HM Treasury
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Building a better europe: making the EU fit for the challenges ahead

Chief Secretary to the Treasury Danny Alexander spoke at Sciences Po in Paris recently on building a better Europe.

Bonjour. Je voudrais commencer par dire que je suis un Highlander. Je suis aussi un Ecossais. Je suis un Brittanique. Et je suis un European.

[Good afternoon. I would like to start by saying that I am a Highlander. I am also a Scot. I am British. And I am also a passionate and committed European.]

The horrifying recent events in Paris have of course overshadowed everything else during the past 2 weeks.

The United Kingdom stands shoulder to shoulder with France in your grief.

Of course, it was an attack on the values we all share in the Western world.

Values of liberty, of decency, and of free speech. Values which we must defend.

These events – terrible and tragic though they are – do help unite us.

They remind us what really is important.

That we need to together stand up for our beliefs, and work together for our shared safety and prosperity.

They remind us, too, that the Western liberal democracies which we have the great fortune to live in were not simply created out of thin air.

They were hard-won – on the battlefield as much as through political manifestoes.

That, at the very least, is why we should defend them, and the values that underpin them, at every opportunity.

And, indeed, it is from those same values and those same battles that the vision of peaceful European co-operation was born.

Citizens of both our countries argued, in the aftermath of the second world war, for a new construction in our continent. Today, we call it the European Union.

I do not think that any of us can look across this European Union, as it stands now in January 2015, and say that all is well.

We have had a long, and deep, and painful recession across all of Europe.

On an economic front, we see risks of deflation; unacceptably high unemployment in many countries; low growth in many countries; families struggling to make ends meet; and young people wondering how they will ever find a job.

I think it would be unwise to deny that there is widespread discontent with politics and politicians, at both the European and the national level.

I have always believed that people want honesty, they want authenticity – and they want politicians to work for them.

But I am afraid that regrettably we have seen examples, among the political class, of attitudes that fall short of that ideal.

The toxic culture of “spin”.

The idea that the centralised State always knows best.

I believe we can change for the better.

I believe that we can restore prosperity to Europe.

And I believe that we should take a degree of pride in what we have achieved – not merely as nations but also as a European Union – over the past 6 decades.

So today I would like to talk a little about how we can make Europe fit for the challenges of the 21st century.

But first, I would like to tackle head-on the assumption, which I dare say some of you hold, that the European Union is something which Britain wants to leave.

Some people in the UK – just like some in every single Member State – would like us to leave the EU. And the more strongly they feel about it, the more vocal they are.

They are entitled to their opinion. But it’s a view many of us passionately disagree with.

We do so because we know that in an increasingly tough and hostile world, unity is strength.

We do so because we know that the economic benefits of EU membership are considerable and far-reaching.

We do so, frankly, because to leave the European Union would be to massively diminish our global influence.

The UK has played a leading role in Europe for centuries – including during its darkest days.

And I believe that today, with storm clouds gathering on the economic horizon, any move towards isolationism would be wrong, backward, and deeply damaging.

Over the past 18 or so months in the UK, we have seen that as the debate on Europe heats up, the number of people who would choose to stay in the EUhas steadily risen.

The voice of British business, the CBI, is certainly clear. 78% of businesses in the CBI want to stay in the EU. And between them those businesses employ over 1.5 million people.

Investors are attracted to the UK because they see the UK as a gateway to Europe. 71% of Nissan’s production in Sunderland is sold in the rest of theEU. But the Bank of England’s research says that leaving the EU would cut our foreign direct investment by over a third. Why would we throw that away?

Skilled Europeans are attracted to the UK because of our flexible labour market and our competitive rates of taxation. Between 2000 and 2011, they made a net contribution of £20 billion to UK public finances. Why would we throw that away?

Under the European Arrest Warrant, we’ve slashed the time taken to extradite an offender. And we’ve been able to track down some of the most elusive terrorists, drug smugglers and paedophiles and bring them to justice in the UK. Why would we throw that away?

Those of us who believe that the UK’s place is at the centre of a successful European Union should stand up and make our voices heard loud and clear.

Say that the UK needs Europe and that Europe needs the UK.

Say that together we’re stronger.

Say that we want Europe to be the best that it can be.

And in turn, those of us who believe that Europe benefits from having the UK around the table should recognise that it’s the role of a friend to give constructive advice.

Wanting to change things for the better is not anti-European.

I have now spent almost half a decade as Chief Secretary to the Treasury – introducing the necessary reforms to get Britain’s economy back on track.

As a government, we have worked on a very simple principle:

Aside from the defence of the realm, there is no more important task for a government than creating the right conditions for prosperity.

That means restoring order in the public finances, and not spending what you can’t afford.

And it means removing unnecessary regulation, helping businesses expand and create new employment opportunities.

Because there is no better way to improve the standard of living than creating jobs and growth.

So the number one way the EU can be the best it can be is to make it clear, at every opportunity, through actions as well as words, that its priority is helping create jobs, growth and prosperity.

There are some very practical things that the EU can do.

It can strengthen and deepen the Single Market to reflect our 21st century economy – particularly in areas such as services, digital and energy.

Full implementation of the 2006 Services Directive, for example, could increase EU GDP by up to 1.8% – the equivalent of adding an economy the size of Denmark’s.

And completing the Digital Single Market could add 4% to EU GDP by 2020.

It can prioritise the agreeing of ambitious trade deals with the world’s fastest growing economies.

If, tomorrow, we could complete all of the currently outstanding free trade negotiations, EU GDP could be increased by 2.2%.

The Transatlantic Trade and Investment Partnership alone stands to bring annual benefits to the EU economy of €119 billion – the equivalent of an extra €545 for a family of four.

And it can free businesses from unnecessary regulations.

A 25% reduction in EU administrative burdens on businesses could lead to an increase of 1.4% in EU GDP.

These are changes which will not be easy to make. But the order of magnitude of the rewards are impressive…

…Not least because the rest of the world is growing fast. And because over the next 15 years, Europe’s share of global output is forecast to halve. So we need to work hard to make sure we are not left behind.

That was the message the PM gave 2 years ago at Bloomberg: of a Europe which was more flexible, more competitive, more democratically accountable – and all the stronger for it.

I also believe that the EU needs to be proud of where it has made life better for its citizens.

Reducing roaming charges by 90% over seven years is a tremendous achievement – and something which could only have been done at EU level.

The Erasmus exchange programme – which I imagine many in this room have used – has given millions of students the chance to further their studies in another country.

The EU-wide deregulation of air travel has made life – and business – easier and cheaper – for instance, by doubling the amount of intra-EU routes.

And it’s enabled businesses to thrive. As Easyjet put it: “EasyJet is a product of the EU’s deregulation of Europe’s aviation market. Without deregulation we would not exist.”

EU regulations, when properly applied, have saved our businesses money. After all, having twenty-eight different sets of technological specifications is not efficient and it certainly doesn’t help businesses export.

Last year’s historic deal to tackle climate change and cut greenhouse gases by at least 40% domestically will ensure that we live in a cleaner Europe.

And – although I think we are all agreed that we need to act to curb abuses of free movement, such as benefit tourism – our ability to live and work in whichever member state we choose is a tremendous asset.

Including for the 200,000 Britons resident in France!

These are all tangible ways in which the EU has made the quality of life better for its citizens – and it should be unafraid to say so.

Importantly, too, these achievements could only have been reached through Member States working together in a multilateral forum – that is to say, at a European level.

I stress this because I am a passionate believer in devolution.

Big does not always mean good. The centre does not always know best. Often the greatest efficiency is to be had at the local and regional level.

Perhaps unusually, I came into politics to give power away!

My approach has been that if a task is best done at a local level, then it should be done at a local level. Do at the regional level what is best done regionally. Do at the national level what is best done nationally. And for the big issues which require action at the European level, then action at the European level is not only right but required.

Or, as the Dutch subsidiarity review put it, “European where necessary, national where possible”.

That means that Europe should focus its resources on the big issues where only action at a European level can get the necessary results.

And where growth can spring from greater harmonisation and integration.

There is a difference between “united Europe” of sovereign states and a United States of Europe. A deep and mature relationship between 28 Member States inevitably allows for differences between them – and creates the necessary space for those differences to exist in comfort.

I think every single politician has their own pet examples of areas where action at the European level is frankly not necessary.

Whether that’s the receptacle olive oil should be served in, or the amount of liquid a urinal in Utrecht should be allowed to flush.

Commission President Jean-Claude Juncker’s vision – for Europe to be “bigger and more ambitious on big things, and smaller and more modest on small things” – seem to me to be correct.

Importantly, this means that there are areas where “more Europe” will be necessary.

Because, if we are to go down the path of economic reform, deepen the single market, protect our world-famous financial centres, and build strong Euro architecture for those countries in it, then that will require greater action at the European level.

That is something we have to be honest about.

And we have seen serious reforms in recent years. The fisheries reform last year was a classic example of devolution achieved. It means that there is much less day-to-day management of fisheries stock in Brussels, and much more in the hands of regional advisory councils, local fishermen and scientists.

So we shouldn’t do down the reforms Europe have made.

And British Eurosceptics shouldn’t be embarrassed about the fact that the UK has been there, at the centre of things, pushing for those reforms – and succeeding.

I have talked so far largely about the EU in purely financial and economic terms.

There are 2 reasons for that. First, I am an economic minister! And second, because I passionately believe that the EU does not help deliver prosperity and employment, then it will always struggle to gain the trust and support of the citizens in its Member States.

But I know that the European Union is not just an economic entity.

Last year, Scotland held a referendum on whether to remain part of the United Kingdom. Passionate arguments came from both sides on Scotland’s economic future. But the most passionate arguments were emotional – about Scotland’s place as an integral part of a three-centuries-old Union.

Over a quarter of a century has now passed since the Iron Curtain came crashing down. And, although the fall of Communism was of course linked to the collapse of the Eastern Bloc economies, people in those countries did not speak of a European community in purely economic terms. They believed in something greater than that.

This year, we commemorate the 70th anniversary of the end of World War II. And, although the founding members of the European Coal and Steel Community spoke in terms of coordinating national industries for mutual economic benefit, they, too, believed in something greater than that.

Working together, Europe can present a front to the world. One in which the liberal values – those which I mentioned at the start of the speech – are held up as an example to the rest of the world. “This is who we are. This is what we stand for.”

But liberty and prosperity go hand in hand. You cannot be proud of one if you are failing to create the other.

That’s why I think we should be stepping back from that somewhat dry approach…

…and look at what Europe is really about.

It’s about building a prosperous community of nations, free from war and strife.

It’s all too easy for our generation to forget the horror of our recent past.

In the last century alone, two cataclysmic cold wars. And then Europe split in two by the Cold War.

A strong and vibrant European Union is the best way to make sure that future generations can talk of prosperity, not of war.

Shared aspiration, not division.

My deep Liberal instincts tell me that in politics as in life, drawing together always beats pulling apart.

Community always beats isolation.

[When a British politician talks about Europe, there is a particular speech – one delivered in Bruges, in 1988, by a certain female Prime Minister – which is invariably at the back of their mind.

“We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level”, she said.

Well, my take on that is as follows:

We have not successfully torn down the barriers of nationalism in Europe, only to see a small, angry minority try to impose them again.]

Europe is part of who we are.

Our identities are inextricably linked.

Let us rebuild our pride in it.


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