Former EU trade commissioner Lord Mandelson today delivered a robust defence of the euro and urged European leaders to make the case for further fiscal integration.
The former business secretary warned that a collapse in the single currency would not only cause "colossal" economic damage across the world but also put Europe's global credibility and influence at risk.
Speaking to a business audience in Singapore, he argued that the euro has given the EU a decade of high growth and low inflation and still offers "huge potential economic benefits" for Europe's future.
But he said that action was needed from EU leaders to shore up the single currency's credibility not only with the markets but also with the taxpayers who are being asked to make sacrifices to support it.
Warning that a failure of nerve risks "disastrous consequences for Europe", Lord Mandelson urged the euro's political supporters to "stand up, win the argument, act decisively and lead - and to do so without further delay".
"The question of European economic integration will also be the question of European global credibility and influence in the 21st century," he said.
"Not just our currency but our position in the world is at stake, our ability to command the attention of investors as well as our capacity to deploy our 'soft' continental power.
"If we see one domino fall, others will follow. That's why we have to fight back. Not against the markets - that's fool's talk - but against a decline in our own self-belief, a failure of nerve which, if we are not careful, will engulf Europe with disastrous consequences not just for our economy but for everyone else's too."
Defending the euro's record, Lord Mandelson said: "We have got so used so quickly this year to talking about the single currency as a source of weakness for the EU that it is easy to forget its strengths.
"Ten years of high growth and low inflation. The reduced transaction costs, the reduced exchange rate volatility, the price transparency, the deep integrated capital market. The benefits of reserve currency status.
"To say that the euro is a political project is not to say that it does not have huge potential economic benefits, although eurosceptics often imply that this is the case.
"And this is true for EU states such as Britain that remained outside the currency bloc, which is why the UK Chancellor is right to urge a political solution that preserves the euro, even if it puts a Conservative Chancellor in the somewhat counter-intuitive position of arguing for closer union in Europe."
The failure to spell out the benefits of currency union has contributed to an erosion of public support for the fiscal measures now needed to save it, he warned.
"It is simply not possible to save the eurozone without explaining and making the political case for further integration," said Lord Mandelson.
"At the moment no one is putting the political case for deeper economic union in anything other than the most evasive and oblique terms.
"I hear leaders insisting they will do whatever it takes to preserve the euro from the scepticism of the bond markets. But I don't hear why. And we are fooling ourselves if we don't see that that omission is part of the problem.
"Until Europe's political leaders re-make a believable political case for 'doing whatever it takes', they will not succeed in restoring their credibility, whether in the markets or amongst the public, and it is credibility more than credit which is currently in such short supply."Reuse content