Labour party (new Labour) are Euro-positive. This refers to people who are in favour of the European integration and they still see Britain at the centre of Europe however, they do not want to support further transfer of function to the union. For example, it believes that tax, social welfare and law and order policies should remain under the control of the national government. In contrast, the Conservatives are Euro-sceptics. This means that they are doubtful of any further political integration but realise the economic advantages. They want to see European decision making kept at an intergovernmental level. Intergovernmental refers to decisions that are made in the interests of the individual countries. However recently, Labour and Conservatives policy regarding the EU have become increasingly similar.
One way in which the parties’ views have become similar is that both parties do not want the European Union to become a federal state. A federal sate is where power is dispersed between federal and state authorities. For example, the USA is a federal state. The two leading parties oppose a federal state because it threatens national sovereignty. This refers to the ultimate power and the source of political power within a state. A European Union federal state would mean the UK would have to give up further national sovereignty. This in return would give European Union considerable power to make decisions at supranational level rather than intergovernmental. Supranational means the national interests are set aside and are replaced by the interests of the European Union as a whole. For example the Common Agricultural Policy as supranational. Supranational decisions are perceived to be negative because although it can benefit countries, it does so at the expense of the other the other countries. . An example of this was when Ireland in the mid 2000’s began to grow at a vast rate, however this lead to high rate inflation in Ireland. Inflation is when there is too much money chasing too few good, so in order to lower inflation Ireland requested the European Central Bank (ECB) to increase interest rate so that people would spend less and save more. However because Ireland is a part of the Euro zone and lowering interest rates in Ireland would mean lowering interest rates in other countries, countries like France and Germany were in disagreement as their economy was sluggish and they needed interest rates to stay down. Because of the supranational style of decision making interest rates stayed low, so when the credit crunch happened Ireland’s economy crashed leaving Ireland bankrupt. This is the kind of situation both labour and Conservative fear hence the opposition to a federal state as it would mean that the decision making process is taken further away form the people, resulting in decisions being made for at more of a supranational level.