EU Exit Will Not Shelter UK From The Economic Storm

You have got to hand it to the Conservative party's right wing and their camp followers in Ukip.

They may own properties in France, Spain or Italy; the excessive free-market policies they enthusiastically espoused under Margaret Thatcher may have contributed to a situation where about half of "our" exports are produced by foreign-owned companies in the UK, but my goodness, don't they just hate Europe!

As if the conjuncture of a world financial crisis and a eurozone on life support is not enough, it looks as though the big issue which is going to dominate British politics in 2013 is not how Britain, drawing on a wealth of historical experience, can contribute to a co-ordinated rescue plan for so many afflicted western economies including our own; no, it is going to be whether or not we should have a referendum about our membership of the EU – not necessarily this year, but at some stage during what has already established itself as a turbulent decade.

You could not make it up. It was not for nothing that Sir Edward Heath, the Conservative prime minister who thought he had finally resolved Britain's ambiguous relationship with Europe by taking us into the European Community, used to refer to his sceptical colleagues as "septics".

The story of the long haul from President Charles de Gaulle's multiple use of the word "non" to UK entry and then the 1975 referendum is elegantly told in The Official History of Britain and the European Community, Volume 2, From Rejection to Referendum, 1963-75 (Routledge) by Sir Stephen Wall.

Wall is in the best tradition of British diplomatists. His inside knowledge – he was private secretary to five foreign secretaries, and to PM John Major, as well as being an adviser on Europe to Tony Blair – and his access to the archives, have been put to good use in an enthralling account which I recommend to all, including the sceptics, or septics, and which may just give the latter pause for thought.

The question they might ask themselves is: do we really have to go through all this again, and in the midst of a serious economic crisis?

Now, I write as someone who is not such a Europhile as to have supported what I regarded as the premature and faulty construction of the eurozone. And, of course, there is continual need for reform of the abuses of the EU budget, not least the way that the common agricultural policy, while a smaller proportion of the budget than it used to be, subsidises large corporate, often Eurosceptical, farmers who are the first to complain about subsidies for the poor and the homeless.

But such abuses are best attacked from within the tent, not outside it. And those fantasists who go on about a looser association with Scandinavia and Switzerland will benefit from the historical explanation of why we as a nation felt it necessary to move from EFTA (the European Free Trade Association) to our successive applications to join the real thing.

It is remarkable how people still go on about the "special relationship" with the US as an alternative to membership of the EU. If there is one thing successive postwar US administrations have been consistent about regarding our relationship with Europe, it is that we should be within, not without.

Many of us hoped that the 1975 referendum – when we voted to stay in by a two-to-one majority – would settle the issue for good. But the real position, as noted by David Watt in the Financial Times, was that the 1975 vote had made secession "inconceivable in this generation". As Wall points out, the day after the referendum, PM Harold Wilson told his principal private secretary, Ken Stowe, that it had taken him 10 years to achieve a yes vote.

By this he meant that he had decided way back in 1965 that membership was in the country's best interests, but all the time he was fighting a very powerful group of anti-marketeers within the party. "People say I have no strategy, cannot think strategically," he observed to Stowe in what must surely be one of his greatest quotes. He had decided that the only way to defeat these anti-marketeers was to go above them to the country.

The saying "a week is a long time in politics", used by Wilson, was actually coined by President Truman. Well, a generation is a very long time in politics, and the generation that David Watt referred to is no longer in control. We have another prime minister, leader of the party that took the UK into the community, and wisely chose not to sign up for the single currency, who is now faced with the problem of keeping his party together.

Keeping out of the eurozone has enabled UK policymakers to retain an independent monetary policy and flexibility in the exchange rate. Fiscal policy, both here and in the eurozone, is absurdly inappropriate for a depression associated with a banking crisis, but unemployment here is mercifully a long way below the levels in Spain, Portugal, Ireland and Greece.

But what is happening in the so-called peripheral nations is deeply worrying. Anyone with a sense of history is familiar with the saying "civilisation hangs by a thread". The austerity policies espoused by Germany, the IMF and the European commission are gambling with social stability. It is time for European policymakers to get together and examine their consciences as well as their policies. This should be a more important objective for the British government than reconsidering its membership of the EU.

Powered by article was written by William Keegan, for The Observer on Sunday 30th December 2012 00.01 Europe/London © Guardian News and Media Limited 2010


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