You think the euro crisis is bad? Think how much worse – how monstrously worse – it might have been. Suppose that, at the end of the 1990s, Tony Blair and Nick Clegg and Ken Clarke, and Nissan and Goldman Sachs and Unilever, and the CBI and the TUC and the BBC, and Sir Martin Sorrell and Sir Michael Rake and Sir Wesley Mouch had got their way. Just imagine that, as was widely expected at the time, Britain had joined the single currency at its outset. What would have happened?
I think we can trace the narrative well enough. The United Kingdom would have experienced the same credit bubble that the other peripheral economies – Ireland, Spain, Portugal and Greece – did. It would, consequently, have suffered the same crash. Only, in the British case, the consequences would have been utterly catastrophic. Ireland, whose economy is cyclically and structurally similar to Britain’s, was running a budget surplus going into the collapse. In Britain, by contrast, Gordon Brown had blown away our reserves during the good years. By 2010, our deficit was higher than any Eurozone state’s.
In some of those states – mystifyingly, from a British perspective – politicians were able to demand sacrifices in the name of the single currency. A lot of Greeks see membership of the euro as a symbol that their country is a European democracy rather than a Levantine satrapy. In Spain, too, Europe is subliminally associated with modernity, internationalism and parliamentary rule. Many of my Spanish friends frankly acknowledge that the euro has been economically painful, but see that pain as justified in the name of a wider Euro-sentimentalism.
In Britain, no such sentiment exists. Any politician who tried to argue that we should suffer joblessness and falling wages for the sake of Europe would have been hounded out of public life. The United Kingdom would have left the euro in the aftermath of the 2008 dégringolade, and its departure would almost certainly have collapsed the currency. Britain’s economy, after all, is larger than that of Spain, Portugal, Ireland and Greece combined. While a Grexit might be managed as a controlled explosion, a Brexit would have blown the entire system to gledes and cinders.
It’s hard to judge whether the EU itself would have survived the explosion, but let’s leave that to one side. I am not one of those Eurosceptics who wants to destroy the EU. I want Britain to leave, not as an end in itself, but as a means to an end – that end being greater prosperity, freedom and democracy. Pulling down the EU in ruin as we left would rather defeat the object. Inside or out, Britain will have an interest in the wealth and security of its European allies, who are also its suppliers and customers. They are less important, its true, month by month, as Britain’s trade with the EU dwindles; but they still account for a hefty 44 per cent of our overseas commerce.
No, what is most striking is how little subdued the advocates of the euro are by their error. It’s not just that they refuse to apologise. It’s that they now deploy precisely the same arguments, dependent on precisely the same flawed logic, about remaining in the EU. Unchastened and unblushing, they trot out the same clichés about losing influence, about companies relocating abroad, about jobs disappearing (see this video).
Here’s the oddest thing of all. Those who called the euro wrongly are still deferred to on Newsnight and the Today programme, still treated as if they were disinterested business leaders or academic experts rather than dogmatic campaigners. Those who called it correctly, meanwhile, are treated as eccentrics, if not extremists, when they extend their logic to the question of EU membership. In politics, there are never any prizes for being right.
