I want to start by analysing why the IPPR asks whether the UK is heading for exit from the EU and outline why there has been a surge in euroscepticism.
I will explain the Labour party’s position on a referendum on our membership and reflect on the relative importance of Europe to the electorate compared to other issues.
Then finally and crucially, I will set out the case for the UK remaining in the EU and spell out the risks of leaving.
The Eurozone crisis
Prior to the eurozone crisis, although our EU membership was unpopular with some politicians, sections of the media and the public, there was little serious discussion about a possible UK departure.
However, as Ed Miliband recently said – there is now a very real danger that without a change in course, the UK will “sleepwalk towards exit from the European Union”
It is undeniable that the Eurozone crisis has created optimum conditions for Euro-scepticism.
Beyond unsustainable levels of sovereign debt, the crisis has also exposed other serious imbalances in the single currency area.
In terms of competitiveness, balance of payments and levels of production, the gap between member states continues to be unsustainable.
For too long, European leaders ignored these imbalances and European citizens are now paying a heavy price.
Across Europe there are 25 million people out of work.
In Greece and Spain, one in every 2 young people is unemployed.
When the European Union is featured on the news, often our TV screens are filled with images of social unrest - such as peaceful and violent protests in Spain and Portugal and Greek people burning their own buildings.
We also see a lack of political leadership from European heads of state and government. There are too many summits and too few decisions.
As the Eurozone crisis has intensified, concerns over our membership have certainly grown.
But there is a latent euroscepticism in the UK that has built up over time.
Our history and geography are part of the explanation as is the British press.
The EU in some cases does overstretch itself but it is also true that there is regular and persistent misreporting about the EU by some sections of the press as Lord Leveson recently underlined.
The latest ridiculous story was that the EU was going to outlaw the Famous Five.
The British public are pragmatic and many are still undecided and are therefore persuadable.
It is also worth remembering that the most vocal anti-European politicians have always been anti European.
Indeed today in Parliament, some anti Europeans are still giving exactly the same speeches that they gave twenty years ago during the Maastricht Treaty debates.
Prime Minister’s role
It is also clear that the Prime Minister has to take some responsibility for our proximity to the departure lounge.
He has lost significant influence in Europe and his failure to lead his party is reminiscent of John Major’s term in office.
But he is even weaker than Major.
Cameron’s Conservatives are more deeply divided than Major’s Conservatives.
Not only do Cameron’s own backbenchers openly contradict him this issue, so do members of his own cabinet (coincidently in particular those who are aspiring to be the next party leader).
Major’s relationship with Helmut Kohl was instrumental in securing carve outs for the UK from the Maastricht Treaty.
Cameron in contrast does not have a relationship of trust with Angela Merkel.
The German Chancellor hasn’t trusted him since he pulled his MEPs out of the centre right grouping in the European Parliament and she was dismayed at his approach at the December summit last year.
His decision to walkout - during negotiations on a treaty which wasn’t even going to apply to the UK - was a serious mistake.
It represented a huge break with the policy of successive British governments.
And it left our European Partners questioning the Government’s commitment to the EU.
Liam Fox and other anti European Tory MPs have argued that the ambiguity - as to whether the UK is going to remain a member of the EU - strengthens the UK’s hand in negotiations.
In fact, the opposite is true.
The ambiguity of the government’s commitment weakens their position in Europe.
When I visit European capitals, I sense concern and frustration about the government’s approach.
So much so that even our natural allies are worried. For example, the Finnish Europe Minister recently said:
“Britain is putting itself at the margins - the boat is pulling away and one of our best friends is somehow saying ‘bye bye’ and there’s not really that much we can do about it.”
So are we heading for the exit?
So Cameron’s isolation in Europe has taken us closer to the departure lounge.
And the eurozone crisis has certainly intensified the debate about the UK’s continuing EU membership.
However, that being said, the question about whether we’re heading for exit needs to be seen in the broader context of what is really important to people.
The uncomfortable truth for anti Europeans is that the public are not obsessed with the issue in the way that they would have us believe.
In a recent IPSOS/MORI poll, only 2% of people said that the EU was the most important issue facing Britain today, and just 6% said it was one of the important issues facing the country.
For the majority of the electorate the EU is simply not a priority.
The economy is the most important issue by far, followed by unemployment and the NHS and it is around these issues that the next General Election will be won or lost.
No political party has ever won a general election on an anti-European platform.
The three main Party leaders all agree that the UK should stay in the EU and as yet no major leader is calling for a referendum.
The Prime Minister seems hesitant about whether to promise a referendum.
His much trailed set piece speech on Europe has now been postponed three times. (refer to rumours that it will happen this week).
At one point it seemed that he was toying with the idea of an “in-in” referendum - a vote for the status quo or renegotiation.
Now he has talked about seeking fresh consent but without defining what that means.
It seems that there is intense debate at the top of the Conservative Party as to whether to push for a referendum or to make a manifesto promise to renegotiate the terms of our membership.
But David Cameron is not the only one who is confused.
Boris Johnson is so unsure what to say about a referendum that he has had 3 different positions in as many months!
Labour’s position on a referendum
To be clear – it remains my position and that of the Labour Party that we should not have a referendum now.
At a time of high unemployment and a lack of business confidence.
When people across the country are looking for work
When many part time workers want more hours to make ends meet
And when businesses are struggling to get more orders on their books
The last thing we need is to introduce even more uncertainty and instability.
A referendum would weaken our economic recovery, threaten jobs, foreign direct investment and undermine business confidence.
The majority of business leaders and trade unionists understand these risks and regard our membership as vital to our future prosperity.
The debate about a possible referendum is drowning out the discussion that we should be having – about the kind of Europe we want.
Being pro European is not about defending the status quo and necessarily involves being pro reform.
In order to avoid the risks of exit in the future, we need to powerfully make this case.
The Labour Party would like to see wide-ranging reform in the EU:
An internal market which is as successful in services as it is in goods
A European budget fit for the 21st Century not the 1950s
State aid rules which unambiguously allow governments to pursue an active industrial strategy.
Making the case for reform, however, should go hand in hand with underlining that our membership of the EU is
- key to securing influence in a multipolar world in which increased regionalisation is the norm.
- key to solving the challenges of globalisation
- key to securing trade deals with emerging economies
As the IPPR report identifies, the EU derives legitimacy when it demonstrates that it is solving problems in people’s lives that nation states alone cannot solve.
Securing influence in the world and regionalisation
Today, the size of a country’s population and economy determine its power in the world.
Increased regionalisation is now a defining force.
Countries are seeking to cooperate more closely with their neighbours.
For example, both Mercosur in Latin America and ASEAN in South East Asia are in the process of building their own single markets.
These regional associations often regard EU cooperation as a model from which to draw inspiration.
For decades to come, the EU’s economy will remain in the top four, alongside the US, China and India.
In 2000, the UK’s economy was the fourth largest in the world. By 2030 it will be the 10th largest.
It would diminish the UK’s power to withdraw from the regionalisation on its doorstep.
Globalisation has provided many opportunities for businesses and individuals alike but it has also brought a set of challenges that even the largest and most powerful countries cannot solve on their own.
From climate change to global economic instability.
From cross border crime and terrorism to energy security.
These all pose great, if not existential, threats to our society and our way of life.
Dealing with these issues requires international cooperation on an unprecedented scale.
In terms of foreign policy, when we stand stall in Brussels, we stand tall in Beijing and Washington.
Successive American Presidents have made it clear that the UK is important precisely because it is seen as the bridge to the EU.
In a global economy dominated by economic giants, it makes no sense to shrink our domestic market from 500 million to 60 million people.
Our membership is also vital to our international trade beyond the EU.
Anti Europeans offer a false choice between trade and EU membership – remain in the EU or trade with emerging economies.
We must, of course, improve our export performance in the rest of the world.
But we will not build real export success if we start by cutting ourselves off from our largest existing market and our largest collective negotiating tool.
Indeed our membership of the EU is crucial to prising open markets in emerging economies and striking trade deals that create opportunities for our exporters.
British businesses will see the benefit of EU Free Trade Agreements, such as the FTA with South Korea, and potential future agreements with the US, Canada, Singapore, Japan and India.
Indeed, as the CBI President, Sir Roger Carr recently stated “Europe is the bedrock of our international trade. It should be viewed as the launch pad from which our global trade can expand – not the landmass from which we retreat.”
What are the alternatives to our membership?
As well as stressing the benefits of our membership, it is also important to underline the risks of leaving the EU.
If we were to leave, foreign direct investment would be under threat because multinational companies - such as Nissan, Toyota, in my own constituency Tata-owned Jaguar Land Rover - all see the UK as a launch pad to the rest of the single market.
We would automatically come out of the EU free trade agreements and our voice in the world would be diminished.
The truth is that those seeking withdrawal don’t acknowledge these risks and don’t have a compelling alternative to EU membership.
One option is an enhanced special relationship with the United States. But that is a non starter given that President Obama has made it clear that the US is now looking east rather than west.
Another option is for the UK to become a de-regulated enclave on the margins of Europe.
And in fact some anti Europeans think that the UK should engage in a race to the bottom.
However, as a social democrat, I find the idea of a ‘Sweat Shop Britain’ deeply concerning.
I don’t want the UK to become an off shore low value economy, with low skills and low wages, outside of the EU.
As Ed Miliband has set out in his speech to the CBI, our membership of the European Union is central to securing a fairer economy, a One Nation economy, in which there are high-skills, high-wages and high-productivity.
Some Eurosceptics deny that they seek withdrawal.
They claim that they want to renegotiate the terms of our membership.
However, as Tony Blair pointed out last month, this is often the refuge of those who want us to leave.
Boris Johnson’s most recent position was that we should negotiate a relationship which more closely resembled Norway or Switzerland, “except that we would be inside the single market council and able to shape legislation”.
He clearly wants to have his cake and eat it.
Norway pays more in per capita to the EU than the UK, but has no say over the rules.
Why would the other 26 member states let the UK have unhindered access to the single market without having to abide by any the rules regarding the environment, consumer protection and workers’ rights.
This would be a free pass without any obligations. There would clearly be a price to pay.
And even if it were a realistic prospect, at what point does the UK de facto become like
Norway even if not de jure, having such little influence that it might as well be outside.
We need a flexible EU
At a time when the future shape of the eurozone and the EU is changing, it is even more important for the UK to have a place at the top table to ensure that the Government continues to shape the decisions which affect us.
Putting the single currency on a sustainable footing has rightly been the focus of European leaders in the last few months.
However, even in a European Union in which the eurozone members integrate their economies more closely, the vast majority of policy areas will affect the 27 and require negotiations with the 27.
The EU is like a Swiss cheese, there have always been holes (that is carve outs negotiated by Member States with specific concerns) but the holes have never undermined the entire construct.
The EU should remain flexible enough to recognise this reality.
The Labour Party remains committed to our membership of the EU and we will do all that wecan to ensure the UK does not head for the exit.
We remain committed to pushing for an EU that focuses on solving problems nation states cannot solve on their own.
An EU that is outward-looking and non-protectionist so that we can prosper in a world dominated by economic giants.
An EU that is flexible enough to accommodate varying degrees of integration whilst preserving a common purpose.