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European Union

'Reforms essential for EU survival'

It was the British government's strongest euroskeptic punch to date: "Reform or decline," said the finance minister. DW talked to his Conservative colleague, Andrea Leadsom, about the source of this discontent.

Addressing a conference on how to reform the European Union, British Chancellor of the Exchequer George Osborne said Europe's treaties were "not fit for the purpose" and had to be overhauled if the EU wanted to stave off economic decline.

There is a simple choice for the European Union," Osborne said, "reform - or decline," adding that it was undeniable that the continent was "falling behind" emerging nations such as India or China.

The two-day conference was hosted by the Open Europe think tank and the Fresh Start group. DW spoke with Conservative MP Andrea Leadsom, founder of the latter, about the need for reform on the European level, qualms from Britain with regard to economic and social policy, and about how migration has affected the UK.

DW: How do you see the European Union today with regard to its global competitiveness?

Andrea Leadsom: I describe it as the EU standing at the end of the Roman Empire, too fat and lazy and complacent to be bothered to recognize that the rest of the world is fast catching up and about to overtake us. We are utterly failing to see that while Europe used to be leading the world - Chancellor Osborne pointed out that we discovered penicillin, we started the Industrial Revolution - here we are now terrified of the future.

George Osborne

Osborne didn't mince his words during his keynote address

"What is the "fresh start" you are looking for?

Well, take life sciences, for example: Our project has just completed a six-month inquiry into pharmaceutical and agricultural science, and what we've found is that the EU, in the face of scientific evidence, is saying 'oh no, we don't like the look of this.' The Chinese are absolutely cutting edge in pharmaceutical science, whereas we are refusing to even allow any clinical trials to go ahead. I think there is a huge problem with the EU holding back the future by refusing to engage with it.

Take [German chemical giant] BASF leaving Germany for America, as one single example. We're seeing that the European Union is drifting further and further behind the competition. At the moment, we have around 29 percent of global GDP. By 2050, the [European Commission] itself has said that figure will drop to 15 percent. So unless we want the rest of the world to overtake us and then start sending us international aid - on that point I'm joking - then we really do need to address not just the issue of the eurozone, but also the issues at the heart of the EU.

Speaking of the eurozone, how seriously do you take Osborne's statements regarding the EU's need to make reforms?

There needs to be very serious consideration of what further integration of the eurozone means for the EU as a whole. What does greater fiscal union mean for the 10 members who don't even use the currency? It cannot be permitted that the considerations for the euro overbear and take over all considerations for the other member states.

Are your qualms about the EU politically or economically based?

Both. Chancellor Osborne gave some very good examples of financial services where the eurozone has decided that the London clearing houses, which account for a significant amount of jobs and income to this country, are required to be relocated to the eurozone. There is absolutely no justification for that in a single-market environment. And of course it has a harmful economic impact on the UK - but it was a political decision.

Strikes against foreign workers

Fears are prevalent that a new influx of immigrants will impede the search for work

How does migration factor into the UK's concerns about prolonged membership in the European Union?

Obviously, the extent and speed of immigration is a huge concern. During the past decade, there were many more new arrivals from the A8 countries [Ed. note: the eight countries that joined the EU during the 2004 enlargement] in Britain than were anticipated, and they put a severe restraint on resources. We had entire classrooms in primary schools with kids turning who couldn't speak English, and for whom there were no provisions, and there is a statute requirement to provide them.

There were the issues of housing, transportation, jobs, et cetera, and this led to a very bad experience in our recent history that has made people very nervous about the risk of the same thing happening again - and of course this has reared up again with the relaxation of transitional control on Romanian and Bulgarian migrants.

However, fundamentally, I think where the real issue lies is in these unintended consequences of free-movement legislation. And what we are calling for is for the EU to recognize these consequences and to do something about them.

The quotas that Prime Minister David Cameron has suggested, which would cap annual migration in Britain at 75,000, have been criticized by the EU as scaremongering. What do you say to such criticism?

I would say that any member state should have an absolute right to protect the interests of the existing population against a sudden flood of immigration. As said, we had an enormous practical problem with hordes of accession member workers turning up and draining local resources in certain key areas.

As we've often found, if you go to a new country and then your friends come, they stay where you stay. And then their friends come and stay where they stay. So you have a concentration of migrants coming to this country. So the speed and volume of immigration is a very real issue that has to be addressed. I don't think it's scaremongering at all to recognize the honest truth, which is that you can deal with immigration provided it's not completely sudden in a way that puts extreme pressure on resources. And that is just sensible; it's not scaremongering at all.

How did you react to the University College London study that suggests immigration has actually been quite beneficial to the UK economy over the past decade?

I don't disagree. I think that immigration during the 90s of those who had jobs certainly was a benefit to British GDP. But I think it's extremely difficult to prove that it also put extreme stress on resources. And it's also very difficult to prove that what it did was to restrict pay [among lower-income earners] and restrict access to jobs for British workers. If you look at the stats, you'll see that during those years employment levels went up, but almost all of it, almost every single job went to non-British born workers.

So it's obviously the case that immigration will improve GDP - it essentially improves production and output - but at the same time you have to measure what is being done with those British people who could have been doing those jobs, and therefore aren't and are claiming social benefits. And, secondly, what about the impact of those immigrants, those new workers on local resources such as schools, housing, or healthcare?

The studies that have been done largely ignore all of these other factors. The case isn't proven, but I think as a specific point you can argue that immigration helps an economy because it contributes to production and output.

DW.DE