Wrong timing by the Euro-skeptics

by Joshua Walker, Michael J. Boskin, George Akerlof, Rachel Kranton, and Tina Burrett

For Britain’s Euro-skeptics, the current eurozone crisis has an air of inevitability and opportunity. The crisis validates their view of the single currency as a straitjacket forcing disparate economies into an unworkable union.

“We told you so”, crow Britain’s anti-European politicians, goaded on by their supporters in the right-wing press.

As the eurozone teeters on the edge of financial abyss, Euro-skeptics in the British Conservative Party sense an opportunity to push Britain’s membership in a federal Europe permanently into oblivion.

The eurozone crisis renewed calls from Tory Euro-skeptics for a partial or total withdrawal from the European Union. On Oct. 27, 81 Conservative MPs defied a three-line whip to vote against their own prime minister for a referendum on EU membership. A further 15 Tory MPs abstained, meaning David Cameron failed to persuade more than half his backbenchers to support the government.

An instinctive but not fanatic Euroskeptic, Cameron told his MPs ahead of the Commons vote that shared their ambition to re-fashion Britain’s membership in the EU, but now was not the time for a referendum. Cameron’s appeal fell on deaf ears. Last month’s Tory parliamentary rebellion was the biggest ever on Europe.

In May 1993, 41 Conservative MPs voted against John Major on the third reading of the Maastricht Treaty. But unlike in 1993, Cameron was never in danger of losing the vote, thanks to support from Labour and the Liberal Democrats. Labour leader Ed Miliband’s decision to support the government in opposing a referendum may have emboldened Conservative MPs to break ranks with the prime minister — a clever, if opportunistic ploy by Labour to increase the scale of the Tory revolt.

Although Cameron was saved from defeat by Labour and the Liberal Democrats, the issue of a referendum has opened up coalition divisions on Europe. Writing in the Observer on Oct. 30, Liberal Democrat leader and deputy prime minister Nick Clegg launched a bitter attack on Tory Euro-skeptics, describing their aims to repatriate powers from Europe a “futile distraction” that if successful, spelt “economic suicide” for the U.K.

Clegg also refuted Downing Street’s claim that the Foreign Office had set up a special unit to assess bringing powers back from Brussels. Although Clegg’s tirade against Tory Euro-skeptics is embarrassing for Cameron, the presence of pro-European Liberal Democrats in the Cabinet provides the prime minister with a convenient ballast against his own party’s extreme opposition to the EU.

In opposition, Cameron committed the Conservatives to a Euro-skeptic position that became impractical in government. Being in coalition allows the prime minister to blame the Liberal Democrats for softening his stance on Europe. Cameron has already grudgingly acknowledged that to overcome the crisis in the eurozone, its members must deepen political integration.

The Tory frontbench understands that British attempts to exploit negotiations on a rescue package for the euro to grab back power from the EU would be self-defeating. Outside the single currency, Britain has much at stake in the eurozone crisis. Forty-nine percent of U.K. exports go to the EU. Furthermore, many British banks are dangerously exposed to European debt.

The antics of Conservative backbenchers are undermining Britain’s ability to shape Europe’s new economic architecture. French president, Nicolas Sarkozy, echoed the frustrations of many European leaders when he said he was “sick” of Britain complaining about the euro while demanding to be included in eurozone meetings. Conservative MPs counter that in pursuing a Euro-skeptic agenda, they are adhering to the wishes of their constituents.

It is true that the Euro-skeptic view articulated by Tory backbenchers reflects the sentiments of many British voters. An ICM poll found that in a referendum on EU membership, 49 percent of Britons would vote to leave, against 40 percent who would vote to stay.

But while voters share the Conservatives Euro-skepticism, they don’t share their preoccupation with Europe. Surveys by Ipsos-MORI show that voters regard the economy (68 percent) and employment (30 percent) as the most important issues facing the country. Only 1 percent sees Europe as most important. The British public want the government to fix the economy, not to fixate on Europe.

Conservative MPs claiming to think only of their constituents’ wishes in voting for an EU referendum have happily ignored voters’ views on National Health Service reform and cuts to public spending. The Conservatives have self-interested reasons for reopening the European debate. As the British economy slides back into recession, the Conservatives want to ensure that Europe gets the blame.

Chancellor George Osborne insists that slashing public spending is the only cure for Britain’s economic ills. But after almost 18 months, the results of Osborne’s medicine are anything but marvelous.

Unemployment is at its highest in 17 years, living standards are falling, and GDP growth remains sluggish. Osborne’s austerity plan clearly isn’t working. On Oct. 29, 100 leading economists called on the Chancellor to consider an alternative Keynesian-inspired “Plan B.” Osborne isn’t budging and public patience with U.K. economic policy is growing thin.

The anti-capitalism protesters camped outside St. Paul’s Cathedral strike a chord with many voters when they object to City executives receiving millions in bonuses, while the rest of society pays for their mistakes and misdemeanors.

According to a recent report by the Income Data Service, Britain’s top executives increased their remuneration by 49 percent in the past 12 months. Over the same period, youth unemployment has grown to a record 20 percent.

Is it any wonder that Britain’s youth are taking to the streets?

The protesters’ anger at corporate greed and the government’s failure to curb it is shared by many Britons. Fifty-one percent agree that it is time to put an end to a system that puts profits before people.

There is sympathy, too, for the protesters’ view that conventional political processes are incapable of addressing public concerns. The Conservatives’ latest outburst over Europe reinforces the perception of a government out of touch with voters’ priorities.

The current European economic crisis offers Britain an opportunity to soberly reassess both its relations with the EU and its model of capitalism. In so doing, British politicians could restore public faith in politics as well as economic prosperity.

Tina Burrett is an assistant professor of international relations at Temple University, Japan.