Mary Ann Sieghart: Where have all the europhiles gone?

The arguments for joining the euro have proved bankrupt but virtually none of their proponents has been willing to admit it

Monday 04 July 2011 00:00

Hello? Hello? Speak up at the back! Blair? Clarke? Mandelson? Heseltine? Clegg? Huhne? Surely one of you could put your hand up? Well done, Alexander! Thank you for accepting that you were wrong all along about Britain joining the euro. Perhaps you could have a word with the other boys afterwards?

It was the most important political and economic decision that Britain has faced in the past two decades. And, unlike most such decisions, the evidence is not remotely equivocal. It is painfully clear now that for Britain to have joined the euro would have been a disaster. Our boom would have been even more unsustainable. Our bust would have been even more agonising. We would now be contemplating the humiliations of bailout and possibly even exit from the currency.

Some of us said so at the time. It's not as if we in the "no" campaign didn't warn of economic shocks that would hit some countries more than others, of interest rates too low for some and too high for others, of the need for huge transfers of money from the rich states to the poor ones, which the rich voters wouldn't like.

But that's the last time today that I'll say, "We told you so", despite the huge temptation to splash it in 24-point type all over these pages. For what's more interesting is how bankrupt the arguments for joining the euro have proved to be, and how virtually none of their proponents has had the grace to admit it.

The one that always annoyed me most was that it was "inevitable". Tony Blair constantly used this, as if God had whispered the future in his ear. "Who says?" was my mutinous response. It didn't have to be inevitable. We could simply choose not to join. As – wisely, but no thanks to Blair – we did.

Then we were told that it would make our economy more efficient and productive. We would grow faster. Funny, that. Since the euro began, the UK has, on average, had higher growth than the eurozone by staying outside. Maybe it's because we have been able to set interest rates that were appropriate to our economic condition, unlike the members of the common currency. But who's this, writing in this very newspaper in 2003? "The freedom to set interest rates merely according to domestic needs is a cruel mirage. Monetary union protects economies from the vagaries of speculative capital flows, enabling more stable growth and investment." Why, it's Chris Huhne. I wonder what he thinks now?

We were warned that the City of London would lose out as business moved to Frankfurt and Paris. Instead, it grew so fast that it eventually overtook New York to be the world's leading financial centre.

Then there were chilling threats of Britain being "left behind", being "in the slow lane", losing influence. Yet when the University of Gothenburg conducted a survey of EU diplomats and negotiators in 2003, it turned out that we were still seen as the third most influential nation in the EU, despite being outside the eurozone. As to be being in the slow lane – frankly, if the others are hurtling towards an abyss, I'm delighted for us to be pootling along behind.

Finally, the euro-enthusiasts were always accusing the rest of us of being anti-European. Actually, the "no" campaign was ruthless in disassociating itself from anyone who wanted to leave the EU. Our slogan was "yes to Europe, no to the euro". But if anti-Europeans had been asked to design a system to sabotage the EU project, they could hardly have done better than the euro. For what could be more damaging than a doomed currency area in which the poorest nations are forced to accept austerity measures and bailouts and the richest ones are forced to stump up for them? Nearly three-quarters of Germans now say they have little confidence in the euro and two-thirds of them are opposed to bailing out Greece. Hardly a recipe for European amity.

Pro-euro campaigners were quick to stamp on what they called "myths" that were, inevitably, "peddled" by our side. There was the "myth" that monetary union would lead to fiscal and political union. This is now accepted as the only possible solution to the eurozone's woes. There was the "myth" that richer countries might have to bail out poorer ones. That was supposed to be forbidden by treaty, but it's happened. And there was the "myth" that an external shock might hit some countries harder than others, causing huge dislocation. Well, it's there for all to see.

In some ways, the eurozone has been a "success". For instance, capital markets are now much more integrated, so investors are far less likely to restrict themselves to buying bonds issued by their own governments or corporations. The inverted commas are there for a reason, though. What this has done is spread the contagion of the sovereign debt crisis well beyond the borders of the more irresponsible countries.

The other "success" was that the euro boosted trade and growth within the eurozone, but in an illusory and ultimately unsustainable way. Yes, the Irish, Greeks and Portuguese splurged on BMWs, but only because interest rates were so artificially low that they couldn't resist racking up debt. Now they're paying for their profligacy – as, reluctantly, are the Germans.

Now is the time for a reckoning. Let us salute the heroes who managed to keep us out of the euro. James Goldsmith, in the last year of his life, forced the Conservatives to agree to a referendum before we joined. That forced Labour to promise one too. Without that obstacle, Blair would undoubtedly have signed us up. Then it was a question of making strong enough arguments to reassure the British people that they were right in their instinct that joining the euro would be a bad idea. All credit goes to Lords Leach and Owen, joint chairmen of the all-party "no" campaign.

But on a question this big, it surely behoves those who tried to push us into the euro to recant now. Blair has become a Catholic; he should understand about confession, repentance and conversion. Danny Alexander showed how it could be done last autumn when he admitted he had been mistaken. We are still waiting to hear from Lord Mandelson, Ken Clarke, Nick Clegg, Lord Heseltine, Lord Ashdown and Chris Huhne. They are as bad as those old Marxists who never conceded communism was wrong even after the collapse of the Soviet Union. We deserve an apology. How dared they sneer at us for being little Englanders or xenophobic when we could just see that the economics were so obviously wrong?

In 2002, Huhne wrote in The Guardian, "The 'no' campaigners said the euro was doomed to failure, but all their predictions have been proved wrong." And later in the same year: "The euro is living up to the highest expectations of the economists who advocated it, and Britain is missing out."

But this is the man whose book, Both Sides of the Coin: The Arguments for the Euro and European Monetary Union, is now available from five booksellers on Amazon for just 1p. His arguments – then and now – are as debased as the price.

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