Chancellor George Osborne has raised the prospect of Britain leaving the European Union if the 28-nation bloc fails to undertake fundamental reforms to improve competitiveness, create jobs and protect the rights of countries which are not in the single currency.
And he suggested that if the UK was unable to secure support for reform from all EU states, it was ready to press ahead with a smaller group of like-minded countries under what he termed “enhanced co-operation”.
In a keynote speech, the Chancellor said that the treaties underpinning the EU were no longer “fit for purpose” and failure to reform will condemn the continent to a future of economic crisis and decline, warning: “We can’t go on like this.”
Mr Osborne stressed the Government’s determination to renegotiate the terms of British membership in order that the UK can remain in the EU following a referendum in 2017.
Speaking to a conference hosted by the thinktank Open Europe and the Fresh Start Project in London, Mr Osborne said: “Europe urgently needs economic reform. Eurozone integration is necessary if the euro is to survive. But proper legal protection for the rights of non-euro members is absolutely necessary to preserve the single market and make it possible for Britain to remain in the EU.
“I believe it is in no-one’s interests for Britain to come to face a choice between joining the euro or leaving the European Union. We don’t want to join the euro, but also our withdrawal from a Europe which succeeded in reforming would be bad for Britain. And a country of the size and global reach of Britain leaving would be very bad for the European Union. It is time to change the European Union and to change Britain’s relationship with it and then to place the decision in the hands of the British people. Do we want to stay in a reformed Europe or would we prefer to leave?”
Last night Labour said that, instead of threatening a British exit from the EU, the Chancellor and Prime Minister David Cameron should be driving reform in Europe but the director-general of the British Chambers of Commerce, John Longworth, said: “The Chancellor is right to say that the status quo is not a viable option.”