Nick Clegg: UK can still influence competitiveness agenda

Deputy PM has been criticised by Eurosceptics and some of his own party but insists he will keep a level head

At the end of a momentous week in European and British politics, the charge sheet against Nick Clegg is long. He has been accused by the Eurosceptic press of treachery, a vanishing act and a euro sulk.

There are contrasting mutterings from some Liberal Democrats that he has displayed insufficient will to fight the pro-European corner inside government and was outmanoeuvred by David Cameron at last weekend's fateful summit.

He had revealed a naivety in failing to foresee how the prime minister might wield the veto in the late-night talks in Brussels. As a result, it is claimed, a gaping fissure has opened both within the coalition and between Europe and Britain.

But Clegg is more concerned with solutions than recriminations. He is now cast in the role of an accident damage inspector at a hideous car crash caused by some reckless late-night driving by his boss. He is gingerly sifting through the wreckage to see if there is anything reparable.

So far as the coalition is concerned, Clegg is certain everything remains in good working order. "I suspect by now everybody understands what I have been saying since the beginning. This government will last until 2015. Nothing has changed."

He is full of plans – on an elected second chamber, social mobility and focusing help on the under-fives. A draft of a big speech on the enemies of the Open Society at the Demos thinktank is purring in the computer at 8,000 words and growing.

One of the chief enemies of openness emerges to be appointed peers. "I hear a lot of people say the Lords is a great receptacle of expertise but expertise is increasingly becoming an alibi for nepotism and political patronage.

"I am absolutely clear there will be a bill in the second session. There is a very clear coalition agreement and commitment."

There is no sign that he is crawling away from political reform in the wake of the disastrous defeat in the AV referendum. Clegg is a resilient optimist.

On Europe, he admits a repair job is needed and that the row with his coalition partners needs de-escalation. His discussion is full of references to bridge-building with EU partners, healing and getting back in the saddle.

He says: "The challenge is to make sure the distinction between Britain's status and the rest that transpired at the summit does not become a permanent widened breach."

He also denies he flip flopped when he first responded to the summit outcome, before condemning Cameron's veto. "Honestly there is this wish for people to be wise with hindsight.

"There had been a momentous summit. Many of the details were not out by Friday morning – you are asked to provide an instant historical commentary on something still evolving.

"So I came out quite clearly and said I regretted it. I said I did not want a treaty change in the first place and that I had always said it would be a divisive process.

"And I said the Eurosceptics needed to be careful what they wish for. People get lost in the detail but what happened was a breakdown in negotiations. Actually what was up for negotiation was not unreasonable."

With his wide political contacts across Europe, linguistic skills and his knowledge of the commission, he is confident the breach is not permanent.

"There will be a lot of opportunities to get back into the saddle. The summit has raised as many question marks as it has provided answers, and there will be a whole lot of discussions about what happens next in which we will be involved.'

He says it is significant that the EU council has granted the UK observer status at the meetings of the new group. Equally, he is firm that Britain will not block or legally challenge the 26-strong group from using institutions such as the commission and the European court of justice. "We have made some very big steps in the last few days. If you get behind the headlines of the big domestic argy-bargy in Britain, we have signalled we are happy for them to use EU institutions.

"Britain will have observer status in the meetings that will put together this inter-governmental arrangement so we will have moved already very quickly in the course of this week, and that is something I have been very keen on."

So is there absolute clarity in the UK that community institutions can be used by this new inter-governmental body that oversees euro discipline?

Clegg's emphatic response is: "Yes, Yes."

But was Cameron as clear in his statement to the Commons?

Clegg replies: "He was very clear we will look at it with an open mind constructively . You need to work out some details. You need a piece of paper, a minute, saying how this will work because it is a novel thing."

But are not some Eurosceptics demanding Cameron block the use of community institutions? "I am sure there are people who will use every debate and crisis to promote their agenda which is nakedly isolationist.

"You have got to go back constantly to what is in the national interest – what is good for growth and jobs – and I just don't think it can be in any doubt that it is our interest to see the Europe succeed."

Whatever his criticisms of the prime minister's use of the veto, Clegg recognises the dilemma Cameron faced because of his backbenchers and the pressure to secure some concessions on the City of London in return for agreeing to a treaty change.

"David Cameron was proposing a menu of options – these were not asking for British exceptionalism. Many of the ideas were just trying to entrench what was already agreed or standard practice.

"The political reality is that there was no way David Cameron could have returned from that summit and gone to the parliament empty-handed.

"All he would have had was a deferred crisis in Britain. That is just a political fact and sometimes I am afraid politics is the art of the possible, not always the ideal," adding parenthetically under his breath: "Boy, do I know that after a year and a half in coalition government."

He seems to indicate Cameron felt he faced a genuine risk of a Commons defeat if he extracted no price for allowing the euro group to form a treaty.

He explains: "You have got a Labour party that is acting incredibly opportunistically on these big issue of the global response to the crisis.

" They voted against an increase in our subscriptions to the IMF a few months ago even though that was delivering on an undertaking by the previous Labour government.

"When you have that degree of opportunism on the opposition benches and very, very forceful Euroscepticism on the Conservative benches, he just could not come back empty handed."

And yet he understands why some euro-group countries, notably Germany, so badly wanted a treaty to strengthen the enforcement of the new fiscal rules. "Germany wanted clear reassurance that the fiscal rectitude it wants was going to be implemented."

That in turn might be a signal to the European Central Bank to act as a lender of the last resort, a step European politicians and economists outside Germany have been begging the ECB to take to ease the markets pressure on sovereign debt.

Clegg explains: "The ECB is independent and that is unbelievably important for the Germanpolitical elite for all the obvious historical reasons so you are never going to get a German politicians from any party to get up and say 'I hereby tell the ECB to do x y and z'.

"But it is obvious to me that the clearer the roadmap to greater fiscal rigour and integration is, the more permissive the environment would be for the monetary authorities to play an activist role. That was the most important thing about the summit. It was not about the position of Britain".

And then there is a sideswipe, if not at Cameron then at his Eurosceptic benches. "We were not being asked to give up anything, we were not being asked to sign over any powers to any European arrangement.

"We were simply being asked to provide passive consent such that the European institutions could do the kind of things ... necessary to create that fiscal integration."

But Clegg recognises the mortal danger facing the European economy. "There are very big question marks about how to stop contagion, how to create a proper ring-fenced mechanism so you don't get a knock-on effect from one country to the next.

"It is clear that markets have got very grave doubts, which in many ways are as bad if not worse after the summit.

"My view is we are still waiting for a very significant and tangible expression to implement labour market reforms, product reforms, pension system reforms which – given large scale fiscal stimulus is not available – is necessary to stimulate growth". He concedes that will "take months and years of painful reform".

"There is no single magic wand, but the focus at the summit from the eurozone countries was what particularly the German government could secure. But the other side of the equation - competitiveness and growth – was not dealt with that extensively and one is slightly meaningless without the other."

He says if the UK plays it smart it can influence this competitiveness agenda. He said: " The great genius of European integration economically is that it always held two different traditions in balance – the Anglo Saxon liberal tradition and the French dirigiste tradition.

"The goal was to ensure that neither the French or British tradition triumphed over the other. I don't think it is in their interest to see the British liberal tradition marginalised."

He chortles when I suggest his pro-Europeanism stems from his widely drawn family roots. " I am British, you know. I am hardly some alien from outer space It is ridiculous I love this country because we are such an open country.

"My mum's family had an upbringing in a Prison of war camp, my dad's family were ripped apart by the Russian revolution, so I understand the tyrannies and totalitarianism of other parts of Europe.

"I think it was great that I was brought up really valuing the tolerance and measured open minded character of this country.

"I think we are at our best when we are open. The danger at the moment is because society is under economic stress, xenophobia, chauvinism and polarisation increase. You can see it in British politics. This is the perfect environment if you are Nigel Farage or Alex Salmond.

"The people who are trying to exploit the politics of grievance and blame, they believe they have got the wind in their sails. The liberal open society is always under pressure when there is fear and anxiety in society. That does not mean you move off the centre ground. As a deputy prime minister, I will hold on to that centre ground of openness and reason.

"Far from being unBritish I think it is incredibly British – we are not going to be allowed to be pushed from one extreme or the other. We are going to keep a level head while others lose theirs."


Patrick Wintour, political editor

The GuardianTramp

Related Content

Article image
What next for Europe's battered post-election political leaders?
Ian Traynor: A Brussels dinner brings together walking wounded from a historic election that has reshaped the politics of at least four nations

Ian Traynor in Brussels

26, May, 2014 @4:18 PM

Letters: The right prescription for our economic woes
Letters: Increasing incomes at the top creates next to no demand; only by generating prosperity at the bottom of the income scale will we get the economy to start growing again

06, Jun, 2012 @7:59 PM

Article image
Nick Clegg challenges David Cameron over EU treaty talks
Lib Dem leader argues that it is not in Britain's best interests to exploit the eurozone crisis to win back powers from Brussels

Nicholas Watt, chief political correspondent

12, Jul, 2012 @7:39 PM

Article image
Ed Balls backs calls for new referendum on Europe
Shadow chancellor follows Peter Mandelson in calling for Britons to renew EU marriage vows and attack lack of growth

Patrick Wintour, political editor

14, May, 2012 @6:33 PM

Article image
Nick Clegg condemns EU response to eurozone crisis
Deputy PM makes speech in Berlin, where he is seeking to persuade German ministers to adopt new approach

Patrick Wintour, political editor

24, May, 2012 @10:04 AM

Article image
We did socialism and capitalism, and we're still in a mess. But there is hope | Deborah Orr

Deborah Orr: Thatcher and Blair both governed as if it were only worth catering to people who wanted the same things they wanted

Deborah Orr

01, Jun, 2012 @6:00 PM

Article image
Lehman Brothers collapse: five years on, we're still feeling the shockwaves
Lehman's trillion-dollar bankruptcy shook the foundations of the global economy. Larry Elliott retraces the reverberations

Larry Elliott, economics editor

13, Sep, 2013 @5:07 PM

Article image
Osborne lays down conditions for eurozone fund contribution
Chancellor tells Davos the world must 'see the colour of Europe's money' before the UK pays into $1tn IMF fund

Larry Elliott and Jill Treanor in Davos

27, Jan, 2012 @5:59 PM

Article image
Huge risk of euro breakup if EU fails to act – David Cameron
Germany asking too much of other nations, says Treasury, as Darling describes existing fiscal pact as madness

Patrick Wintour, political editor

16, May, 2012 @8:17 PM

Article image
Austerity has never worked | Ha-joon Chang

Ha-Joon Chang: It's not just about the current economic environment. History shows that slashing budgets always leads to recession

Ha-Joon Chang

04, Jun, 2012 @9:14 PM