John Rentoul: All hail John Major, a true European hero

The euro debate in Britain is over, but the door is now opening to fresh challenges to Brussels orthodoxy

Continuing my series on things on which all right-thinking people were agreed but now realise were a mistake: the euro. Not such a great idea after all. Well, the Franco-German-Benelux bit might be all right, but they let in other countries for political reasons. Greece was not ready; its economy had not converged and its public finances were not strong enough.

Previously in this series: the free movement of labour, the Human Rights Act, and Ed Balls. Recently, I wrote in defence of the Shadow Chancellor, pointing out that the leak of some of his papers did not prove that he plotted against Tony Blair and that, even if he did, it was not the main reason why the most successful Labour prime minister was forced from office. On the euro, Balls has also been vindicated.

There are limits, however, to my new admiration for him. He was right about the euro and Blair was wrong. But Balls did not save the nation from the terrible fate of whatever would have happened to us if we had adopted the euro before the British banks went rupt. He presented himself during last year's leadership election campaign as the lonely hero. As the true author of Gordon Brown's five tests, it was he who valiantly held the pass against the advancing mush of sentimental pro-Europeanism. This is a little unfair on John Major, who is, if any one person can claim to have saved us from a fate worse than Greece, the true hero of the story.

Perhaps I should add a low opinion of Major to my series of mistaken consensuses: the weak prime minister who survived for six and a half years, by the end of which he was so despised by all right-thinking people that they gave Blair a landslide. He it was, though, who first promised a referendum if the government were ever to seek to adopt the euro. Once he had made the promise, Labour had to match it. Once promised, a referendum could not be unpromised, and it was the impossibility of winning a referendum which ensured that Blair's ambition to join the eurozone never stood a chance.

Last week, that argument in British politics came to an interim conclusion. Jack Straw, the former foreign secretary, said in the Commons: "The euro in its current form is going to collapse." That being so, he said, it was "better that that happens quickly rather than it dying a slow death".

It was notable that this was the view not just of the Tory back benches, but the Labour back and front benches too. John Redwood, previously mocked by the pro-European consensus as an unblinking visitor from another planet, found himself in agreement with Balls, who said of the Greek crisis: "The lesson of history shows that it is not possible to deal with a solvency crisis by providing liquidity package after liquidity package, because that does not reach the heart of the issue."

Denis MacShane was the only MP on the opposition benches who refused to "join in the glee of the euro's gravediggers". What was surprising was that Mark Hoban, the Tory Treasury minister, agreed with him. He said, ungleefully, that it was "important that the eurozone is strong and stable". It was in our interest. "It is important for the Greek bailout to work and be effective," he said, to a House that plainly disagreed with him. Most MPs seemed to think it important that the bailout should fail, and fail quickly, or not be attempted at all.

David Cameron then set off for Brussels, like so many prime ministers before him, with a formula to accommodate divided opinion back home. We want the euro and the bailout to succeed, he said, but we won't pay a penny for it. (Apart from, in the footnotes, our contribution via the IMF.)

As ever, the European Union looks rather different from Brussels, and a British prime minister is regarded as an eccentric visitor from the periphery where the local customs are peculiar. Our MPs may be convinced that the euro experiment is over, but over there it is less clear. It looks to me as if Germany has signed up to precisely what Balls said will not work. I think Balls is right and that Angela Merkel and the eurozone core are still trying to pretend that the euro can be fixed with Greece part of it.

There is a more complex debate over there about the consequences of expelling Greece from the eurozone. Greece is only 2 per cent of the EU economy, but if it falls, what about Portugal, Ireland, Spain and Italy? Over here, though, it looks as if the Labour Party and the Tory back benches are broadly united behind a new consensus, which is that the plug should be pulled on the lot.

Except that the consensus never stands still. Last week, a group of new Tory MPs, including Chris Heaton-Harris, George Eustice and Priti Patel, used the Greek crisis to demand a cut in Britain's contribution to EU funds. The Conservative Party in the Commons is now thoroughly eurosceptic on the old definition. But the old definition was to refuse ever to accept Britain's adoption of the euro. That has not been a live question for some time.

Tony Blair's words last week, that Britain might still join the euro, were a mere recitation of an ancient creed. Now euroscepticism has moved on to new questions: rolling back European law and pulling out of the European Court of Human Rights (even though it is not part of the EU), which are supported in No 10 by Steve Hilton, David Cameron's adviser. The other new test for eurosceptics is the demand for a referendum on any new treaty. That has recently prompted a conflict between the eurosceptic cohort in the Commons and the pro-European layer of sediment laid down in the Lords. The EU Bill, in which the new promise of a referendum was contained, has been watered down by the Lords and now returns to the Commons.

The new definition of Tory euroscepticism increasingly includes options that come closer and closer to rejecting the EU altogether.