Allan Massie: Shaking the tree may have dire consequences

Those who want the UK out of the EU or who call for renegotiation of treaties must make their case

AS PRIME minister, John Major spoke of his desire for the United Kingdom to be “at the heart of Europe”. We are further from that position than we have been at any time since we joined what was then the EEC. This is partly because of our refusal to join the euro. Most people in Britain think that was the right decision, especially when they look at the problems of the eurozone.

It has not, however, been all gain. That refusal has allowed us to engage in devaluation. In the last four years, the pound has suffered its sharpest depreciation since we left the gold standard in 1931. One consequence is 5 per cent inflation, a figure more likely to rise than fall.

Devaluation, which leaves us with the paradox of a strong euro (despite the eurozone’s problems) and a weak pound, has been the recourse of British governments for a very long time now.

How a weak currency is supposed to lead to a strong economy has always baffled me. It baffles the Germans, too, since they have done rather well without indulging in devaluation. Devaluation is, of course, supposed to stimulate exporters. Inasmuch as it does so, its effect is temporary, because it enables them to sell a greater volume of goods (at a lower price), without having to be more efficient.

Eventually their inefficiency catches up with them, and the brief stimulus evaporates.

Bernard Jenkin, a Eurosceptic Conservative MP, is one of many who complains that European Union regulation is stifling British industry. He says that the EU Working Time Directive alone costs us £1.8 billion a year. Maybe it does, but it’s not as if the directive is inflicted on us alone. In any case, is there a majority here in favour of giving less protection to workers or of permitting employers to exploit them? It seems unlikely.

Mr Jenkin also complains that “the EU wants to regulate the City of London” and that its proposed tax on financial transactions would be damaging. Well, not everyone is so enamoured with the City of London as some Tory MPs.

Certainly, the City earns a lot of money, and those employed there pay a lot of tax. On the other hand, the influence of the City’s addiction to short-termism, share price and takeovers has made it very difficult for British companies whose shares are traded on the market to engage in long-term planning.

The economic historian Sydney Checkland wrote a book about the damaging dominance of heavy industry in the west of Scotland before the First World War. He gave it the title The Upas Tree, this being a poisonous Japanese tree under which nothing else can grow. Is the City of London Britain’s Upas tree? It may well be that, in which case closer regulation of its activities is to be welcomed, and if the UK government is reluctant to provide this, then I for one give a welcome to EU proposals to do so.

Most absurd of all is Mr Jenkin’s complaint that “the EU is moving in on the UK’s highly successful defence industry with a defence and security procurement directive aiming to establish a truly European defence market”. Surely, if our defence industry is as successful and efficient as he says it is, this is something we should welcome?

Our Eurosceptics always seem to assume that any EU legislation which they think damaging applies only to us. Now, it may be true that our civil servants apply the letter of European directives more scrupulously and more narrowly than officials in other member states, though I doubt if this could be said of Germany, a state remarkably punctilious in its respect for law.

If, however, this is indeed the case, then the remedy is in our own hands; take a more relaxed or liberal interpretation of the law. In general, however, EU legislation applies to all member states, and what is harmful to us is harmful to them equally. What is beneficial to them is beneficial to us.

Moreover, it is not as if we have no influence on EU directives. Apart from the contribution of our politicians, the CBI and other bodies such as the NFU lobby hard in Brussels in protection of their interests. Indeed, while out Eurosceptics squawk and moan, the French sometimes bewail what they see as the excessive British influence in the EU. We are not poor hudden-doon partners.

Those who want out have at least a clear policy. I think them misguided, and I fear that if they had their way the consequences would be less than happy. It’s different with those who call for a renegotiation of the terms of our membership. They are surely under an obligation to tell us just which powers they want to be repatriated, and to say which concessions they would make in order to get their way.

Anyone who supposes that the UK can opt out of anything it dislikes, while retaining all the benefits of membership, is living in a world which bears little relation to reality. Decisions which affect us would be made without our being in a position to influence the form they took.

Calls for a referendum to require the UK government to engage in a renegotiation of our terms of membership are irresponsible unless the aim of such renegotiation is made clear. Otherwise the electorate is being asked to buy a pig in a poke.

Certainly, if a new European treaty is made, there will be an argument for presenting that to the electorate in a referendum, because then there would be something specific to vote on.

Of course there is dissatisfaction with the working of the EU, and some of the complaints are justified – even if often exaggerated like the claim that 70 per cent of our laws are made in Brussels. In fact, there are mostly administrative regulations, and according to figures provided by the House of Commons Library, only 7 per cent of primary legislation emanates from Brussels. Most of our bad laws are passed by Westminster and Holyrood.

There is also, one should add, dissatisfaction with the working of successive UK governments and Scottish ones, too. Nothing is perfect in this world, but the EU, whatever its deficiencies, has made Europe a better place than it was before, and we, like other member nations, have shared in the benefits of peace and co-operation between governments.