Whether we join or whether we stay out, our relations with the rest of Europe will change utterly in the lifetime of the next parliament. Whatever we decide, the existence of a single European currency will colour the politics and economics of this country deep into the next century. And whatever Kenneth Clarke may say, the practical decision on whether to join the EMU must be taken just after the election - by the end of next summer at the latest.
The time for abstract debate over European economic and monetary union is over. It is possible to argue, even from a pro-European viewpoint, that EMU is a bad idea; or a good idea at the wrong time. A single currency does raise problems of democratic control over economic decision-making. It does risk dividing the European Union and distracting it from the important task of absorbing the former Soviet-bloc countries to the east.
But these arguments are now largely beside the point. EMU is going to happen. France, Germany and at least six other countries will merge their currencies from January 1999. The only argument still worth having is whether the dangers of British membership outweigh the dangers of non- membership.
Following the party conferences, it seems certain that a proper EMU debate will be avoided in next spring's election. If so, a decision with enormous consequences for Britain's future has, in effect, already been made: Britain will NOT be among the first wave of countries in the single currency.
The General Election has to be called by May at the latest. Unless an EMU decision is taken within three or four months of the poll, there will be no time to prepare Britain practically, psychologically or legally. And such a decision could hardly be taken so soon after the election if EMU had not featured in the campaign.
By common consent of the major parties, it seems, the Great British EMU debate will be delayed by one election cycle. When the debate does finally occur - whether in a referendum or election campaign - it is likely to be all the more vicious. We are sleep-walking into a period of five or ten years when our relations with Europe are going to be placed under severe strain, possibly to breaking point.
Here are two possible time lines, neither of them far-fetched:
Scenario One: John Major returns to power; Britain does not join EMU. The new intake of Conservative MPs makes the parliamentary party several degrees more Eurosceptic than the present one. Relations between Britain and other EU countries descend from bad to untenable.
The states inside the single currency insist on sterling's re-entry to some form of European exchange rate mechanism. Even Kenneth Clarke is unable to deliver such an affront to the new anti-Euro Tory orthodoxy. Sterling drifts down against the euro, making British goods cheaper on the continent; other EU governments seek to impose a border tax, shattering the single market. The resultant row makes the 1996 beef war look polite. (Under the headline "Bash the Eurotrash", the Sun calls on its readers to boycott all European goods - even Spanish holidays.)
The biggest crisis in European Union history ends in historic compromise. Britain agrees, in effect, to leave the EU but stay in the Common Market. Britain is no longer subject to EU law or the EU budget but, like Norway, remains part of the "European economic space" with free trade in goods and services. However, to win this point, Mr Major has to swallow his pride and rejoin the exchange rate mechanism. Despite this concession, the Prime Minister is feted as a Churchillian hero in the British press. Britain, says the Times in a crowing editorial, has the best of both worlds: access to the great European market; but freedom from Euro-bureaucracy, the Common Agricultural Policy, and the federal ambitions of the Continent. Britain can be Britain again. No more Euro bananas; no more Euro sausages!
In the ensuing years, however, the euphoria cools. The anticipated fall in post-CAP British food prices fails to appear in the supermarket trolley (pocketed by the processors, wholesalers and retailers, most probably). It turns out that, to trade in the European market, British industry is still, in effect, subject to EU rules on the curvature of bananas or the speed of ceiling fans. The only difference is that the British government can no longer help to shape the rules at the negotiating table in Brussels. Is this really a repatriation of sovereignty?
More seriously, despite our honorary membership of the European market, overseas investors are startled by our withdrawal from the EU. New investment, which had been pouring into the UK in the 1990s, migrates to Spain, Portugal, and the new member states in central and eastern Europe. The bright promise of British industry turning away from a stagnant Europe to the booming markets of Asia and Latin America proves a mirage. The Germans, even the newly competitive French, do far better in Asia than we do.
Scenario Two: The Tories lose. A Blair government stays out of EMU. But it agrees - to Conservative fury - to re-enter an exchange mechanism.
After enormous birthing pain, the single currency becomes a bouncy infant with the uninspiring name of "euro". It produces increased growth at low inflation, driven mostly by German industry, freed at last from the Sisyphean burden of the constant rise of the deutschmark. Apart from the benefits of cheaper cross-border transactions, the other founding countries benefit gradually from the unpleasant fiscal medicine that they swallowed in order to qualify for membership.
British industry and the City begin to feel nervous, even panicky. International investment in the UK starts to melt away. Britain is still in the single market but not, the Japanese, Americans and South Koreans obstinately note, in the starting line-up of the new "core Europe".
At the next British election in 2001 or 2002, the principle, almost the only, issue of the campaign is the single currency. Labour argues that Britain should eat its pride and give up the pound. The British electorate - cheered on by a rabidly anti-European press - votes overwhelmingly for the new Tory leader (Redwood? Portillo?)
In the first months after the election, in the name of sovereignty, free markets and the Union flag, the Portillo-Redwood government pulls Britain out of the exchange rate mechanism. Sterling tumbles; the continentals rage, with similar consequences to Scenario One. Britain withdraws from the EU, but remains in the single market, with disappointing results
Tony Blair wins the next general election in 2007 with a mandate to renegotiate British membership of the EU and the EMU. The other Europeans rejoice - in public. In private, they are tempted to say that we can go and straighten our own bananas.
The moral of the tales: the Eurosceptics are right on one thing. Britain should face the awkward questions about EMU now. This is something even pro-Europeans should support. The leading parties are burying their heads in the sand. For their EMU policy, read ostrich politics.
The debate is no longer simply whether we wish to move away from Europe. If we do nothing, Europe may move away from us.Reuse content