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George Osborne urges Germany to strike 'deal' to reform EU

Published 03/11/2015

Chancellor George Osborne
Chancellor George Osborne

George Osborne has urged Germany to join the UK as partners in a "deal" to reform the European Union and deliver the changes needed for Britain to remain a member.

Speaking to the German equivalent of the CBI in Berlin, the Chancellor of the Exchequer set out details of safeguards Britain is seeking for EU states outside the single currency - including legally-binding assurances that they will not be called on to bail out eurozone members and their companies will not face discrimination because of their country of origin.

Mr Osborne's comments came as German chancellor Angela Merkel told the same conference that her country " will do what we can so that Britain can stay" in the EU.

The Chancellor told the BDI industrial body that Britain is not seeking any new "opt-outs" or new powers to veto the closer integration of the eurozone which Berlin is seeking, but wants safeguards for non-euro states embedded in EU law.

Rewriting the fundamental principles underpinning the EU to recognise that the 28-nation bloc has more than one currency and to protect the rights of members which do not use the euro would be good not only for Britain but for all of Europe, he said.

"When it comes to the relationship between those who use the euro and those who do not, here's the deal," said Mr Osborne. "You get a eurozone that works better. We get a guarantee that eurozone decisions and costs are not imposed on us.

"You get a stronger euro. We make sure the voice of the pound is heard when it should be.

"A deal that is written into law. A deal that is good for Britain. And a deal that is good for Germany too.

"The result will be a better EU, stronger economically so it becomes more competitive in the world and supports the creation of jobs and higher living standards for all its citizens, stronger constitutionally so it works better for the 19 countries of the eurozone and better for the 28 countries of the single market.

"I ask you to work with us to make these changes and to form a partnership ... Let Britain and Germany work together as partners for a European Union that works better for all of us and deliver that brighter and more secure future for all of our citizens."

Mr Osborne's speech amounted to the most detailed explanation yet of the changes Britain is seeking in the renegotiation of its EU membership ahead of the in/out referendum promised by the end of 2017.

Prime Minister David Cameron is due to publish the wishlist of demands in full later this month, ahead of a crunch summit of EU leaders in December.

The Chancellor said Britain wanted reforms to cut red tape, boost European competitiveness and complete the single market in services and the digital economy, warning: "If the EU allows itself to be priced out of the world economy, the next generation will not get jobs, living standards will decline and the Union will lose the popular consent of the people of Europe."

And he said that only a "tiny minority" of British voters wanted the country to be signed up to "ever-closer union" with other EU states.

Britain supported the "inexorable logic" that will require the EU treaties to be changed to allow the construction of a stronger and more closely integrated eurozone, said Mr Osborne.

But he said that the process must include the establishment of safeguards for non-euro states "embedded in EU law and binding on EU institutions" that will:

:: Support the integrity of the single market;

:: Recognise that the EU has more than one currency and that businesses should not face discrimination on the basis of the currency of the state in which they reside;

:: Ensure that eurozone integration does not damage the interests of non-euro members;

:: Ensure that participation by non-euro members in developments such as banking union is always "voluntary and never compulsory"; and

:: Prevent taxpayers in non-euro countries being asked to bear the costs for supporting those in the single currency area.

"We want Britain to remain in a reformed European Union, but it needs to be a European Union that works better for all the citizens of Europe - and works better for Britain too," said Mr Osborne.

Mr Osborne welcomed Mrs Merkel's comments to the BDI, which will be seen as an indication that Berlin is ready to smooth the path to a successful renegotiation.

Meanwhile, BDI president Ulrich Grillo warned that UK withdrawal would be a "dead end street" for Europe.

Mr Grillo said the BDI believes "with conviction and passion" in continued UK membership.

"The British are an extremely important partner for us in the EU on at least three central fundamental questions - the deepening of the single market, the development of new markets and the introduction of structural reforms for the good of European competitiveness," he said.

"A Brexit will lead us all into a dead end street. We need each other.

"Great Britain's future lies not in Europe's front yard, but in the centre of the European single market with its 500 million consumers. The BDI calls on the new British Government to make the case clearly for remaining in the EU."

Shadow chancellor John McDonnell said: "This trip is a meaningless publicity stunt as he is demanding powers of veto that we already have. These conditions are all straw men that the Chancellor wants to then knock down and claim victory to a home audience.

"Rather than sticking up for bankers in Berlin, he should be sticking up for steel workers in the UK and those people in our country who are not paid a living wage, and who are about to be hit by £1,300 a year on average by his tax credits cuts."

And Ukip leader Nigel Farage said: "If this sort of sycophancy is what we have to expect from Cameron's so-called renegotiation they may as well give up now. From Osborne calling for deeper single market integration to reform of the EU's treaty framework to strengthening the euro, it sounded more like a speech from an EU commissioner.

"As far as I can tell all he actually asked is for Britain to not be forced to bail out the euro, but for further treaties to be written and for a stronger EU constitution. Who is he actually working for?

"Osborne made no mention of free movement, no mention of getting back any of the powers we have already ceded to Brussels and no mention of cutting regulation nor even reducing the net contributions we make to the EU. It is quite apparent that the Conservative Government are not just for 'in', they are actually for 'more' "

Mrs Merkel told the conference: "I am of the opinion that Britain should stay in the EU ... But of course we aren't the ones making that decision. It is for the British to decide.

"When it comes to justified concerns, where competitiveness and better functioning of the EU are concerned, British concerns are our concerns."

Mr Osborne made clear that he believes treaty change will be needed to enshrine the safeguards he is seeking in EU law.

"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," he said.

"So let me be candid - there is a deal to be done and we can work together.

"Rather than stand in your way, or veto the treaty amendments required, we in Britain can support you in the eurozone (to) make the lasting changes that you need to see to strengthen the euro.

"In return, you can help us make the changes we need to safeguard the interests of those economies who are not in the eurozone."

Simon Walker, director general of the Institute of Directors, said: "As the eurozone takes the steps it needs to build a stronger currency union, the Chancellor is right to insist on protections for the UK and other EU members who are not part of the single currency.

"This is an important part of the Government's negotiations, but it is not the only part. The overriding aim must be to secure reforms which make the whole of the EU more competitive, benefiting companies of all sizes, even those which don't export."

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