University of Denver Digital Commons @ DU Electronic Theses and Dissertations Graduate Studies 8-1-2011 The Impact of European Monetary Integration on the Labour and Conservative Parties in Britain, 1983–2003 Denise Froning University of Denver Follow this and additional works at: https://digitalcommons.du.edu/etd Part of the Economics Commons, and the International Relations Commons Recommended Citation Froning, Denise, "The Impact of European Monetary Integration on the Labour and Conservative Parties in Britain, 1983–2003" (2011). Electronic Theses and Dissertations. 214. https://digitalcommons.du.edu/etd/214 This Dissertation is brought to you for free and open access by the Graduate Studies at Digital Commons @ DU. It has been accepted for inclusion in Electronic Theses and Dissertations by an authorized administrator of Digital Commons @ DU. For more information, please contact [email protected],[email protected]. THE IMPACT OF EUROPEAN MONETARY INTEGRATION ON THE LABOUR AND CONSERVATIVE PARTIES IN BRITAIN, 1983-2003 __________ A Dissertation Presented to the Faculty of the Josef Korbel School of International Studies University of Denver __________ In Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy __________ by Denise Froning August 2011 Advisor: Frank Laird ©Copyright by Denise Froning 2011 All Rights Reserved Author: Denise Froning Title: THE IMPACT OF EUROPEAN MONETARY INTEGRATION ON THE LABOUR AND CONSERVATIVE PARTIES IN BRITAIN, 1983-2003 Advisor: Frank Laird Degree Date: August 2011 ABSTRACT This study examines what effect the movement towards deeper economic and political integration in the EU has had on the domestic politics of a member country, Britain. This study argues that this pressure to integrate by joining the single currency, or European Monetary Union (EMU), and its predecessor, the European Exchange Rate Mechanism (ERM), has exacerbated the cross-cutting cleavages inherent in British party politics, making them potentially dangerous to party unity and to successful governance by making party management more challenging. The pressure imposed by the EU on British parties and governments to follow the path of economic integration to its fullest extent exacerbates these cross-cutting cleavages in each time period examined in this study, forcing successive British politicians to seek an accommodation between pro- and anti-euro forces in their own parties. In particular this study examines two factors that condition British politicians’ reaction to the pressure to join the euro and the impact that the euro cross-cutting cleavage has had on the parties and on British government. First, formal British political institutions, particularly the size of a ruling party’s parliamentary majority but also the ii First Past the Post (FPTP) electoral system, shape the range of decisions on euro policy available to a political actor. Second, in keeping with the reiterated problem solving methodology employed in this study, this work considers the role of actors in managing the euro cross-cutting cleavages, especially prime ministers and/or party leaders and how they use their informal powers to manage their party. Examining how these factors and their interaction with the EU-level integration pressure impacted the decisions Prime Ministers Margaret Thatcher, John Major and Tony Blair, and Labour Party leader Neil Kinnock, made regarding euro policy provides insight into what range of options a future prime minister may enjoy when the pressure to integrate rises again. Finally, this work examines the broader repercussions of the EU impetus to deeper integration in other member countries currently struggling to balance the EU-level imperative of economic integration with domestic political realities. The presence of euroskeptic countries such as Britain gives voice within the EU to alternatives to the dominant imperative to deeper integration whatever the cost. Thus, Britain’s protracted political agonizing over whether to join the euro has given the country a broader legacy in Europe by making the debate over economic and monetary union a more open and democratic one, allowing this “reluctant European” a key role in shaping the future of the European Union. iii Acknowledgements Completing this dissertation would not have been possible without the support and encouragement of a number of people. First, I thank my committee, Frank Laird, Jack Donnelly, Nile Gardiner, and my outside chair, Ann Dobyns, for their time and expertise. Thank you also to my former colleagues at the ‘no’ campaign—especially George Eustice, MP; Alex Hickman; and Dominic Cummings, who first inspired my interest in Britain’s ambivalence over the euro—and to my DU colleagues, especially Sarah Bania- Dobyns, Eric Fattor, and Bobby Pace, and others in the dissertation workshop who patiently read and commented on drafts. Finally, I am especially grateful for the longstanding support of my family: my parents, Janice and Steven Froning; and my sister and brother-in-law, Cynthia Froning and Niall Gaffney. iv Table of Contents Chapter One: Introduction, Literature Review and Conceptual Overview......................1 Part I. Methodological approach..........................................................................2 Part II. Cross-cutting cleavages ...........................................................................7 Part III. How formal and informal institutions affect British euro policy ..........24 Part IV. Shaping prime ministerial power ..........................................................30 Part V. Historically contingent variables...........................................................31 Part VI. Explanatory concepts ............................................................................32 Part VII. Conclusion ...........................................................................................40 Chapter Two: Conservatives 1985-1990: Single Market, ERM and the Rise of the Skeptics...............................................................................................................43 Part I. Conservatives’ stance on Europe prior to the SEA..................................44 Part II. The Single European Act (SEA)............................................................48 Part III. Fixed or floating exchange rate? ...........................................................55 Part IV. Delors and the EC .................................................................................68 Part V. Conservative euroskepticism grows ......................................................76 Part VI. EMU triggers Thatcher’s downfall ....................................................100 Part VII. Conclusion .........................................................................................112 Chapter Three: Labour 1983-1990: Labour Changes Course on Europe ....................114 Part I. Introduction............................................................................................114 Part II. Labour Party realignments up to the SEA ...........................................118 Part III. Stage One: 1983-1987 .......................................................................122 Part IV. Unions ................................................................................................131 Part V. Stage Two: 1987-1990.........................................................................140 Part VI. Conclusion...........................................................................................155 Chapter Four: Conservatives 1990-1997: Maastricht, the Single Currency and Implosion ...........................................................................................................................159 Part I. TEU negotiations, December 1990-December 1991 .............................159 Part II. TEU ratification and complications, 1992-1993...................................168 Part III. Conservative Party turmoil 1993-1997 ...............................................191 Part IV. Taking the debate outside Parliament, 1992-1997..............................224 Part V. Denouement: The 1997 general election.............................................228 Part VI. Major and the cross-cutting cleavages challenge................................234 v Part VII. Conclusion .........................................................................................242 Chapter Five: Labour 1997-2003: Cross-cutting Cleavages Resolved?......................246 Part I. New Labour comes into power ..............................................................249 Part II. Chronology post-Five Tests..................................................................263 Part III. Prime minister and chancellor.............................................................270 Part IV. Prime minister and cabinet: Marginalized ..........................................283 Part V. Prime minister and backbenches: Not quite irrelevant.........................285 Part VI. Conclusion...........................................................................................291 Chapter Six: Conclusion ...............................................................................................298 Part I. Main arguments......................................................................................298 Part II. Summary of the temporal cases............................................................301 Part III. Implications for the europhile-euroskeptic debate in the EU..............307