Brian Monteith: Wave the euro goodbye, welcome two-tier Europe

The euro is dead. Long live the new euro. Angela Merkel and Nicolas Sarkozy have spoken rather cryptically but their meaning is clear. If the euro was a movie its title would be The Dawn of the Walking Dead. It is the zombie of currencies waiting for its head to be lopped off so it cannot stagger around from one crisis in Greece to another in Italy and terrorising France and Germany. The truth is it never had a chance, it never had the right genes nor did it have the resistance to fight the contagion to which it has succumbed.

Don’t take my word for it; see what is happening: the softening up of the European public for what is about to befall the euro in their pockets, namely the currency’s orderly collapse and the creation of a new euro, for want of a better working title.

Jacques Delors is already getting his retaliation in first. As the great architect of an ever closer union and its signature currency, Delors wanted to make sure that no-one blames him for this horror story so what better than give an interview to a euro-sceptic London paper proclaiming his creation was doomed from the start?

Blaming the political leaders and finance ministers of the euro member states, he lashed out saying that they had preferred a quiet life to the frank and honest but all-too-disagreeable task of calling a pig a pig by confronting the louche behaviour of countries that could not help themselves running up more debt – no doubt a reference to Portugal, Italy, Greece and Spain. He even admitted that critics of the euro had, from the outset, made some valid observations about it being flawed from the beginning because it lacked the political union that other currencies work under – although his humility stopped short of crediting Margaret Thatcher for her adroitness and instead said that Anglo Saxons had had a point.

Only the day before, the governor of the Bank of England, Mervyn King, said Britain’s banks should prepare for the euro’s demise, which in central bankspeak means he has read the runes (or has insider knowledge) and has started his own preparations. If he has gone public you can expect our government will have received similar instructions to batten down its hatches.

There will be unannounced sub-committees and ad-hoc working parties being formed in the Treasury, the Foreign and Commonwealth Office and other departments that might suffer from the fall-out of the single currency becoming as useful as a ten bob note today. David Cameron met President Sarkozy at the weekend to take a briefing on his role – which is to keep calm and make a cup of tea while showing a stiff upper lip – when underneath the waterline Merkel and Sarkozy and the rest of their Frankfurt Group are paddling like mad to reach the landing grounds for the launch of a new currency.

The game will be given away once the British Cabinet is briefed and Business Secretary Vince Cable puts his foot in it (again) by offering up an indiscretion about the pretence of it all – or it is leaked that he is in disagreement with his colleagues and might yet resign (again).

The situation seems fairly clear: Germany will not bail out the euro in the long term and Merkel cannot face the German public over the issue as so many already feel deceived from being asked to finance rescue plans before. The only solution is to introduce new rules, with German monetary discipline being at the heart of them, that must, by definition, reduce the number of nations willing to be part of the new euro.

The remaining argument is about whether or not this will require a new European treaty or just amendments to a treaty – the sort of sleight of hand that we have seen before to ensure the peoples of Europe do not have a say in their own destiny. Remember how the European Constitutional Treaty required many nations by their own laws to hold referenda that would give people the chance to say “no” – and they did, killing it stone dead? Remember how it was declared that the Lisbon Treaty was not a proper new treaty but just amendments to existing treaties, thus relieving many nations from the necessity to give their people a say?

Remember how this let Gordon Brown off the hook from his promise to consult the British people – and how in turn Cameron was also released from his promise to still have a referendum because Brown had already signed Britain up and it was too late to go back? Cameron’s party has certainly not forgotten any of that; many MPs and members saw the prime minister and William Hague’s finessing of this decision as an act of betrayal they would revisit later.

This time a referendum in Britain will be unavoidable – treaty or not. Indeed, I would put serious money on it happening before any vote on Scottish independence. If Cameron’s premiership is not to go the way of John Major’s he had better become more Eurosceptic and quick, for he is about to find that it will be easier to hold his coalition together than keep his own party united.

The new intake of Tory MPs is much more sceptical towards EU institutions and it is no longer predominantly about the cost of membership. In a world of more globalised trade, fewer Tory MPs view an ailing Europe as the panacea to economic success; with Merkel’s planned tax blitz on the City of London emotions are rising and with Tony Blair having signed away Major’s Maastricht employment law concessions and much of Thatcher’s Fontainebleau rebate the EU looks more like a hindrance than a help when it comes to the UK escaping from the eurozone whirlpool.

If Europe is to become two-speed – one under the strait jacket of a German-dominated new euro currency and the other the mostly southern European and former communist states with their own currencies, MPs are beginning to think the unthinkable and ask would we be better off out of it altogether.

Nato? Yes. European Economic Area? Yes. Two-speed Europe? Hmm. When Jacques Delors helped design the euro it was meant to bring Europeans closer together – now its inevitable collapse looks like pushing them apart. The Anglo Saxons were right, and he should have listened.

• Brian Monteith is policy director of ThinkScotland