP) and the GREAT loss of permanent Sovereignty if we remain in the EU, the only way the people of this UK Country may be set FREE from foreign rule, is by using the General Election in 2015 as the REFERENDUM we have been denied. We know AS A MATTER OF FACT that all three major Political Parties want to remain in the EU-apparently FOREVER, so the only alternative is to vote for any Political part or Organisation THAT WANTS OUT OF THE EU. It matters not if none have ever GOVERENED before, for lets face it, those we have elected in the past have only been able to obey EEC/EC/EU Orders. Whether the people in other Coun try's want out of the eU or rEMAIN in, is up to them. Using the General election as the REFERENDUM is the only way WE may have to set ourselves FREE.