Unsurprisingly, there has already been a rush to judgement on the implications of Syriza’s electoral triumph in Greece. Its victory is fast becoming all things to all people, from those anticipating a clash with Germany and a subsequent Greek euro exit, to the many expecting the party to blink first in negotiations with the EU/IMF/ECB Troika. But what it means for Europe as a whole is not yet clear, despite the fervent declarations of Syriza leader Alexis Tsipras that his victory is a blow against austerity across the continent. This will no doubt have an impact on the UK, but it will very much depend on the extent to which Syriza’s broader policy direction is co-opted by the rest of the EU.
The fact that the emerging picture from Athens is still far from clear has not deterred some leaders from making finite pronouncements about the expected consequences. Perhaps most surprisingly, David Cameron was first out of the starting gate, warning that the result would “increase economic uncertainty across Europe”. As the UK is outside the Eurozone and shielded from the more direct knock-on effects of a potential Greek debt write-down, Cameron’s early intervention may have seemed odd and even a touch patronising from the comfort of his non-euro perch.
But Cameron knows that any opportunity to put on a meaningful united front with Angela Merkel must be taken advantage of, even if the UK’s ability to influence outcomes is somewhat limited on this issue. Germany has already been under fire in recent months, as it stands accused of having kept the ECB from launching full-scale, risk-borne QE and of refusing to take the threat of deflation seriously. In a way, Germany is as prone to sticking to its own singular view of how the EU – or rather the Eurozone – should work as the UK is often accused of being. So the hope is that, by buttressing Merkel’s position when it is most under threat, Cameron’s support will pay dividends in any future reform negotiations.
It’s never been so clear how much change in Europe is dependent on – even held hostage to – fluctuating domestic political landscapes. In Britain, our vision of EU reform tends to be interpreted through the lens, shared by Germany, of making the bloc more competitive and getting serious about structural changes. The narrative rapidly gaining ground elsewhere is equally enthusiastic about reform – but reform which entails moving away from austerity and the European Commission’s perceived “neoliberal” orthodoxy.
It is not the pushback against austerity itself which has repercussions for the UK and its relationship with the EU. Labour has rarely, if ever, spoken out against the structural reform drive in the Eurozone. But the risk of centre-left parties jumping on the bandwagon of Syriza in Greece and Podemos in Spain, and driving home the message of moving Europe even further away from a market-oriented approach, is where Brexit could come into play.
The president of the Socialists & Democrats group, in which Labour MEPs sit in the European Parliament, has been quick to pledge his ambition to work with Syriza on corporate taxation and social inequality issues. Fearful of losing too much electoral ground to its more radical counterparts, the left-wing establishment hopes to harness its energy to reboot European social democracy in areas that have often come into conflict with the UK’s more Anglo-Saxon economic model. On a pan-European level, that means the new Commission’s pause on the regulatory switch in social, environmental and employment legislation may come under serious threat. The attack on business and wealth creators may gather pace, with the quest for true competitiveness abandoned.
A scenario in which a Labour government – either wishing to jump on Europe’s lurch to the left or absent from the field of play while focusing on domestic issues – refused to hold a referendum on the UK’s EU membership could provide fertile ground for Conservative Eurosceptics. At present, there isn’t a whole lot that Brussels itself is doing badly from Britain’s perspective. It’s early days yet for the new Commission, but the signs are that its agenda is far more in tune with Britain’s than that of its predecessor.
Depending on how the likes of Syriza and Podemos align themselves with progressive forces in the Parliament and the Council, that could change. The Commission is far from immune to populism in public sentiment – corporate taxation being a notable example. The emphasis on the social dimension of the social market economy, which acts as the official model for the EU’s growth strategy, could increase at the expense of the more market-friendly element.
We already know that UK business isn’t particularly keen on the EU’s current socio-economic model, with just 11 per cent of IoD members thinking it is viable in the long term. A sharp pan-European shift even further away from the free market could see a sustained Eurosceptic spike in the UK if the next government failed to engage properly with EU reform, particularly if it then refused to hold a referendum. By 2020, the EU could then become an election issue of unprecedented proportions.