Friday 29 October 2010

The European Union is in trouble

Guardian Editorial: Europe is in a mess. The European Union is in trouble. Today's summit in Brussels is unlikely to do much to help. David Cameron, like his fellow leaders, can only hope to limit the damage: and even as he does so he can hear the ghoulish sound of Tory Euroscepticism rising from the grave.

The summit faces trouble from three directions. The first is the enfeebled condition of many European governments. To pick the news almost at random, this week the Romanian government narrowly survived a confidence vote; talks on the Portuguese budget collapsed and President Sarkozy was battling (successfully) to pass his pension reforms. Ireland is preparing for another round of spending cuts; Belgium hardly exists at all. These are not promising times for effective deal-making between strong leaders.

Second, the European Union is in the middle of an indulgent institutional upheaval. The Lisbon treaty was necessary, but some of its consequences were not. Lady Ashton, Europe's new foreign minister, announced the other day that she will spend £10.5m a year on new offices; the European parliament has voted for a 6% increase in EU spending next year, including a 4.5% rise in administration costs. At a time when most EU governments are cutting their domestic budgets, such things are provocative – and British Tories have been duly provoked. Yesterday Lord Tebbit warned Mr Cameron that he risked a "Vichy-style surrender" if he agreed to a budget rise. Last week 37 Tory backbenchers voted against one. The coalition provides some ballast: Mr Cameron is playing a more co-operative role at the summit than he ever could have done as a purely Tory prime minister. But his freedom is limited: even conceding a 2.9% increase in the EU budget will bring him trouble in his party at home.

Third, and most serious, is the European Union's response to economic crisis. Germany, with a growing economy and unemployment now below 3 million for the first time in 18 years, fears being dragged down by its EU partners. Germans bailed out Greece and stabilised the eurozone. Now the German government wants to overhaul the rules to prevent future budgetary implosion. But the existing rules were not the reason Greece went bust and Ireland overspent. Changing them – which could require a controversial reopening of European treaties – is a distraction.

Britain is still hoping to secure a freeze in the EU budget – which would be a success for Mr Cameron. He could tolerate the more probable 2% rise. But these things are trifles compared to Europe's search for economic growth. That is the challenge the EU is facing – and failing.