Barroso’s State of the European Union: a challenge for Labour

By Jon Worth / @jonworth

Few in Labour would have noticed it taking place, but President of the European Commission José Manuel Barroso delivered his annual ‘State of the European Union’ address (highlights here) on Wednesday this week, at the moment when Labour politicians and activists had their full focus on conference.

Labour would do well to reflect on what Barroso said, for it poses a fundamental challenge to Britain’s future relationship with the European Union, and also Labour’s EU policy.

The challenge: what to do, and how to respond to Barroso’s call for a Financial Transaction Tax (FTT), essentially what is known in UK politics as the Robin Hood Tax. This is what Barroso said:

“In the last three years, member states have granted aid and provided guarantees of 4.6 trillion euros to the financial sector. It is time for the financial sector to make a contribution back to society.”

“Today, the Commission adopted a proposal for the Financial Transaction Tax. Today I am putting before you a very important legislative text.”

Larry Elliott has more on the issue in The Guardian.

The reaction of the Tory-led government to Barroso’s call was as disappointing as it was predictable; such a tax would have to be global, not for the EU only, and as global agreement will not be achieved the UK will oppose anything the Commission proposes. EU tax matters need unanimous agreement of the 27 Member States.

The problem for the government is that there is adequate political consensus within the Eurozone to make the FTT a reality, perhaps for the Eurozone countries alone rather than for the EU as a whole. Osbourne has said before (see my previous column) that he wants the Eurozone to go ahead and integrate, so would the UK be churlish enough to stop a FTT for the Eurozone? Under the treaties the UK would have the power to do that, but I’m not sure it’s wise in realpolitik terms.

Last then to Labour: what does anyone in the party think of Barroso’s idea? Labour MEP Arlene McCarthy has been strong in her defence of Barroso’s idea but there has been no reported response as yet from either Ed Miliband or Ed Balls (although the latter has been cautiously in favour of a FTT in the past).

If Labour were to be bold it should defend Arlene McCarthy’s line: that an EU-wide FTT is a good idea, and that the UK should be a part of it. The argument would be the one made by Barroso: that the banks landed us in this crisis, so they need to take their very small share of responsibility to help us out of it. Labour could alternatively just stand by and watch this issue develop, and by so doing fail to start to carve out a decent, socially responsible approach to EU politics that would distinguish the party from the coalition.