Britain sees new realism at the heart of Europe

First Edition

The European Community meets in sombre mood today at the Copenhagen summit, the six-monthly meeting of heads of government.

The summit will be dominated by a debate on unemployment, the kind of navel-gazing which normally attracts British scorn. But senior British officials in Brussels have been at pains to welcome the new-found thoughtfulness. They believe that it means that the appetite for grand institutional change is waning, and that it could herald a new European approach to social policy and economics.

Economic growth has sagged in the EC and now looks set to vanish entirely in 1993, giving way to recession. There are no easy answers to the problem, and the summit will probably lead to a clutch of studies.

But even the return of growth is unlikely to bring an end to the rising trend of unemployment, raising fears that the social underpinning of Western Europe is starting to subside. This is matched with a fear that the EC's competitive position is being weakened in international markets. Its job creation record compares pitifully to those of the US and Japan. The EC's trade balance is suffering and its companies are shifting production to eastern Europe, where labour costs are a tenth of those in Germany, or South-East Asia, where they are even lower.

Industry says the EC is pricing itself out of the market, because of the high cost of labour, and Jacques Delors, the Commission's President, has started musing publicly on how the EC should adapt its social policy aspirations. He is worried about the impact the gloom could have on the EC's institutions. There is clearly a risk that the malaise will lead to a renationalisation of policy on trade, industry and the economy, as it already has on currencies.

Publicly, Britain is sanguine about calls for greater EC trade protection, such as that launched by Francois Mitterrand on Friday, and officials say they are still confident of a Gatt deal by the end of the year. Behind the scenes everyone is nervous, and the summit could see a confrontation on trade. Germany will also be attacked for its bilateral deal with the United States.

Howeer, Britain has concluded that the post-Maastricht malaise is an ally in the fight against further expansion of EC powers. The wind is blowing in the direction of consolidation, not revolutionary change, officials in Brussels say.

But further institutional change will be put on the agenda, if not in Copenhagen then certainly afterwards. In particular, the enlargement of the Community requires a rethink of the rules on qualified majority voting. These currently allow three large states or five small ones to block a decision in some policy areas. There is a question over how this should be reworked to account for more small countries: should the threshold be raised, on the basis that it should rise proportionately with the size of the Community? Or should it stay where it is, on the basis that it is a minimum requirement?

It is still possible that, through questions like this, the whole basis of the Community's structures could be challenged. The European Parliament has a veto over whether the new states are admitted. Some officials are saying publicly that the EC's next intergovernmental conference, scheduled for 1996, should be brought forward to 1995 to deal with the issues as part of a deal with the Parliament.

Maastricht, the last fateful attempt to tinker with the EC's structures, is still to be put into force. There are plenty of details to be cleared up, not least the question of where to locate the European Monetary Institute, forerunner of a European Central Bank, an issue which is not expected to be finalised in Copenhagen. Chancellor Helmut Kohl of Germany has re-emphasised that he wants a new EC summit in the autumn - perhaps October - to relaunch the Community.