The British Labour Movement and Economic and Monetary Union in Europe

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ONE OF THE MOST DIFFICULT and controversial policy issues currently facing the British Labour movement is undoubtedly the question of whether or not a Labour government should take the historic step of abandoning sterling-not something it has favoured in the past-and sign up for the European single currency and full European economic and monetary union (EMU).

It can certainly be argued that the prospect of EMU further endangers what have been some of the key post-war institutions and policy objectives of the British and the European left. The Maastricht treaty `convergence criteria' for entry into the single European currency, which set tight targets for national inflation rates, government borrowing and national debt have been described by some critics as an attempt to institutionalise 'monetarism' and impose long term deflation throughout the European Union (EU) (Burkitt et al, 1996). Others have seen the centralised imposition of the fiscal and monetary constraints of EMU as an attempt to depoliticise national economic policy in a way that ensures the dominance of the imperatives of capital accumulation (Bonefeld and Burnham, 1996). The convergence criteria seemingly contradict the foundations of both British and European social democracy, 'forcing' national governments to cut welfare spending and abandon the use of budget deficits to stabilise employment during recession.

In Britain the convergence criteria have so far had a much less dramatic social impact than elsewhere in Europe. There have been no strikes or mass demonstrations opposing the criteria and relatively little public debate about the costs and benefits of monetary union. One reason for this apparent lack of interest in monetary union in Britain is that the British economy has not been faced with the type of fiscal adjustment crises which, in other EU countries, have required governments to make major cuts in public spending programmes in order to meet the convergence criteria. These spending cuts have had serious knock-on effects in terms of unemployment, poverty and economic insecurity which has led to some of the most significant and wide-spread labour unrest the EU has witnessed in over a decade. In Germany, last autumn, 350,000 union members demonstrated in Bonn against proposed public spending cuts and changes to Germany's strong employment laws aimed at reducing employer costs and increasing labour market flexibility. In France, teachers throughout the state education sector undertook industrial action in defence of jobs and earnings which culminated in a one day strike on October 17th which mobilised a third of all public sector workers. The Spanish government's decision to cut public investment by 6.5%, despite anticipated increases in revenue from economic growth, lead to a massive day of action, organised by Spain's eight public sector unions, involving 650,000 workers (Labour Research Dept, 1996a 9-12) The spending cuts introduced in the UK during the early 1980s had a similar mobilising effect on the British labour movement culminating in major struggles, notably the miners strikes of 1982 and 1984-5 and the poll tax revolts of 1989-90. But the defeats experienced in many of these struggles as well as the cumulative impact of anti-trade union legislation undoubtedly contributed to a deep-seated demoralisation of British workers who were faced by a sustained Conservative hegemony and the continued dominance of neo-liberalism. Against this political back-cloth, the agenda of the European Union elite's for social and economic integration appealed to many union members as relatively progressive. However, the election of a Labour government for the first time in over two decades may foster the re-emergence of a more critical and assertive British labour movement willing to challenge the priorities of the EU's leaders including what is arguably an unbalanced approach to EMU. For example, British trade unionists and parliamentarians participated in recent mass demonstrations in Paris and Brussels opposing the proposed plant closures and job losses announced in March by the French motor company Renault without prior consultation in the appropriate European works councils. …


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