Obviously, readers of this magazine are not naïve about the way politics works or how public policy debate is reported by the media. But less worldly-wise consumers of mainstream newspapers and broadcast news must have been rather surprised by recent coverage of Britain’s apparently imminent entry to the eurozone. After all, since the currency was freshly minted a decade ago we have stayed resolutely on the sidelines.
We know that this furore is totally artificial. Moreover, it is bound to happen again and again until, after no doubt a very painful process, we do finally join up.
There have been three impulses to the recent controversy. First, the president of the EU Commission, José Manuel Barroso, let it be known at the end of last year that ‘people who matter in Britain’ had told him they ‘are currently thinking about’ joining the euro. He concluded that British membership is therefore ‘closer than ever before’. ‘Some British politicians have already told me,’ he teased, ‘if we had the euro, we would have been better off’.’ Foreigners telling us what’s what always excites the media. And speculation about who these people who matter might be was grist to the mill of a media hardly starved of real news throughout the end of 2008.
Second, soon afterwards, the former EU commissioner and new business secretary, Lord Mandelson of Foy and Hartlepool, declared that: ‘I hold to the view that our aim, our goal, should be to enter the single currency.’
It is easy to see how in those circumstances £2 plus £2 could equal €5. The truth is that Lord Mandelson was doing no more than restating government policy; it is already committed to joining in principle. No 10, in its response to his remarks – ‘we have no plans to join the euro’ – was also restating government policy; it has no intention of joining in practice. And therein lies the confusion and conjecture, not just now, but since Labour came to power in 1997.
The government still has the five economic tests to determine the right circumstances to enter, which it currently has no plans to assess again, never mind assess positively. And if it were to do so, there would still be the little matter of a nationwide referendum that it is pledged to hold, which recent polls continue to suggest would be lost 70-30.
So there is no prospect of Britain’s entry to the eurozone. Still, an artificial debate is probably better than no debate at all. You will have heard the deafening silence from pro-Europeans since the collapse of ‘Britain in Europe’ in 2003, after the five tests were last assessed.
Which brings us to the third, and underlying, cause of the recent stories: the credit crisis, financial meltdown and economic recession. Because the prospects for our membership of the single currency is not just an issue of gossip for the media, it is a real issue for ordinary families.
Britain’s response to the economic downturn – cuts in taxes and interest rates – has left the pound with no visible means of support. It has collapsed in value, more or less reaching parity with the euro and the dollar. This would obviously not have happened had we been inside the single currency of the single market in Europe.
Exchange rate volatility is hardly new for Britain: the phrase ‘run on the pound’ haunts our economic history, and in recent years as the two great global currency blocs of the dollar and euro seesaw against each other, sterling has repeatedly been squeezed in the middle – often high against one but low against the other. For businesses operating from an island trading nation like ours, where we sell abroad three times more of our output than either the US or the eurozone countries, this volatility can be fatal. As almost 60 per cent of our exports go to Europe, sterling’s relationship with the euro in particular can be decisive for thousands of companies and millions of jobs.
The first British political leader to pounce on this argument has been Nick Clegg, who recently called for an ‘anchor’ against our ‘incredibly vulnerable exposure to international financial markets’. He argued that ‘the strict rules attached to the euro could emerge as one of the best ways to persuade the markets that we will put Humpty Dumpty back together again, put the public finances in order’. He even went on to claim, rightly, that refusing to discuss the euro is ‘a failure of political leadership’, and even to predict, more controversially, that public opinion could ‘turn on its head’.
Although the Liberal Democrats have historically been Britain’s most pro-European party, when he was first elected leader Clegg went out of his way to downplay Europe as an issue. His colleague Chris Huhne admitted that ‘the truth is, within the British debate, it’s completely off the radar and there is simply no point in regarding it as a runner worth investing political time in’.
So what’s changed? The economics, of course. But Progress readers might also believe that the Lib Dems have spotted a political opportunity amid the economic chaos. After all, it is a verity that Britons have never reached a settled attitude to Europe and until we do it will always have the potential to destabilise our politics – something very much in the Lib Dems’ interests.
In his desperate search for mainstream respectability and floating voters, David Cameron has just summoned my old friend Ken Clarke. Despite promising not to rock the Tory boat on Europe when he was appointed shadow business secretary, within days he couldn’t stop himself from warning that President Obama might see Cameron as a ‘rightwing nationalist’. During the negotiations about his appointment, it has emerged he branded the Tory position on Europe ‘isolationist’ and ‘silly’. No wonder that the old anti-Europeans like Norman Tebbit had sought to block his recall, saying it would ‘split the party’.
By attempting to raise the profile of Europe, Clegg is undoubtedly also trying to wiggle a knife into the papered-over crack that still divides the Tories. The danger for Labour is that any return of Europe to the top of the political agenda would cause trouble for us too.
Since the launch of the European Coal and Steel Community in 1950, Britain has repeatedly failed to confront a decision about our relationship to the process of European integration taking place right on our doorstep, hoping it will just go away. It took a decade before we decided to apply to join the European Economic Community, and a further 13 years before they let us in, helping to destroy the governments of Harold Macmillan and Harold Wilson along the way. Our ambivalent relationship under Margaret Thatcher and John Major – from opting out of the social charter to empty chairing crucial meetings about beef, never mind the struggle over Maastricht – was embarrassing and self-defeating.
When Labour first came to power, there was a sense of belief that maybe at last Britain would accept our place at the heart of Europe. But the failure to make the case, duck the euro and hope nobody notices we remain on the margins of Europe, is in the same tradition that has dogged us for almost 60 years. Of course we are not about to join the euro – but those who thought it would go away are set to be just as disappointed as their predecessors.