Throwing out piles of mouldering print as part of my annual new year rubbish-cleansing ritual I came across an upbeat pamphlet called EU:2010: An Optimistic Vision of The Future. Written in 2000 by Charles Grant, director (then and now) of the Centre for European Reform, it set out a vision of a resurgent Europe into which he hoped the second Blair government would take us around about 2005.
Ten years this week after the eurozone's notes and coins were finally launched – on 1 January2002 amid much excitement and optimism – Grant's pamphlet looks a trifle out of synch. Angela Merkel, Nicolas Sarkozy and David Cameron have all been forced to whistle in the dark with new year messages that seek to balance grim realism today with hope for a better tomorrow.
So the Europe: 2010 pamphlet is easy to mock with hindsight. But that is not my purpose, quite the reverse. Grant is a clever and sensible fellow whose booklet makes a number of smart predictions.
Some of them have come true – he even refers to the then-uninvented EU foreign and security minister as a "Ms CFSP" long before most voters had heard of Lady Cathy Ashton – and notes the growing need for budgetary co-ordination and discipline within the eurozone. How true, Charles!
The euro-sceptics (I admit to mild contagion on the currency issue) have had a field day with such writing and can claim to be correct about the wisdom of not joining sterling to the eurozone.
But are their alternatives any more coherent or credible? No. Some want Britain to become a "nuclear-armed Switzerland" (ho,ho) on the EU periphery; others to join Nafta, the US-led trade block with Canada and Mexico (ho,ho,ho); some to revive the Commonwealth connection (ho,ho,ho,ho), though India is quite well placed to manage without us now. A few still hanker after a protectionist siege economy, perhaps because North Korea has done so well.
In fairness to Tony Blair, Peter Mandelson and the yes camp they always said they would want to join a "successful" euro. So did cautious Gordon Brown and Alistair Darling, though Ed Balls was always more sceptical and deserves a round of applause - he won't get it – for those "five tests" of sterling/euro convergence that kept our currency safe from mistakes in the euro's design and implementation.
As for all those Lib Dem politicians who were most passionate about joining at the time, they have mostly kept their heads down. Nick Clegg has blustered about not joining any time soon and Danny Alexander has said things would have been better if we had joined at a more realistic exchange rate.
Paddy Ashdown recently took a kicking from Times readers for suggesting that British presence inside the eurozone from day one would have stopped the Germans and French from breaking their own rules on budget deficits (not more than 3% of GDP for more than three years) – which they did long before Greek misconduct came unstuck.
Few such enthusiasts have admitted error. One who did is ex-FT editor Andrew Gowers who wrote last year that "the model was flawed and appallingly managed", though he also made the useful point that the Germans were very reluctant to give up their mighty Deutsche Mark. It was France that pushed the single currency to curb the power of the newly reunited Germany. The euro was created to hide German strength and French weakness, as remains the case today.
The sceptics, rooted in warm (but safely) distant memories of victory in the two world wars, tend to ignore such awkward facts in preference for seeing a German plot, always much more fun. The use of David Low's defiant cartoon of 1940 ("Very well, alone") after David Cameron's Brussels veto in December is not the only explicit comparison.
Last summer, around the time that Andrew Duff MEP, another ardent pro-European federalist, was polishing his earnest, technocratic prose ("a proper federal budget of the European Union will serve to reduce fiscal pressure by lowering costs") in a pamphlet favouring greater EU integration (including Britain), Tory journalists Peter Oborne and Francis Weaver were busy too. They were researching a rival pamphlet for the Thatcherite Centre for Policy Studies (CPS).
Bearing the catchier title Guilty Men, it sought to do to the pro-Europeans in every party what the best-selling pamphlet of the same title – co-authored by Michael Foot – did to pro-appeasement politicians in the summer of 1940 when Neville Chamberlain's government – the "Men of Munich" — had finally been replaced by Churchill's cross-party coalition (the last one before 2010) determined to fight Hitler.
Hastily written, hyperbolic in tone and not always accurate, 1940's Guilty Men was also simplistic in playing down painful choices, public opinion's ardent desire for peace, Labour's misplaced faith in the "collective security" of the League of Nations, not to mention Churchill's own erratic record. But Foot's version became the conventional wisdom for over 20 years. It was expedient simply to dump on the appeasers. In 2012 that is the current narrative too.
Oborne and Weaver's account has not resonated much beyond the euro-sceptic citadels of Fleet St and Westminster, though it is lively stuff too. Promoting the romantic notion that the opponents of the single currency were a beleaguered minority, marginalised and abused like the Churchillians in 1938, the authors single out for vituperation pro-European institutions like the Financial Times, the Confederation of British Industry (CBI) and the BBC – against which the Mail on Sunday took another crack for its euro-enthusiasm in 2001 only this week.
As well as leading Labour and Lib Dem targets of the last 15 years, Oborne and Weaver savaged Tory politicians like Chris Patten (when a pro-European becomes chairman of the BBC Trust it counts as a bonus); his BBC deputy Diane Coyle (a pro-euro journalist formerly at the Independent); and Sir Richard Lambert, who went from his "slow-witted editorship" of the FT to run the fat-cat CBI and to claim (on "very flimsy" evidence) that small businesses wanted the euro too.
Adair Turner, currently running the Financial Services Authority (FSA), was placed in the Guilty Men tumbril. So were columnists such as the FT's Philip Stephens, the Observer's Will Hutton, the Times's David Aaronovitch, the Indy's Johann Hari, and the late Hugo Young of the Guardian.
All had embraced what has now been shown to be the greatest political misjudgment of our times, culminating in what Oborne calls "the most complete and crushing victory" for the persecuted euro-sceptics, the people who foresaw" with lucid, prophetic accuracy exactly how and why the euro would bring with it financial devastation and social collapse.
Leaving aside the awkward fact that such a euro-Armageddon has not yet happened and that most of the main newspaper groups, the Tory frontbench and other opinion formers have long since switched sides, is it actually true?
Were the euro-sceptics really so accurate in their analysis and rival prescriptions? Then or now? Or are Charles Grant and Anthony Duff still in with an outside chance if Merkel and Sarkozy finally pull off their long-promised rescue?
It was John Major, who does not get much credit either (not a kosher euro-sceptic), who tried hardest to square the British euro-circle. At the Maastricht summit of December 1991 he skillfully negotiated a British optout from the proposed single currency and – at the behest of those cabinet colleagues he privately dubbed the "bastards" – from the provisions of the new "social chapter" to protect workers rights.
What was seen as "social solidarity" to continental Catholic conservatives, a Rhineland economic model that had served the Bonn Republic well, was seen as closet-socialism to insular British Tories.
Only six Tory MPs, including the veteran John Biffen but not 2012's arch-sceptic Bill Cash, voted against the pre-Maastricht statement of Commons support for Major in 1991. After the summit compromise and optouts the Tory press joined widespread praise for Major's "consensual instinct with more than a touch of steel," so Hugo Young noted in This Blessed Plot, his 1998 history of Britain's tortured relationship with Europe since 1945.
"A copybook triumph for Mr Major," noted the Telegraph's Brussels correspondent, one Boris Johnson, a former pro-European now brilliantly making a career from peddling Euro-myth stories back home. "An emphatic success,'' declared the Murdoch Times. The euro might one day be a currency "worth having", conceded the Mail.
Yet within a year they were all denouncing Major. What had happened? First he won the 1992 election against the odds. Sensibly enough he had also refused to rule out membership of the euro for all time. Then the Danes voted against the Maastricht treaty (with minor concessions they later voted yes) and uncorked the genie of Britain's own referendum movement – backed by Thatcher and by her old chum Jimmy Goldsmith's money.
Nowadays it comes complete with routine accusations of "betrayal" against those who argued that parliamentary sovereignty means just that – that parliament decides specific issues, not voters in the kind of plebiscites an earlier generation (Thatcher as well as Attlee) had linked with prewar fascism. Blair and Brown, already fearful of the power of the Tory press, were increasingly reluctant to stand up to it on Europe – as on much else.
The referendum campaign finally bore in the European Union Act (2011), promoted by William Hague himself, to guarantee a referendum ballot on any future EU treaty which transfers powers from Britain to Europe.
But Hague and Cameron have found themselves where opposition parties usually do when back in office: they want referendums on past decisions (Hague did not support one on Maastricht in 1992) and future ones, but never on current ones.
If the Lib-Con coalition has to help Merkel strengthen the EU's central powers to save the euro in 2012 it will not risk a referendum now, not after decades of using Europe as a scapegoat for what are mostly domestic disappointments of Britain's own making has made even an in/out referendum on basic EU membership an uncertain one. No one in Brussels stops British exporters trading with China: the Germans manage it quite well.
It is not that the sceptics were wrong on the central judgment. On the desirability and practicality of a one-size-fits-all currency zone from Donegal to Athens they were right. Clumsily constructed, more a political than an economic concept, the euro was flawed from the start, though few predicted that sovereign debt – theoretically impossible under those Maastricht rules on 3% maximum deficits – would be the trigger of the euro's present existential crisis.
Some understood this at the time. Labour's former foreign secretary, turned breakaway SDP leader, now crossbench peer Lord Owen, has long been pro-European, but anti-euro. The speeches of Tory sceptics like Peter Lilley stand up well. "There has never been a currency in the history of the world which has not had a government to run it," he once wrote.
In other words a currency union needs a central government to transfer money from rich regions and individuals to poorer ones in hard times – as Washington does from Texas to Massachusetts and vice versa. But neither leftwing socialists, New Labour euro-sceptics nor Tory free marketers have created a model which has resolved the underlying problems facing an ageing Europe increasingly challenged from Asia.
Blair and Brown presided over an unsustainable bank-driven boom and bust, lightly regulated in the way so many Tory sceptics wanted – in contrast to what they saw as the heavy hand of Brussels.
The European Central Bank in Frankfurt and the US Federal Reserve made many similar mistakes and are paying the price too. Britain has retained its control over its own currency, but the stronger eurozone economies in 2001 – most conspicuously Germany – remain stronger in 2012.
Our problems of deficit and debt, sluggish growth and a democratic deficit, may be our own, but they look remarkably similar to theirs. The euro may break up over Berlin's self-defeating insistence on ever-deeper austerity, but its core states may adapt and fulfil its early promise.
In urging the eurozone to save itself by greater integration around Germany as Cameron and George Osborne now do, they find themselves endorsing an outcome which British statesmen have resisted for 500 years: the creation of a single dominant European power across the channel.
In which case the Tory euro-sceptics and their outliers in Ukip and beyond will still face all the familiar dilemmas and hard choices about Britain's relationship with its nearest neighbours – and the wider world – questions they are yet to answer convincingly.
Far from insular triumphalism in which blame for failure is all heaped on one side – the pro-Europeans – a little humility all round may be prudent this uncertain new year.
Comments
3 January 2012 10:42AM
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3 January 2012 10:49AM
Any system built on lies and fraudulent figures will fail
Poor foundations make a dangerous building-but the EU didn't/doesn't want to look too hard for fixed figures in case it finds them.
It's all about confidence-if the markets lack confidence in the currency ,it will fail.
I wouldn't trust the Euro as far a I could throw it
3 January 2012 11:06AM
Look no further
The UK economy will grow through exports to asia (OBR first dodgy estimates)
The UK will grow through a wildly implausible growth in domestic personal indebtedness at a time when households were manifestly paying down debt (OBR second dodgy estimates)
3 January 2012 11:13AM
Your ho's or ho ho ho's or ho ho ho ho's are a cheap jibe. These alternatives (which are not exclusive, it could be any two or all three) represent viable alternatives to us being chained to Europe. To dismiss them out of hand without examining their pros and cons diminishes your whole article.
3 January 2012 11:18AM
One of Michael White's best articles. I still think of the euro as the most sensible way to run European economies, including Britain's. What the continent needs to do is find the way to balance German desire to play monetarist belt-tightening with sustainability that is allied to social cohesion. Standard eurosceptic positions are for the birds.
3 January 2012 11:19AM
Oh cruella...
3 January 2012 11:21AM
"No one in Brussels stops British exporters trading with China: the Germans manage it quite well."
True, but being in the EU does restrict Britain from making a bilateral agreement with China or others. We cannot negotiate our own free-trade agreement with China or anywhere else. And Germany's balance of trade with China is nothing to want to imitate, even though currently in rough balance in 2010 this has already changed to a considerable deficit for 2011 and will decline further this year.
3 January 2012 11:23AM
Wait...what? One of his best? Did you read the article? Have you thought about looking at it from the other perspective perhaps? I don't just mean a pro-euro or euro-sceptic idea either. I do mean from a technical aspect as to whether this thing article is actually reliable, or even making any points (it isn't really, not that are any worth...the hohoho remarks show how detailed he goes)
The way to balance German desire to play monetarist belt-tighting...
So we want them to be as least like us as possible. O_o; Because that's what we're doing effectively. It's called Austerity, you're part of it.
3 January 2012 11:31AM
I take it that Michael White is not actually in favour of any referendum on EU membership?
Too important a decision to trust the voters with, then?
3 January 2012 11:32AM
Michael, it was not 'light" regulation that caused the problem, it was INCOMPETENT regulation. Even FSA admitted this, when the government forced it to publish their full review on the RBS scandal. (Unsurprisingly, Labour made the review secret and only published a one page summary.) Less than a month ago, even YOU admitted to knowing about the review (but not to reading the review), when you wrote, in an article closed to comments,
The difference between 'light' and 'heavy' regulation is how disruptive the regulation is for the bank's operations. The difference between competent and incompetent regulation is whether the regulation achieves the protection for the taxpayer, and the economy, that is desired. Brown's tripartite regime failed because it was INCOMPETENT, not lightweight.
We all know that you whitewash Brown's errors at every possible opportunity, but the fundamental flaws in Brown's tripartite system was a critical factor in all three collapses. Your urging the continuation of this idiotic system meets Einstein's maxim "Insanity: doing the same thing over and over again and expecting different results."
Light is not a synonym for incompetent. Check Roget.
3 January 2012 11:34AM
When I studies economics 50 years ago, I discovered that lots of the ideas and theories were quite ludicrous e.g the idea of perfect knowledge etc and the absence of any psychological dimension and people. Certain things have been remedied such as the emergence of behavioural economics i.e.psychology but still the daft ideas persist: Joy through austerity or per ardua ad disaster of Osbornonomics.The Euro is a deeply flawed and should have been exposed for what it was: a two legged stool whose flaws Stiglitz well described in his article in the Project Syndicate. Sadly, finance and economics is still a mess well attested by the financial crash engineered by the banks
3 January 2012 11:34AM
A very fair and balanced summary, I think. Admitting the Europhobes had a point about a single currency needing a government is a bitter but necessary pill for pro-Europeans to swallow before we can move on. (Although had the rules governing the Euro - regarding debt levels in particular - actually been followed, Greece would never have joined, and things might have worked well enough.) A Euro is still worth more pounds than it was ten years ago, so I'm not quite sure what we have to feel so smug about.
As Michael White points out, the Germans manage to trade with the BRIC economies quite successfully from the heart of the EU, so what's stopping Britain? It wouldn't be the fact that our manufacturing sector - what the Chinese like buying from Germany, after all - has been run down by years of ignorant and unsustainable obsession with financial services as the economic cure-all? Why aren't BRICS buying our banking services, if they're so good?
I do wish some pro-Europeans would be more positive about the prospects for Europe in the global political scene over the next fifty years. This 'old Europe' stuff is depressing and inaccurate. Europe should be proud of its role as an example of a still-prosperous economy which values democracy (unlike China) and social welfare (unlike US), and shows how these civilising values are compatible with economic success.
Some of the most promising emerging economies are the EU's eastern european members, or just outside the EU (e.g. Turkey). Western Europe has access to much better cheap, educated labour than US, of example, and the opportunities for growth in high-tech manufacturing here are immense. German car manufacturers do very well making cars in Eastern Europe, for example.
And there further opportunities with democratic developments in the Middle East and Russia: early days, still, but over the next twenty years the prospect for growth in these countries is huge, as an ambitious and in many cases well-educated population is freed from oppression. With the right assistance and encouragement, there's a good chance that North Africa and Russia will be booming in twenty years or so, with EU economies well-placed to lead that growth.
The saddest thing about the Europhobic world view is how limited its ambition is for British influence and involvement. With positive leadership and the right contribution from Britain, Europe could still be the crux of global development in C21. But Euro-sceptics would rather bury their heads in the sand of George W's Texas ranch.
3 January 2012 11:40AM
So, after 15 years of being jeered at as "little Englanders" and "isolationists" etc etc, the euro-sceptics are now expected to show "a little humility"?
The euro-sceptics, whether from the Tory right, and the Bruges Group or some within Labour, or Jimmy Goldsmiths Referendum Party (which forced Major and Blair to both agree to a referendum on the euro, during the 1997 election campaign, and therefore effectively preventing it ever happening), have all been totally vindicated.
Meantime, the usual "euroloons" (two can play at the stupid name calling) such as Keith Vaz, Kinnock, Heseltine, Paddy Ashdown, Ken Clarke, Mandelson, the BBC and almost the entire Liberal Democrat party have been found to be totally incorrect on one of the most important issues of this generation.
No wonder the euro-sceptics are crowing. If any "little humility" is to be shown, then it should be from those named above who have been found to be on the wrong side of history. Listening to Kinnock, Heseltine and Ashdown on Radio 4 recently, Kinnock (to his credit) owned up to being wrong, and almost sounded contrite. No such honesty from Heseltine and Ashdown, and until all the euroloons finally show some contrition, you can't reasonably expect the euro-sceptics to stop crowing.
3 January 2012 11:41AM
Quite possibly. Zig-zagging every time a government decision is required is not necessarily a part of democracy. Why don't we have a referendum on hanging, which so many people slaver for?
3 January 2012 11:43AM
Surprisingly, I read every word. You may diasagree with his ho ho but I find his view just a weeny bit preferable to yours.
As to austerity - neo-liberal economics brought us to this place but is not necessarily the best tool to get us out of it. Just go and read about the '30s.
3 January 2012 11:44AM
I would have thought that having the option to devalue our currency would be a good place to start.
3 January 2012 11:53AM
Apart from London, exactly what is Britain providing to the world again? Germany provides World Leading engineers, France has its wines and chefs, the arts even, asia has its electronics and technology, the US has its Medicine... what does Britain do that other countries can't do better?
You're delusional if you think Britain has a real place in the world anymore. Sure we're more popular than North Korea, but line us up against Germany, Norway, Switzerland even and we come up pretty damn short.
We act as America's poodle and do effectively as we are told. We were told to join the EU, we did. We were told to go to war in Iraq, we did. The people never had a say.
Admittedly if given the vote, I'd probably be voting for the EU unless someone come up with a decent alternative but just because we don't want to join the Euro doesn't make it a bad decision.
As for feeling smug. A euro was worth 0.6 10 years ago now it is worth 0.8...though it appears to be steadily decreasing from 0.9 a few years ago just from looking at the stats on face value.
http://www.x-rates.com/d/GBP/EUR/hist2011.html I predict it'll get to 0.7 and stay there roughly.
3 January 2012 11:57AM
Austerity I think is right wing policy...(well given that all three uk parties are heavily right wing...(politicalcompass.org)) I am assuming that you think that spending is not the way out? Yet leading economists and traders point to left wing (liberalist) policy to spend more >_> or maybe I'm just getting things completely muddled.
Austerity, cut education, welfare and we go into a depression (that's pretty much what happened before)
3 January 2012 12:02PM
I am not against Keynesianism with spending as necessary but given where we are, that spending needs to be very sensibly targetted. My preference is for anything that promotes sustainability.
3 January 2012 12:17PM
The eurosceptics AKA " little Englanders" have been ridiculed and vilified by the europhiles no end. It would have been gracious if the europhiles now accept that euro sceptics had a point and apologise for all the insults they hurled on to them. But then that would be too much to expect from those who have a blind faith in Euro and the European project.
We have to thank the TB-GB feud for keeping out of zero. After all every cloud has a silver lining.
3 January 2012 12:27PM
But perhaps it is. Let's have a referendum on that point............
Bad example. Do you favour life imprisonment for murders, or more modern techniques, such as loss of housing benefit?
You know that a referendum on hanging would be passed by a huge majority. Are the voters 'wrong' to want this?
3 January 2012 12:36PM
I wonder if those espousing free trade as an antidote to membership of the EU's single market, recall their 1930's history.
The way its been explained to me is that under threat of horrific unemployment, governments (democratic and otherwise) felt compelled to erect tariff barriers. If 2012 is as bad as predicted, why should this not happen again?
I mean erecting tariff barriers is counter-productive, but once someone starts, it acquires a momentum of its own. And if it does, I'd expect the EU to get in on the act after a while. And we'd be on the outside. Hmmm...
(Yes, I've participated in the high tech evasions of free trade that both the US and the EU engage in. I have no illusions that there is any real free trade in the world as it is. Why is it supposed to suddenly get any better?)
3 January 2012 12:38PM
The issue is not about pro or anti europe, or the euro, it's about being pro or anti democracy.
For the europhiles - I give you serially ignored, cancelled and denied referenda on their various plans for sovereignty burglarly.
For the so-called eurosceptics - I give you a Westminster system which is itself a disgrace to the idea of democracy.
For the euro - that the pressures bringing it to the edge of collapse should be a select band of hedge funds, too-big-to-fail mega banks and assorted other screen jockeys - well that's hardly a representative sample of humanity.
We need root and branch reform of our democratic systems, locally, nationally, in Brussels and globally for the likes of the UN and also our financial systems. Something closer to direct democracy on a real-time, ongoing basis. It is a massive task - the euro and its future is a small part of that whole.
Michael White and most other conventional political journalists have yet to get that bigger picture.
3 January 2012 1:01PM
Not at all. True Europhiles, of the sort that are extremely rare in Britain, always wanted a federal Europe and hence a European government. That the single currency has made one necessary is manna from heaven for us. True, its not what most people want, but I'm just setting you straight on what pro-Europeans want.
3 January 2012 1:08PM
In judging the flaws in the euro's original design MW rather misses the point that the key objective of the new currency was to push political union. This fits the general pattern of European integration since the Treaty of Rome: economic facts create political facts.The French (supported by the British) were not prepared to accept the federal institutions at the outset desired by the Germans. If, as I would anticipate, the Germans now get a eurozone on their pattern, a very great step towards a more fiscally, and thus politically united Europe will have been achieved. "What does not kill us makes us stronger." Where this leaves Britain is another matter. The problem is that just as the ERM crisis (without which the euro would probably never have been created) led the Continent towards greater unity, whilst making it politically almost impossible in the absence of strong and principled leadership, for Britain to join the the single currency, the current euro crisis has so damaged the pro-European case here that we are now clearly on a divergent course which will take us out of the EU altogether. Then perhaps those who wanted Britain in at the start will be vindicated, but against a backdrop of immense damage not just to national prosperity but even national unity.
3 January 2012 1:11PM
I don't what MW has been imbibing at the New Year but I thought this was an excellent article. More please (the articles, I mean - not the imbibing).
3 January 2012 1:41PM
Dear Felix,
If I have read this right, what you are saying is that you believe Dr Vince Cable can negotiate a better trade deal with China on behalf of 65 million people in times of austerity, than Peter Mandelson did in times of prosperity on behalf of half a billion people?
I admire your confidence!
3 January 2012 2:14PM
I will gladly exchange my german passport with a british one to get out of the €uro…
3 January 2012 2:24PM
I'll grant you Germany and engineers. France and the arts? Maybe, but three of the top museums in the world - for example - are in London (1 in Paris, 1 NY). As far as global impact in the arts overall is concerned, Britain has a very distinguished record. And medicine? America? A hugely expensive and inefficient system, which leaves millions of people without any care? Not my idea of good medicine. The NHS isn't perfect, but it's good value for money, and the principle is something we should be proud of.
The weird contradiction about the Europhobic position is that, as Michael White pointed out, they keep harping on about the Second World War, when Britain intervened crucially to stand up for human rights and liberty, but their idea of our position now is to abandon any notion that we might have a positive role in world affairs, and hide like a frightened kid in America's skirts.
3 January 2012 2:36PM
What you wont read in the Tory papers is the the Pound has lost value against the Euro.
At the start of the Euro a Pound bought about 1.43, now 1.19.
If the Euro is a bad currency the what is the Pound? A load of cat excrement?
As for George Osborne's safe haven - more like a sealed coffin six feet under. Near zero interest rate as you get the same back when the coffin is dug up a few years later.
3 January 2012 3:32PM
A good thing Britain did not join the Euro - for the Euro . . . With its current budget deficit as high as any nation in Europe (and far larger than the big economies) Britain would surely have sunk the currency all by itself.
On the other hand, had there been more discipline and the 3% max. budget deficit been enforced across all EU members this country would not have been so spectacularly screwed by Gordon Brown's 'golden rule'.
In the end, we really are all in it together.
3 January 2012 4:12PM
One's never more than six paragraphs from a reference to the paper that supported Hitler, is one?
3 January 2012 4:17PM
I still want to join the Euro
3 January 2012 4:20PM
Another thing you will not read about in the eurosceptic press is that the euro has for the first time in modern history brought a stable currency with low interest rates to hundreds of millions of europeans. No longer are speculators in New York and London able to ruin people's lives with attacks on their currency or their interest rates. Since the financial crisis mortgages of citizens from Finland to Spain to Greece have gone down and the value of their savings has gone up. No banks have gone bust (not even in greece), no one has lost their savings and everyone is still able to afford a loaf of bread and a litre of petrol.
Yes, prices of houses have gone down in spain -- but everyone has a new house (plus a spare one to rent to tourists). Yes, there have been difficulties in greece but the average greek still earns almost as many euros as the average german.
If that is a crisis, then I'll take that anyday in comparison to disasters elsewhere conveniently overlooked by the eurosceptic press. Its not a 'crisis' at all in fact, just a bit of local difficulty. The euro has thus far been a huge success. We all know perfectly well that any central currency is a political project, whose primary purpose is 'closer union'. The Americans understood this perfectly well when they set out in their constitution the power to 'coin' money. But it took more then 100 years to establish a single currency run centrally by the federal reserve (established almost 100 years ago). A project that has withstood much more serious problems than a few wayward greeks and profligate italians.
Where is it that the banks have gone bust, prices have doubled in the supermarkets and at the petrol pumps and the currency has suffered a devastating crash? Example #1: Iceland (not a member of the eurozone, but now desperate to join). Example #2: Britain. A simple fact: every british person with savings has since 2008 lost 25% of their money. I would call that an economic disaster. A thief from New York comes in the middle of the night and steals 25% of everyone's money? I would expect to read about this in the newspapers and hear about it on television. I would expect our prime minister to be on the first plane to new york and pound the table demanding 'our money back'. What do I read and hear instead? About the miracle of 'devaluation'. Who owns these newspapers and media outlets? The very same people from new york who helped themselves to 25% of our money. Who is the prime ministers right hand man? The servant of the man from new york of course!
The simple fact is that the man from Brussels is working night and day to protect our money, while the man from Whitehall is busy finding ways to kow-tow to the men from new york and washington in order to sell us out. Who is more democratic? My support goes to the person protecting my interests.
3 January 2012 4:21PM
MikeWhitereplies, one of your best : well done. (I agree with zavaeli on this point)
Just one point on the Euro (that I think that you recognise?) is that it is and continues to be a political project. But that having been said it does not require "central" government in the way that many think.
The four freedoms are in themselves a sufficient binding force from an economic point of view : what is lacking is an appreciation of the implications of the four freedoms on Euro states' freedom of action. I think that this is one of the reasons why Angie reminds us all correctly that we are in for a long haul.
I would also add that we should beware of putting the cart before the horse (I think that the experts call it sequencing but that I would prefer they rename it overlapping sequencing) : trying to put in place an acceptable mechanism for managing a single currency would mean that a single currency would never see the light of day. What is happening currently is predictable and manageable and but a stage towards a closer political alliance. What form that alliance takes I wouldnt like to guess on.
A Euro brings with it another element to bind economies of scale not only for costs but more importantly for benefits. To meet the challenges of the next ten years at least Europe needs to be united in concentrating its efforts into those activities that are likely to sustain a decent society for everyone : many of these activities require national boundaries to be ignored. The Euro is an essential element in providing that wider social market.
3 January 2012 4:33PM
I am pro-European, but the problem with the EU is we have a choice in the UK of two extremes.
1) Tory xenophobia, isolationaism and paranoia with no plan B
2) Left pro-Europeanism which means being in the EU for the greater good (i.e. agreeing with what is in the interests of France or Germany or Italy will somehow be good for us).
What we need is to be in the EU for our own good and have the pro-European lobby relentlessly push our interests in shaping the EU for our own purposes as much as possible. Who really thinks that the German, French, Italian, Spanish politicians in the EU are as interested in the EU for anything other than their pursuit of their own interests (and therefore their re-election), they are as nationalistic in European issues as any British Eurosceptic, the difference is they efficiently pursue their interests within Europe rather than blustering incompetently outside. Pushing for a greater part of that prize rather than pretending that other countries share some selfless ideology would help make pro-Europeanism viable.
3 January 2012 4:43PM
The British want to slander the Euro and also want the right to devalue their money against it. In the meantime they are the first to go in recession and proud of the choices they made. I think they are hopeless romantics.
3 January 2012 5:07PM
It was easy to mock with foresight - and many did.
Surely Japan, not Switzerland, is the model to emulate.
Japan, despite the lost decade due to failing to fess up to bank losses from their own property bubble, is the model we should look at: A thriving export based manufacturing sector with world-renowned brands (but hopefully with added British inventiveness and style), no ties to any supra-national politicians' wet-dream pseudo-state, and a can-do attitude to match the Americans. Britain can thrive.
3 January 2012 5:14PM
How is it that the Germans manage to sell stuff to China without their own bilateral agreements? Could it be that they actually make stuff other people want and we don't? So how would bilateral agreements help us? Do we just pretend that the things we make that China wants are better than the things the Germans make that China wants and actually buys? Or worse, do we just pretend to the Chinese that we actually make anything they want and hope they don't notice when the orders don't turn up after they've handed over the cash?
3 January 2012 5:20PM
Drypoint,
Japan has a homogenous population (and immigration laws that would shock), different political traditions and less of an individualistic culture.
We are not Canada, Switzerland, America or Japan.
From a global perspective we are a very high population density in a small land area (although anyone who says small island didn't study georgraphy) neither powerful yet not insignificant either with a socially liberal, moderately free market nation, relatively well educated, with a reasonable but aging infrastructure, relatively wealthy but not super-rich and also in relative decline surrounded by many other countries which have all those points (although some apply to us slightly more e.g. population density). Essentially we are a populous European Nation not unlike France, Germany, Italy and Spain if only we had some political mechanism for co-operation.
3 January 2012 6:08PM
The Euro is here to stay and to think otherwise would be daft. Fifty years of international diplomacy and 28 countries are forces to be reckoned with. I would predict the demise of the Pound rather than the Euro within a few years.
3 January 2012 6:13PM
Dear Mr White. Apropos of the widely held belief that US states facing insolvency can simply obtain fiscal transfers from the Federal government.
USStates continue to face a major fiscal challenge. Some 42 states and the District of Columbia have closed or are working to close $103 billion in shortfalls for the coming fiscal year (FY2012). [1] These gaps are all the more daunting because states' options for addressing them are fewer and more difficult than in recent years. Temporary aid to states enacted in early 2009 as part of the federal Recovery Act was enormously helpful in allowing states to avert some of the most harmful potential budget cuts in the 2009, 2010 and 2011 fiscal years. But that aid will be largely gone by the end of the June, when FY2011 comes to a close. States have written, or are finalizing, their budgets for FY2012, and their final budget plans reflect this difficult fiscal reality. Many states are enacting deep cuts in state services that go even further than the substantial cuts of the last few years.
This situation is an internalised version of the eurozone crisis. An economy of large regional variations being subject to a one-intererst-rate-fits-all policy. The eurosceptic argument can be just as well be applied to disparities within countries as well as between them. The eurosceptics missed that one poor souls. Moreover, US states and cities have tax-raising powers and are constitutionally required to run balanced budgets. The situation in states such as Michigan and Alabama rather resemble the austerity of the eurozone periphery with swingeing cuts in public expenditures and tax rises. In addition there is the knock-on effect of the problems in the municipal bond markets. The problem for the Federal government - which has one or two debt problems of its own - is that if it bails-out one of the mendicant states a queue will form in DC for a generalised handout.
This situation is not generally understood in the UK - hardly surprising given the raibidly eurosceptic press - and really deserves more coverage. Not that it will get any of course, since the euro-haters have no wish to uncover counterfactual evidence to their one-sided arguments.
In states facing budget gaps, the consequences are severe in many cases — for residents as well as the economy. To date, budget difficulties have led at least 46 states to reduce services for their residents, including some of their most vulnerable families and individuals. [3] Over 30 states have raised taxes to at least some degree, in some cases quite significantly. If revenue remains depressed at low levels, as is expected in many states, additional spending and service cuts are likely. Budget cuts often are more severe later in a state fiscal crisis, after largely depleted reserves are no longer an option for closing deficits. Spending cuts are problematic during an economic downturn because they reduce overall demand and can make the downturn deeper. When states cut spending, they lay off employees, cancel contracts with vendors, eliminate or lower payments to businesses and nonprofit organizations that provide direct services, and cut benefit payments to individuals. In all of these circumstances, the companies and organizations that would have received government payments have less money to spend on salaries and supplies, and individuals who would have received salaries or benefits have less money for consumption. This directly removes demand from the economy. Tax increases also remove demand from the economy by reducing the amount of money people have to spend — though to the extent these increases are on upper-income residents, that effect is minimized because much of the money comes from savings and so does not diminish economic activity. At the state level, a balanced approach to closing deficits — raising taxes along with enacting budget cuts — is needed to close state budget gaps in order to maintain important services while minimizing harmful effects on the economy.
And so on and so forth. Your economics team are misleading the public in giving a largely inaccurate assessment of what is happening on the other side of the pond.
3 January 2012 6:58PM
Actually the GBP has bought between EURO 1.63 in 2002
down to EURO 1.05 in 2009.
It's been bumping along beween 1.10 and 1.20 since then.
See:
(10 years, Euro v GBP)
The GBP has gone down the tube compared with the Euro because of higher GB inflation
and the devaluation of the GBP.
EUR 10,000 in notes stuck under the bed would have been a brilliant investment for any Brit
in 2002. (Even for Daily Mail readers).
And a Brit buying a Euro fund tracking the German MDAX index would have doubled their money
in Euros alone...
GBP 10,000 would have bought 16,300 Euros in 2002. If used to buy an MDAX tracker
the tracker would now be worth more than 32,600 Euros - worth GBP 27,200 today!
3 January 2012 7:07PM
dwcc like so many europhiles is mute on the political and economic costs for Britain of the closer and deeper integration they crave.They are mute on the sovereignty and independence losses in any political or fiscal union,loss of taxation,interest rate,spending, budget,pensions, defence,social security,foreign,immigration, transport,energy, climate change,criminal law,commercial law powers to name but a few.If Britain did join any United States of Europe(the europhile dream) such powers would be surrendered to a Brussels treasury of equivalent of Washington.Question europhiles about this and they are evasive two in particular Clegg and Huhne,former M.E.P.s,I question where their first loyalty is.Unfortunately for pro-Europeans majority opinion in Britain is deeply eurosceptic,averse to the much deeper,surrendered integration they wish for,I suggest that any referendum would show this.
In any united union in Europe the Germans would be dominant, as paymasters,largest member nation,biggest economy,biggest population and home market,their demands would be loudest in setting economic,trade,fiscal,market, defence,foreign,pensions,social security,trans[ort, criminal law, commercial law policies across the union.To voters in other eurozone or E.U. nations this I suggest might not be acceptable,the electorate in France may well tell Sarkozy so in April.I do not wish to see the economic and fiscal German jackboot or steel helmet supreme.
It must be so frustrating for europhiles that any proposal for Britain to join an integrated or political union they crave has to win referendum support.In any campaign it would be so easy to portray europhiles, especially LibDems as extreme euro believers,putting European interests before British ones.I would enjoy that.
3 January 2012 8:18PM
"pensions, defence,social security, foreign,immigration, transport,energy, climate change,criminal law, commercial law powers".
All of which are dealt with by the Germans immeasurably better than the UK.
A bit of German influence on the UK pension scene for one thing would be no tragedy.
Half of German state pensioners retire on a 50% median of their former salary as
just as one example.
Maybe this is one example where British is not best?
Pensions are not an issue in Germany (nor jackboots either, but it's clear from your word choice
that your mindset is more attuned to 1917 /1944 than the realities of 2012)
The rest of the EU will continue probably without the Brits - who will wake up again sometime as they did
in 1970's when they realised their star was really on the wane and that being part of a wider Europe
was in the UK's interest (as it has manifestly proved to be).
3 January 2012 8:39PM
Incredible.
Mr White skips through the history of the Euro and completely forgets the EMU disaster which saw the UK on the rack due to a too-high interest rate designed to force the economy into Euro-harmony.
Remember that most of the press (including the Graun) were wildly in favour of EMU membership. As was Labour. Only the five senior Tories around Major thought it was a good idea.
Heseltine, Howe and co ensured that the UK had a much deeper recession than needed and five billion or so was trashed.
Even after the close-up EMU crash - which amply demonstrated the folly of common interest rates - the Euro-fans still refused to learn their lesson.
Today's Euro crisis is the UK's EMU crash times 100.
Come on Sir Michael.....what lessons did you learn from the EMU experience?
Judging by this piece....nothing
3 January 2012 9:11PM
Absolute nonsense! Europhiles are very vocal on the political and economic cost for Britain not being being at the table when closer and deeper integration is being decided. What we crave is not only to push our interests in shaping an integrated european union but to push our political ideals to the fore. European integration is happening and will continue with or without britain. In a future united states of europe the only real question is whether Britain will be the equivalent of a Texas (strong and independant within the union) or a Mexico (lapdogs who wait by the fax machine for orders from washington). We have already had a vision of this in the early 70s with desperate british workers crossing the border in droves to work illegally in Germany for a pittance.
Sovereignty is something we are not in the slightest mute on. Slavish devotion to washington which destroys our industry and kills our citizens (in crazed neo-imperial wars with no appreciable benefit) are an utter embarrassment to any sense of sovereignty. Something most of us are very vocal about. By contrast it is people like you who are mute on surrendering our interests to washington. Why are there american military bases throughout this country? Many people are not even aware of this travesty because the euro-sceptic press will not tell them. By contrast we have no military bases in america? Why is that we would all like to know. But selective mutism prevails on this very important issue. Whether Brussels sets rules about how bent our bananas should be is something I care not a fig for (yet for some odd reason it is something the euro-sceptic press obsesses about). Whether the jackboot of a foreign military occupier has settled upon our lands is something is something I and any patriot cares a great deal about. So why do you wish to cover it up?
With respect to your lengthy list of minor matters like pensions we have the important concept of subsidiarity. It means decisions are best taken as close to home as possible. Something the Irish, Scots and Welsh have wished (and fought) for a long time. For example, because fish swim freely in the ocean, fisheries policy are best taken at the EU level. On the other hand deciding how many apples trees to plant is probably best left to the local region to decide.
3 January 2012 10:40PM
tell me Tinebreaker how you optimist 99 also intend getting the British electorate to accept and join the kind of union, fiscal or political that you wish for?So many in this country do not regard sovereignty as something to be lightly given up,French voters may well give Sarkozy the same message next April.Defence,fiscal, spending,budget,trade,foreign,criminal law are not minor matters.
It must be frustrating for you and those who agree with you that your fellow voters in this country dont seem to get your message.Dp you then think that a referendum,as Clegg as conceded,should not be held.
My mind is well attuned to modern political realities,the reality of German dominance in any type of union political or fiscal, which the German Chancellor Merkel has admitted is her goal,echoed by her Brussels stooges Barroso and Van Rompuy,and of course by both of you.A few months ago this German woman said in a Bendestag speech that if the euro fails, Europe fails,and another 50 years of peace could not be assured.This German was saying that if I do not get what I want,if Germans dont get what they want,peace cannot be guaranteed.Not for me at any cost.
3 January 2012 11:36PM
Well, very very simply by kicking out the treasonous new york owned media. If we had our own media which printed stories of plots by washington to drag us into illegal wars, plots by new york bankers to steal 25% of our money and stories exposing the jackboot of military occupation then the british electorate might well have quite a different view. A few stories about how washington is foisting its bland straightened genetically modified monster bananas onto us instead of our tasty curvy euro-bananas might also help. I should note all these stories are true, as opposed to the new york scripted untruths. What frustrates me is that the british electorate is being misled by lies and obfuscation in the foreign owned media.
Do I think we should have a referendum? Absolutely. 1. On american military bases in the UK. 2. On any wars proposed by washington should be put to a referendum. 3. On any foreign stooge trying to buy up our media. On the EU? I it may surprise you, but we already had one on that! It must frustrate you no end that it was won by a landslide! An absolute landslide.
Do I worry about German 'dominance'? Certainly not in the hateful divide and conquer mentality that seems to pervade your thinking. I worry more about making sure our interests are being pursued.
4 January 2012 12:20AM
But we are not chained to Europe as the article makes only too clear, as in