A week tomorrow, the British Government will assume the presidency of the European Union. In the past, this has been a largely bureaucratic exercise. But Tony Blair considers the next six months to be a rare opportunity for him to press the case for economic reform in Europe. He took that argument directly to the people of Germany yesterday in a signed article in Bild, the top-selling newspaper in that country. He insisted that “Britain supports a social Europe, but it must be a social Europe that suits the world today. We must find out why some economies in Europe create jobs and others do not”. It is a reasonable, indeed vital, question for Britain, as well as Germany.
That message was, in theory at least, reinforced by Gordon Brown when he delivered the Mansion House address in the City of London last night. The Chancellor wrapped himself up in the cause of further economic reform with the strong implication that others on the Continent would be well advised to follow the model he has adopted. As is often true of Mr Brown, the rhetorical enthusiasm for “enterprise” was powerful and the promise of a benign atmosphere for business ringing. Those who actually have to produce profits and jobs are, however, becoming increasingly less convinced that his noble words are being matched by his deeds.
If Britain is to lead the charge to implement serious economic reform in the EU, it has to lead by example. Change has to be an enduring experience, not an historical process initiated by Margaret Thatcher and institutionalised by Mr Brown courtesy of the independence awarded to the Bank of England in 1997. The Chancellor always points to that decision with pride, but it is now more than eight years since it was taken.
What he has failed to do is show he personally believes in the social importance of businesses, large and small. He leaves a sense of trying to balance the approval of companies with the courting of a different left-listing constituency in the Labour Party. He seems to be too wary of informing this section of his supporters that profits are a good thing and that profits alone create a society in which ordinary people prosper and opportunities are created for the disadvantaged.
There are absolutely no grounds for complacency either about the health of the British economy or its standing compared with others in Europe. The short-term situation has become sufficiently uncertain that the minutes of the Bank of England released yesterday revealed that two members of the Monetary Policy Committee backed an interest-rate reduction. In the medium term, many EU entrants from Central and Eastern Europe are pursuing radical low-tax and deregulatory policies that will make them very attractive to investors. Mr Brown needs to persuade business that he recognises the scale of the challenge and will act to meet it.
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In his speech last night Mr Brown contended that Europe needs fundamental structural reform, to restrain and recast its budget, to curb excessive regulation and to promote trade. All this is welcome but is not just a requirement of our continental partners. He also spoke of the need for a “social dimension” in policy to complement the “market dimension”. No one disputes the Chancellor’s theory, but business is, rightly, increasingly sceptical of this potential prime minister’s practice.