The UK and the EU - our road ahead

Minister for Europe, David Lidington's EU speech, University of Iceland - Reykjavik 20 June 2013.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Rt Hon David Lidington MP

Your Excellencies, ladies and gentlemen, distinguished guests. I’m delighted to be here in Reykjavik and it’s both a pleasure and a privilege to be invited to speak today in this impressive hall.

A few weeks ago, BBC radio broadcast a programme on the Icelandic Sagas. The presenter was Melvyn Bragg, one of our foremost commentators, and he was joined by academics from Oxford, Cambridge and Reykjavik. Millions of listeners tuned in to hear about 13th century love triangles and to find out who was the beautiful Gudrun’s real love.

They heard about the links between the British Isles and Iceland. And they learned that the people of Cumbria in northwest England need only two weeks to understand Icelandic, provided that they speak the Norse dialect.

The programme underlined the point that our two nations have much in common. And it’s not just a love of a good story – although I gather that there are fans of Downton Abbey here too.

We are both independent island nations, with maritime traditions and a deep-seated respect for democracy. These were points raised by Prime Minister David Cameron when he gave a speech about Britain’s relationship with Europe in January this year.

Icelanders who heard the speech may be forgiven for thinking the Prime Minister was describing them as he set out how our geography has shaped the British character - independent, forthright, and passionate in the defence of our sovereignty.

Like Iceland, we are a European nation, a NATO member, and we have played our role in shaping the history of this continent. For example, the breakthroughs made at the Reykjavik Summit in 1986 developed into effects felt across Europe to this day.

Where we differ is that forty years ago the UK made the decision to join the European Union. Forty years is a long time. I expect that many people in this room never knew the 1970s. It was a time when the digital age had yet to arrive. Mobile phones had not been invented, neither had the internet, let alone the ipad or ipod.

…Financial services were in another era.

And you certainly couldn’t buy an Easyjet ticket from London to Reykjavik for £123. But then the British view was that membership was in our national interest, as it is now. We think that a single market of 500 million people on our doorstep that works properly, that is competitive, that is unbureaucratic and dynamic would be a huge advantage. The EU is not there yet, but the UK is prepared to work with its allies to try to realise that vision, shaping the policies of the EU from the inside.

Our starting point is that the Eurozone is in need of reform and this will have profound effects for all of us, even those, like the UK, who do not have the single currency.

Second, the financial crisis has brought into sharp relief that the EU’s competitiveness is at risk. Rules governing commerce and labour need reform.

And third, there is growing frustration that the EU is seen as something done to people rather than a body that acts on their behalf.

Let me start with the question of competitiveness.

It is now five years since the global economic crisis. Iceland has made impressive progress since then, and the UK economy is on a path back to health. But growth remains a problem across the EU, and we face a situation where one in four young people across the EU are unemployed. Within the EU, the UK is known as a liberalising force. We were behind the single market, one of Europe’s greatest success stories. But this market remains incomplete, and by our estimates could be double the success it already is.

Europe must make it easier for businesses in the services sector – which account for 70% of Europe’s economy - to operate across the continent. We must appreciate that financial services are among our core strengths, and that they help European companies to do business at every level. And we must create the conditions that will allow the digital economy to flourish. We must cut back on regulation which unfairly impacts on Europe’s 21 million small and medium-sized firms. These firms matter because they create 85% of all new jobs in Europe and employ two-thirds of the workforce.

Currently up to half of the administrative burden on these businesses comes from EU rules. Promoting competition is a priority, not just because it is fair, but because it lowers prices for our households. And energy is one of the areas where this matters in particular. Cheaper energy would help British and Icelandic companies alike.

The UK has led the debate on increasing competition across the single market in energy, liberalising gas and electricity markets, developing new low carbon energy sources and supply corridors, and strengthening interconnections between countries to enable EU-wide trade in clean, low carbon electricity.

We have also been leading on international trade, on which one in ten jobs in the EU depends, using the collective weight of the world’s biggest marketplace to secure the best terms.

Currently, there are deals in place with about 30% of the global economy and the EU is negotiating deals to raise this to 70%. The Transatlantic Trade & Investment Partnership alone could be worth £10bn to the UK economy and is now within our grasp.

Let me turn now to flexibility and democratic accountability. As a historian by training, I am well aware of the long democratic traditions in Iceland. Westminster is often called “the mother of parliaments” but Iceland has the world’s oldest extant parliament, and I was delighted to be able to visit it this morning.

Currently, across Europe, there is a sense that decisions at EU level are taken far away from the citizens themselves. Pew Research found in May that support for the EU is waning sharply.

According to these results, Britain is no longer the most Eurosceptic nation, as that position has been taken by Greece, where only 33% support the EU. Support is below 50% in both France and Spain and even Germany has seen a fall in support of 8% over the past year.

We need to find a way to help voters connect more with the EU. We need to find a greater role for national parliaments, and we need to strengthen links between national democracies, their parliaments and the European Institutions.

In the UK, we are looking at ways to do this: from more effective parliamentary scrutiny arrangements, to helping to facilitate use of existing powers in the Treaties such as the yellow card, to proposals to give national parliaments powers to force the Commission to withdraw a proposal (the so-called ‘red card’). We are confident that we can achieve the reforms that will make the British people more comfortable with their membership.

And the Conservative Party in its manifesto will offer the British public a chance to have their say on Europe after the next election. David Cameron has said that he will be campaigning heart and soul to stay in a reformed EU.

I came here today to set out the British position. But Iceland has its own relationship with Europe. I would like to assure you whichever road you choose you can count on Britain as your ally and friend. I think many of our interests overlap; furthermore, I think we could have a very productive dialogue on the future of Europe. For example, when it comes to fisheries we know that regionalisation of policy makes sense.

We know that local scientists working with local fleets can administer sustainable, profitable fishing. Indeed we successfully campaigned for such an agreement at the last round of Common Fisheries Policy discussions. We do not support a one-size-fits-all approach. We think that subsidiary is important. And we know that respecting a country’s specificities is important for Iceland.

If Iceland were to join the EU, it would be the least densely populated Member State, with the northernmost and westernmost capital, and with one of the smallest official languages.

It is for these reasons that as we have been a strong supporter of Iceland’s accession thus far, we have also sought to encourage the EU to be as understanding as possible in its negotiation positions.

This does not mean that there are no rules to follow, but fits in with our assessment of the EU that these rules should be there to administer an efficient single market, not to stifle innovation and regional advantage as they seem to have done in the past.

Finding the right balance between integration and flexibility is an enormous challenge, but one where the UK and Iceland would be speaking on the same side.

The position of the UK is that we want to see a European Union fit for the 21st century and we are listening to and working with our partners to achieve this for all Europeans.

If Iceland wanted to be a member of such a Union, we would warmly welcome you and would support your accession, but if your chosen path is to have access to the EU market without full membership then that is a position that we can understand too.

Thank you for your time, and now for questions.

Published 20 June 2013