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George Osborne issues 'reform or decline' warning to EU George Osborne issues 'reform or decline' warning to EU
(about 1 hour later)
The European Union is falling behind India and China and must reform if it wants to halt the decline, George Osborne has warned.The European Union is falling behind India and China and must reform if it wants to halt the decline, George Osborne has warned.
In a speech the chancellor pointed to the continent's spending on welfare and its "competitiveness problem".In a speech the chancellor pointed to the continent's spending on welfare and its "competitiveness problem".
"We can't go on like this," he said at a conference organised by two Eurosceptic groups."We can't go on like this," he said at a conference organised by two Eurosceptic groups.
It followed the Conservative leadership rejecting a call from 95 of its MPs to allow Parliament to block EU laws.It followed the Conservative leadership rejecting a call from 95 of its MPs to allow Parliament to block EU laws.
Earlier this week Foreign Secretary William Hague said the European Union's rules had to be followed by all its members and the backbenchers' plan was unworkable. Labour said David Cameron's "weakness" regarding his party was preventing reform, while the UK Independence Party said the prime minister had repeatedly "caved in" to Brussels.
Earlier this week Foreign Secretary William Hague said the European Union's rules had to be followed by all its members and the Conservative backbench MPs' plan was unworkable.
'Simple choice''Simple choice'
But addressing the think tank Open Europe and the Fresh Start group of MPs, set up by Conservatives keen to see reform, Mr Osborne said he understood the need for change.But addressing the think tank Open Europe and the Fresh Start group of MPs, set up by Conservatives keen to see reform, Mr Osborne said he understood the need for change.
"The biggest economic risk facing Europe doesn't come from those who want reform and renegotiation," he said."The biggest economic risk facing Europe doesn't come from those who want reform and renegotiation," he said.
"It comes from a failure to reform and renegotiate. It is the status quo which condemns the people of Europe to an ongoing economic crisis and continuing decline.""It comes from a failure to reform and renegotiate. It is the status quo which condemns the people of Europe to an ongoing economic crisis and continuing decline."
Mr Osborne argued there was a "simple choice for Europe: reform or decline".Mr Osborne argued there was a "simple choice for Europe: reform or decline".
He said: "There are those who throw their hands up and say 'We can't reform Europe'. To them, I would say that we have already proved that wrong.
"Take the EU budget. Last year, the prime minister negotiated the first ever real-terms cut... Far from being a lone voice, we were working with like-minded countries like Germany, the Netherlands and Denmark."
'Power shifting''Power shifting'
The chancellor also repeated the Conservatives' pledge to hold an in-out referendum on the UK's membership of the EU in 2017 should they win the next election.The chancellor also repeated the Conservatives' pledge to hold an in-out referendum on the UK's membership of the EU in 2017 should they win the next election.
And he talked about how the 2008 financial crisis exacerbated the EU's problems.And he talked about how the 2008 financial crisis exacerbated the EU's problems.
"We knew there was a competitiveness problem in Europe before the crisis," he said."We knew there was a competitiveness problem in Europe before the crisis," he said.
"But the crisis has dramatically accelerated the shifts in the tectonic economic plates that see power moving eastwards and southwards on our planet.""But the crisis has dramatically accelerated the shifts in the tectonic economic plates that see power moving eastwards and southwards on our planet."
In a sign he believes spending on social security is too high not just in the UK but across Europe, he said: "Europe accounts for just over 7% of the world's population, 25% of its economy, and 50% of global social welfare spending." Discussing social security is too high not just in the UK but across Europe, he said: "Europe accounts for just over 7% of the world's population, 25% of its economy, and 50% of global social welfare spending."
Echoing the Conservatives' 2010 election campaign slogan, he said: "We can't go on like this."Echoing the Conservatives' 2010 election campaign slogan, he said: "We can't go on like this."
Senior Conservative MP John Redwood, one of the signatories to the letter to the prime minister, told BBC Radio 4's Today programme it was important to stop the EU "simply grabbing power".Senior Conservative MP John Redwood, one of the signatories to the letter to the prime minister, told BBC Radio 4's Today programme it was important to stop the EU "simply grabbing power".
He said the MPs were simply stating the case made in a "serious" and "seminal" report by the European Scrutiny Committee.He said the MPs were simply stating the case made in a "serious" and "seminal" report by the European Scrutiny Committee.
He urged the UK government, in a similar way to Germany, to set up a safeguard against excessive intervention by Brussels, by promoting "the sovereignty of Parliament".He urged the UK government, in a similar way to Germany, to set up a safeguard against excessive intervention by Brussels, by promoting "the sovereignty of Parliament".
The current state of the EU meant it was "difficult for there to be sufficient reform" and any powers of veto over EU laws would be used only "in extreme cases", Mr Redwood added . 'Utter bunkum'
The current state of the EU meant it was "difficult for there to be sufficient reform" and any powers of veto over EU laws would be used only "in extreme cases", Mr Redwood added.
In a question-and-answer session following his speech, Mr Osborne said the Conservatives were "having a grown-up conversation" on Europe, adding: "I would rather be in a party that's addressing these issues for the future than a party that's burying its head in the sand."
But, for Labour, shadow foreign secretary Douglas Alexander said: "The Conservative leadership seems to be spending more time negotiating with their backbenchers than negotiating with Europe to deliver real reform.
"All of us know change in Europe is needed, but the tragedy is that David Cameron's internal party weakness is preventing him from approaching the need for reform in a sensible way."
UK Independence Party leader Nigel Farage called the idea that the UK could lead reform within the UK "utter bunkum".
He added of Mr Cameron: "The EU is not going to suddenly turn around and be dictated to by a man with only 15 months left as prime minister and who has repeatedly caved in to their demands and given away any leverage in the negotiations he may have had by declaring his support for EU membership."
The CBI business group said Mr Osborne had set out a "compelling" case for EU competitiveness, adding: "A growing EU is in the UK's national interest so we must build alliances with other member states to get the reforms we need."