Britannia vs Europa

No one doubts that Great Britain is a member of the European Union but the British eurosceptics currently appear to have the only say, giving the general impression that Britain stands on the sidelines vis-à-vis Europe. Frankly, the eurosceptics have lost sight of the wood for the trees. Their antipathy towards the EU, and more specifically the euro, has created tensions that are most harmful to the British economy. Britain’s exports to Europe began to fall six months ago, just about at the start of the eurozone crisis in May. In the July-September period the number of employees in Britain fell by 305,000, the largest quarterly fall since 1992. Over the past three months, “the confidence of Britain’s biggest companies has collapsed… with more than a third looking to cut staff numbers” according to the CBI (The Sunday Times, November 20).

It has now been made clear to David Cameron, bluntly in general terms by President Nicolas Sarkozy, but more firmly and specifically by Chancellor Angela Merkel, that the EU and the euro are there to stay. It should be clear to all who have any knowledge of the international financial markets that the euro is the only alternative freely convertible Western currency other than the US dollar. The British pound risks becoming, like the Swiss franc, a “boutique” currency, because the “pool” of pounds is simply too small to meet the huge demands of international trade. This would certainly not be helpful to British exports.

The eurozone countries are generally delighted with the euro, indeed proud of it, and will do whatever it takes to ensure that it survives and flourishes. The only regret is that Great Britain is not yet part of it. The British would be well advised to heed the words of Wolfgang Schäuble, Germany’s Finance Minister and a heroic European, who recently reiterated that the euro will ultimately emerge as the common currency of the entire European Union.

Britain should not, by her intransigence, push the eurozone members to set up a separate treaty, leading to the creation of a two-tier Europe. Eurozone members are inclined to believe that closer fiscal and political union will in the long run be beneficial. Britain will eventually have to face reality. Meanwhile there is no point in cutting off one’s nose to spite one’s face.