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  • This morning I want to talk about the future of Europe.

  • But first, let us remember the past. Seventy years ago, Europe was being torn apart

  • by its second catastrophic conflict in a generation. A war which saw the streets of European cities

  • strewn with rubble. The skies of London lit by flames night after night. And millions

  • dead across the world in the battle for peace and liberty.

  • As we remember their sacrifice, so we should also remember how the shift in Europe from

  • war to sustained peace came about. It did not happen like a change in the weather. It

  • happened because of determined work over generations. A commitment to friendship and a resolve never

  • to re-visit that dark past - a commitment epitomised by the Elysee Treaty signed 50

  • years ago this week. After the Berlin Wall came down I visited

  • that city and I will never forget it. The abandoned checkpoints. The sense of excitement

  • about the future. The knowledge that a great continent was coming together. Healing those

  • wounds of our history is the central story of the European Union.

  • What Churchill described as the twin marauders of war and tyranny have been almost entirely

  • banished from our continent. Today, hundreds of millions dwell in freedom, from the Baltic

  • to the Adriatic, from the Western Approaches to the Aegean.

  • And while we must never take this for granted, the first purpose of the European Unionto

  • secure peacehas been achieved and we should pay tribute to all those in the EU,

  • alongside NATO, who made that happen.    But today the main, over-riding purpose of

  • the European Union is different: not to win peace, but to secure prosperity.

  • The challenges come not from within this continent but outside it. From the surging economies

  • in the East and South. Of course a growing world economy benefits us all, but we should

  • be in no doubt that a new global race of nations is underway today.

  • A race for the wealth and jobs of the future. The map of global influence is changing before

  • our eyes. And these changes are already being felt by the entrepreneur in the Netherlands,

  • the worker in Germany, the family in Britain. So I want to speak to you today with urgency

  • and frankness about the European Union and how it must changeboth to deliver prosperity

  • and to retain the support of its peoples. But first, I want to set out the spirit in

  • which I approach these issues. I know that the United Kingdom is sometimes

  • seen as an argumentative and rather strong-minded member of the family of European nations.

  • And it’s true that our geography has shaped our psychology.

  • We have the character of an island nationindependent, forthright, passionate in

  • defence of our sovereignty. We can no more change this British sensibility

  • than we can drain the English Channel. And because of this sensibility, we come to

  • the European Union with a frame of mind that is more practical than emotional.

  • For us, the European Union is a means to an endprosperity, stability, the anchor

  • of freedom and democracy both within Europe and beyond her shores - not an end in itself.

  • We insistently ask: How? Why? To what end? But all this doesn’t make us somehow un-European.

  • The fact is that ours is not just an island storyit is also a continental story.

  • For all our connections to the rest of the worldof which we are rightly proud - we

  • have always been a European powerand we always will be.

  • From Caesar’s legions to the Napoleonic Wars. From the Reformation, the Enlightenment

  • and the Industrial Revolution to the defeat of Nazism. We have helped to write European

  • history, and Europe has helped write ours. Over the years, Britain has made her own,

  • unique contribution to Europe. We have provided a haven to those fleeing tyranny and persecution.

  • And in Europe’s darkest hour, we helped keep the flame of liberty alight. Across the

  • continent, in silent cemeteries, lie the hundreds of thousands of British servicemen who gave

  • their lives for Europe’s freedom. In more recent decades, we have played our

  • part in tearing down the Iron Curtain and championing the entry into the EU of those

  • countries that lost so many years to Communism. And contained in this history is the crucial

  • point about Britain, our national character, our attitude to Europe.

  • Britain is characterised not just by its independence but, above all, by its openness.

  • We have always been a country that reaches out. That turns its face to the world… 
That

  • leads the charge in the fight for global trade and against protectionism.

  • This is Britain today, as it’s always been:Independent, yesbut open, too.

  • I never want us to pull up the drawbridge and retreat from the world.

  • I am not a British isolationist. I don’t just want a better deal for Britain.

  • I want a better deal for Europe too. So I speak as British Prime Minister with

  • a positive vision for the future of the European Union. A future in which Britain wants, and

  • should want, to play a committed and active part.

  • Some might then ask: why raise fundamental questions about the future of Europe when

  • Europe is already in the midst of a deep crisis? Why raise questions about Britain’s role

  • when support in Britain is already so thin. There are always voices sayingdon’t

  • ask the difficult questions.” But it’s essential for Europeand for

  • Britain - that we do because there are three major challenges confronting us today.

  • First, the problems in the Eurozone are driving fundamental change in Europe. 
Second, there

  • is a crisis of European competitiveness, as other nations across the world soar ahead

  • And third, there is a gap between the EU and its citizens which has grown dramatically

  • in recent years. And which represents a lack of democratic accountability and consent that

  • isyesfelt particularly acutely in Britain.

  • If we don’t address these challenges, the danger is that Europe will fail and the British

  • people will drift towards the exit. I do not want that to happen. I want the European

  • Union to be a success. And I want a relationship between Britain and the EU that keeps us in

  • it. That is why I am here today: To acknowledge

  • the nature of the challenges we face. To set out how I believe the European Union should

  • respond to them. And to explain what I want to achieve for Britain and its place within

  • the European Union. Let me start with the nature of the challenges

  • we face. First, the Eurozone.

  • The future shape of Europe is being forgedThere are some serious questions that will

  • define the future of the European Unionand the future of every country within it.

  • The Union is changing to help fix the currencyand that has profound implications for

  • all of us, whether we are in the single currency or not

  • Britain is not in the single currency, and were not going to be. But we all need the

  • Eurozone to have the right governance and structures to secure a successful currency

  • for the long term. And those of us outside the Eurozone also

  • need certain safeguards to ensure, for example, that our access to the Single Market is not

  • in any way compromised. And it’s right we begin to address these

  • issues now. Second, while there are some countries within

  • the EU which are doing pretty well. Taken as a whole, Europe’s share of world output

  • is projected to fall by almost a third in the next two decades. This is the competitiveness

  • challengeand much of our weakness in meeting it is self-inflicted.

  • Complex rules restricting our labour markets are not some naturally occurring phenomenon.

  • Just as excessive regulation is not some external plague that's been visited on our businesses.

  • These problems have been around too long. And the progress in dealing with them, far

  • too slow. As Chancellor Merkel has said - if Europe

  • today accounts for just over 7 per cent of the world's population, produces around 25

  • per cent of global GDP and has to finance 50 per cent of global social spending, then

  • it's obvious that it will have to work very hard to maintain its prosperity and way of

  • life. Third, there is a growing frustration that

  • the EU is seen as something that is done to people rather than acting on their behalf

  • And this is being intensified by the very solutions required to resolve the economic

  • problems. People are increasingly frustrated that decisions

  • taken further and further away from them mean their living standards are slashed through

  • enforced austerity or their taxes are used to bail out governments on the other side

  • of the continent. We are starting to see this in the demonstrations

  • on the streets of Athens, Madrid and Rome. We are seeing it in the parliaments of Berlin,

  • Helsinki and the Hague. And yes, of course, we are seeing this frustration

  • with the EU very dramatically in Britain. Europe’s leaders have a duty to hear these

  • concerns. Indeed, we have a duty to act on them. And not just to fix the problems in

  • the Eurozone. For just as in any emergency you should plan

  • for the aftermath as well as dealing with the present crisis so too in the midst of

  • the present challenges we should plan for the future, and what the world will look like

  • when the difficulties in the Eurozone have been overcome.

  • The biggest danger to the European Union comes not from those who advocate change, but from

  • those who denounce new thinking as heresy. In its long history Europe has experience

  • of heretics who turned out to have a point. And my point is this. More of the same will

  • not secure a long-term future for the Eurozone. More of the same will not see the European

  • Union keeping pace with the new powerhouse economies. More of the same will not bring

  • the European Union any closer to its citizens. More of the same will just produce more of

  • the sameless competitiveness, less growth, fewer jobs.

  • And that will make our countries weaker not stronger.

  • That is why we need fundamental, far-reaching change.

  • So let me set out my vision for a new European Union, fit for the 21st Century.

  • It is built on five principles. The first: competitiveness. At the core of

  • the European Union must be, as it is now, the single market. Britain is at the heart

  • of that Single Market, and must remain so. But when the Single Market remains incomplete

  • in services, energy and digitalthe very sectors that are the engines of a modern economy

  • - it is only half the success it could be. It is nonsense that people shopping online

  • in some parts of Europe are unable to access the best deals because of where they live. I want

  • completing the single market to be our driving mission.

  • I want us to be at the forefront of transformative trade deals with the US, Japan and India as

  • part of the drive towards global free trade. And I want us to be pushing to exempt Europe's

  • smallest entrepreneurial companies from more EU Directives.

  • These should be the tasks that get European officials up in the morningand keep them

  • working late into the night. And so we urgently need to address the sclerotic, ineffective

  • decision making that is holding us back. That means creating a leaner, less bureaucratic

  • Union, relentlessly focused on helping its member countries to compete

  • In a global race, can we really justify the huge number of expensive peripheral European

  • institutions? Can we justify a Commission that gets ever

  • larger? Can we carry on with an organisation that

  • has a multi-billion pound budget but not enough focus on controlling spending and shutting

  • down programmes that haven’t worked? And I would ask: when the competitiveness

  • of the Single Market is so important, why is there an environment council, a transport

  • council, an education council but not a single market council?

  • The second principle should be flexibility. We need a structure that can accommodate the

  • diversity of its membersNorth, South, East, West, large, small, old and new. Some

  • of whom are contemplating much closer economic and political integration. And many others,

  • including Britain, who would never embrace that goal.

  • I accept, of course, that for the single market to function we need a common set of rules

  • and a way of enforcing them. But we also need to be able to respond quickly to the latest

  • developments and trends. Competitiveness demands flexibility, choice

  • and openness - or Europe will fetch up in a no-man’s land between the rising economies

  • of Asia and market-driven North America. The EU must be able to act with the speed

  • and flexibility of a network, not the cumbersome rigidity of a bloc.

  • We must not be weighed down by an insistence on a one size fits all approach which implies

  • that all countries want the same level of integration. The fact is that they don’t

  • and we shouldn’t assert that they do. Some will claim that this offends a central

  • tenet of the EU’s founding philosophy.  I say it merely reflects the reality of the

  • European Union today. 17 members are part of the Eurozone. 10 are not.

  • 26 European countries are members of Schengenincluding four outside the European Union

  • Switzerland, Norway, Liechtenstein and Iceland. 2 EU countriesBritain and Ireland

  • have retained their border controls.   
Some members, like Britain and France,

  • are ready, willing and able to take action in Libya or Mali. Others are uncomfortable

  • with the use of military force. Let’s welcome that diversity, instead of

  • trying to snuff it out. Let’s stop all this talk of two-speed Europe,

  • of fast lanes and slow lanes, of countries missing trains and buses, and consign the

  • whole weary caravan of metaphors to a permanent siding.

  • Instead, let’s start from this proposition: we are a family of democratic nations, all

  • members of one European Union, whose essential foundation is the single market rather than

  • the single currencyThose of us outside the euro recognise that those in it are likely

  • to need to make some big institutional changes. By the same token, the members of the Eurozone

  • should accept that we, and indeed all Member States, will have changes that we need to

  • safeguard our interests and strengthen democratic legitimacy. And we should be able to make

  • these changes too. Some say this will unravel the principle of

  • the EUand that you can’t pick and choose on the basis of what your nation needs.

  • But far from unravelling the EU, this will in fact bind its Members more closely because

  • such flexible, willing cooperation is a much stronger glue than compulsion from the centre.

  • Let me make a further heretical proposition. The European Treaty commits the Member States

  • tolay the foundations of an ever closer union among the peoples of Europe”.

  • This has been consistently interpreted as applying not to the peoples but rather to

  • the states and institutions compounded by a European Court of Justice that has consistently

  • supported greater centralisation. We understand and respect the right of others

  • to maintain their commitment to this goalBut for Britainand perhaps for others

  • - it is not the objective. And we would be much more comfortable if the

  • Treaty specifically said so freeing those who want to go further, faster, to do so,

  • without being held back by the others. So to those who say we have no vision for

  • Europe. I say we have.

  • We believe in a flexible union of free member states who share treaties and institutions

  • and pursue together the ideal of co-operation. To represent and promote the values of European

  • civilisation in the world. To advance our shared interests by using our collective power

  • to open markets. And to build a strong economic base across the whole of Europe. 

  • And we believe in our nations working together to protect the security and diversity of our

  • energy supplies. To tackle climate change and global poverty. To work together against

  • terrorism and organised crime. And to continue to welcome new countries into the EU.

  • This vision of flexibility and co-operation is not the same as those who want to build

  • an ever closer political unionbut it is just as valid.

  • My third principle is that power must be able to flow back to Member States, not just away

  • from them. This was promised by European Leaders at Laeken a decade ago.

  • It was put in the Treaty. But the promise has never really been fulfilled. We need to

  • implement this principle properly. So let us use this moment, as the Dutch Prime

  • Minister has recently suggested, to examine thoroughly what the EU as a whole should do

  • and should stop doing. In Britain we have already launched our balance

  • of competences reviewto give us an informed and objective analysis of where the EU helps

  • and where it hampers. Let us not be misled by the fallacy that a

  • deep and workable single market requires everything to be harmonised, to hanker after some unattainable

  • and infinitely level playing field. Countries are different. They make different

  • choices. We cannot harmonise everything. For example, it is neither right nor necessary

  • to claim that the integrity of the single market, or full membership of the European

  • Union requires the working hours of British hospital doctors to be set in Brussels irrespective

  • of the views of British parliamentarians and practitioners.

  • In the same way we need to examine whether the balance is right in so many areas where

  • the European Union has legislated including on the environment, social affairs and crime.

  • Nothing should be off the table. My fourth principle is democratic accountability:

  • we need to have a bigger and more significant role for national parliaments.

  •   There is not, in my view, a single European

  • demos. It is national parliaments, which are, and

  • will remain, the true source of real democratic legitimacy and accountability in the EU.

  • It is to the Bundestag that Angela Merkel has to answer. It is through the Greek Parliament

  • that Antonis Samaras has to pass his Government’s austerity measures.