29 January 2013

Tony Blair: Leaving Europe would be very bad for Britain

The part of David Cameron's speech I completely agree with is where he talks about the need for reform and change in Europe. This is clear and right. Europe's got a huge competitive challenge, and it's a case that successive British prime ministers have made, including myself. Chancellor Merkel would be an ally on these questions. The part of Cameron's speech that is a problem is not the bit about Europe, it is the point about the British relationship with Europe. I have difficulties with the notion that we commit now to putting a referendum question with an out option. We put into play the issue of whether Britain exits the European Union. That's a quite separate and different question from whether Europe reforms or not.

I think Europe should react by dealing with the reform case on its merits. When Cameron talks about the need for reform, he'll have a lot of support in that. The eurozone crisis in many ways has exposed the need for reform; it hasn't actually created it, that need for reform was there anyway. Whether you're talking about pensions in Italy or labour market reform in Spain -- these are changes that in any event should happen. So I'm sure the rest of Europe will deal with this, but I don't think it will give us additional negotiating strength to say, well, if you don't give us what we want, we're off. You've got to be very careful with this argument, because Europe will resent it.

Labour should argue unequivocally for Britain to stay, it will help the party to build bridges to the business community, which is important. The sensible thing to do is to argue the case for change inside Europe, build up alliances to achieve that and stay with the biggest political union and the largest business and commercial market in the world.

I imagine that people on the streets in Athens, Rome or Madrid would be totally opposed to some of the changes Cameron will want to make. The problem that Europe has is that the concept of the single currency with the single market is a perfectly sensible concept. But I'm afraid in its execution there was not the proper alignment of the political desire to have a single currency with the economic decisions necessary to make it work. And that misalignment is what we are now dealing with. And we've got to deal with it in circumstances of enormous difficulty in a crisis.

But I keep saying to people about Europe, you've got to take the long view. Right now, possibly for the next few years, Europe is going to face a period of great uncertainty. The measures that the European Central Bank has taken have given us some breathing space in terms of liquidity, which is why the bond yields have come down. But that didn't solve the solvency problem or the growth problem. So I still think Europe faces a great deal of challenges. But in the long term Europe will come to its feet because of the underlying rationale for it. It's the reason why there is the ASEAN Group, the African Union, Latin American countries coming together. Regional groupings make sense today. Europe should decide what it really wants to do and then focus on doing it.

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