Britain is at present sleep walking into political pygmy land without even realising where the country is heading. The euro crisis has provoked the ultimate challenge not only to the future of the European Union but also to that of the United Kingdom. As the EU possibly gears itself up to take hard decisions about further fiscal integration, with the inevitable consequence of further political co-operation, the UK would do well to consider its long-term future.
Britain’s decision not to join the euro in the late 1990s was undoubtedly based on sound economic criteria. Unfortunately most UK commentators on both economics and politics remain smugly sure that the current sovereign debt crisis in the euro zone vindicates the decision not to join the single currency. Few, including David Cameron’s coalition government, are, however, giving any thought to the future political realities of Britain’s current position.
The euro zone’s only realistic response to the Greek crisis and the looming chasm in Spain is to think beyond monetary union. In an incredible leader on 20 May, the Sunday Timescame out in favour of a united states of Europe, referring to Robert Mundell, a Nobel prize-winning economist, who set out the conditions under which a single European currency could function – fiscal union, wage flexibility and the ability of people to move between states to find work.
While the Mundell scenario is, I am sure, too much for Europe’s present leaders, the Economist this week came up with a far more acceptable proposal for greater financial and fiscal control at EU level. Although the end result of such moves would not be political integration as it is generally understood, it would inevitably give the EU more power and more political clout.
It is my firm belief that moves towards further political integration, at least for the 17 EU member states in the euro will be the long-term outcome of the euro zone crisis. The 17 may increase to 22, 23 or even 24 since joining the euro was a condition of EU accession in 2004. Were this to happen, the two-speed EU model, often touted as the answer to Britain’s semi-detached position towards the European Union, simply will not work.
The British people, our government and our media need to be made aware of the consequences of Britain being outside a further integrated European Union.
The world is currently, and always has been, divided into power blocks, generally based on some recognised common interest. Once the euro zone crisis metamorphoses into a stronger European Union there will be four such blocks – the United States of America, China, India and, of course, the European Union. (I have excluded Russia as its future remains unpredictable).
Britain needs to take on board what it will mean for us if we were to position ourselves outside a European Union which is politically stronger with more integrated fiscal and financial arrangements. The only possible conclusion is that further European integration without the UK will isolate us in the wider world. If Britain wants to get anywhere near the position we held in the nineteenth and early twentieth centuries when Britannia really did rule the waves, we have to be a real leader in the European Union. There is quite simply no other way.
Therefore, in order to remain at the global top table, Britain needs to take some very tough decisions. If we remain detached from the EU and let the European political project develop without us, we will no longer be one of the world’s leading political powers. We will not have that crucial “x” factor, the sense of being a world leader with the pride that goes with it. Our only hope of achieving something resembling our old imperial confidence is to be at the heart of Europe both politically as well as economically.
The European Union, the bold phoenix to emerge from the ashes of the Second World War, is one of the most visionary political projects in modern times. The EU’s success has been to unite a continent fractured and constantly at war since the fall of the Roman Empire. Remarkably, this twentieth century coming together was voluntary rather than enforced by brutal power. It is now time to move the EU forward with Britain playing a vital role at the heart of Europe.