Splendid Isolation: Looking to the Future of Britain and Europe

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KIRSTY HUGHES is Head of the European Institute Policy Unit at the London School of Economics and Political Science. She was formerly Deputy Director of the Institute for Public Policy Research.

A confident British government, no longer at odds with its European partners as in the darker days of Conservative rows and crises with the European Union, is looking to the future with the aim of matching French and German influence and leadership in Europe. The broad immediate questions this raises are first, whether this is a realistic aim, and second, whether Prime Minister Tony Blair's government possesses the right strategies to achieve such a leading role. The current political conjuncture looks promising--center-left governments hold power in 11 out of the 15 EU member states. And, while some suspicions remain about Britain's reliability over time in its support for the European Union, the tone and nature of the United Kingdom's relations with its European partners have been transformed since the new Labour government took over in May 1997, leaving a Conservative Party nearly destroyed by its internal divisions over Europe. The leading Labour politicians, most significantly Tony Blair himself, take a constructive and pragmatic approach to the European Union, without any of the hostility or paranoia about potential loss of sovereignty embodied by the Tories, whose negative attitude significantly damaged Britain's reputation and influence in Europe.

Nevertheless, Britain for now is outside the central EU project of Economic and Monetary Union (EMU), and is thus facing a continuing decline in influence in the coming years. Even in the medium run of eight to ten years, it seems unlikely that Britain will be able to match the overall weight of France and Germany. Rather, the prospects are high for a constructive role for the United Kingdom as a serious player, but not as a leader at the heart of Europe. This is not only due to the United Kingdom's failure to join European Monetary Union at the start, but also from its abasence from the single currency. This is the most important factor ensuring that it is left on the sidelines as the European Union develops.

Single Currency

The new Labour government appears to have recognized, if somewhat belatedly, that its political influence across a range of areas will become progressively weaker while the United Kingdom remains outside the single currency. In terms of European politics, the obvious choice would be to join European Monetary Union as soon as possible; but in the context of economics and domestic politics, timing and strategy are more complex. Chancellor of the Exchequer Gordon Brown addressed the related economics and domestic politics in his key statement to the House of Commons in October 1997. He set out five economic criteria to be met before the United Kingdom could decide to join the European Monetary Union (still leaving the final decision open), the most important of which is the resolution of the ongoing misalignment of British and continental cycles. Crucially, in an attempt to neutralize controversy over the single currency in the short to medium run, he also announced that barring exceptional circumstances, the promised referendum on the single currency would not be held until after the next general election. This delay partly reflected hesitations based on the persistent opposition to European Monetary Union among the general public, in addition to serious concerns about the hostility of large segments of the British media. But with the launch of the euro on January 1, 1999, there is now increasing concern among large sections of the British policy elite, big business, and the City about the impact of remaining outside of the euro in its crucial early years. Tony Blair launched the government's so-called changeover plan on what would be necessary to be accomplished if and when the United Kingdom joins the European Monetary Union at the end of February with his most positive notes yet on the currency, but with no change in the actual rhetoric (apart from the spin doctors emphasis that "if" and "when" should now be read as interchangeable terms). …