The European Union was never an experiment. It had to be a project, because monetary union without political union was always going to throw up analogous situations that would lead to the mire we’re seeing in Greece.
With Southern European countries having lived high on the hog (or the Palma ham) on the back of low interest rates more appropriate for Germany and France, they’ve run up huge debts and imbalances, and there’s no way out but to get deeper into bed with their European fellows – or to get out and go bust.
Compare that with the UK, which is booming (okay, getting there!) thanks to the devalued pound.
As John Redwood MP recently wrote on the UK’s advantage versus the Eurozone:
The market is beginning to work, to adjust the big imbalance in the UK balance of payments. Foreign shoppers will swell receipts, whilst UK shoppers will buy fewer foreign made goods as their prices surge.
Families nervous of job prospects and finding it difficult to balance domestic budgets will cut back on foreign holidays. Gradually imports and exports will come into better balance.
Redwood spells out the issues facing the Eurozone from a political perspective, as opposed to the trader-centric spin the financial media has taken.
He’s quite right to – the political ramifications are what will matter in the long term, once the smashed plates in Athens have been tidied away.
The reason I say the Eurozone was a project is because an experiment has multiple outcomes, and the Euro could end only one way.
Economic and monetary union without political integration is a pipe dream – just ask the United States.
Margaret Thatcher saw this very clearly, and while I’m no dyed-in-the-wool Tory, every single one of us – particularly the UK manufacturing workers who would never voted for her – should raise a glass tonight.
I’m also a fan of the European Union – anyone familiar with the region’s insanely bloody past must be thankful for 65 years of peace, give or take the fringes (and the other unifying force that was the Soviet threat…) But the Union works fine as a friendly trading bloc. Beyond that it risks stoking the very tensions its founders sought to ease.
The Greek drama will make the Eurozone stronger in the medium term, but the long-term aspirations of its people and the consequences of the inevitably deeper political union to come can only be guessed at.
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