• Osborne: 'It is the status quo which condemns the people of Europe to an ongoing economic crisis' (Photo: consilium.europa.eu)

'Reform or we leave EU,' warns British chancellor

15.01.14 @ 15:48

  1. By Benjamin Fox
  2. Benjamin email

LONDON - The UK will leave the European Union if the bloc refuses to reform, the country's chancellor George Osborne said on Wednesday (15 January).

Speaking at the start of a two day conference on EU reform organised by the Open Europe think tank, Osborne said that the EU had to decide whether to "reform or decline".

"It is the status quo which condemns the people of Europe to an ongoing economic crisis and continuing decline," he added.

He also urged that Europe's labour market was becoming increasingly uncompetitive and was falling behind China and other economic blocs.

Prime Minister David Cameron last year set out plans to renegotiate the terms of Britain's EU membership. The reforms are to be followed by a public vote. His Conservative party are currently piloting a bill through parliament to guarantee a referendum on EU membership in 2017 if it wins the next election in 2015.

The Conservative party, which dominates the UK's coalition government, wants the EU to focus on completing the single market and prioritise free trade deals with the US, Japan and China.

Osborne also warned the EU not to allow the will of the 18 eurozone countries to compromise the countries outside the single currency.

"If you cannot protect the collective interests of non-eurozone member states, then they will have to choose between joining the eurozone, which the UK will not do, or leave the European Union."

"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."

Speaking with reporters after Osborne's speech, Andrea Leadsom, the Conservative MP who chairs the Fresh Start group of MPs demanding EU reform, said a UK referendum was "inevitable."

Members of Fresh Start were among 95 backbench MPs to sign a letter to Cameron earlier this week demanding that the UK parliament be given the powers to block EU legislative proposals from the European Commission.

Although foreign minister William Hague quickly dismissed the idea as "unrealistic" the UK government plans to beef up the role of national parliaments in EU law-making.

Under the so-called 'yellow card' procedure, national parliaments have the right to send a proposal back to the commission if one third of them believe the issue could be better dealt with at national level.

Critics say the eight-week window to object is too narrow and that the commission can simply re-table the proposal if it wishes. The procedure has only been used twice since 2010.

The UK government says that it is not alone in demanding reform in Brussels citing the Netherlands, Germany and Denmark as possible allies.

However, there are concerns among Britain's business community about the prospects of leaving the EU. On Wednesday car-manufacturer Ford indicated that it would withdraw its investment if the UK exited the bloc.

For his part, John Longworth, director general of the British Chambers of Commerce, warned that businesses needed more clarity on Cameron's negotiation plans.

"It has been a year since the prime minister announced his intentions on Europe, and we are still yet to learn what areas he will seek to negotiate," he said.