Michael Fry: Should Britain quit the EU?

As Germany takes an ever-tighter grip on the eurozone, driving forward its message of federalism, would the UK be better served by going it alone, asks Michael Fry

In THE past week, both David Cameron and Ed Miliband have flown kites about a possible referendum on continued British membership of the European Union. The Foreign Secretary, William Hague, put flesh on this skeleton of an idea in his speech to the Conservative Party conference.

Before the end of this month, Hague said, he will “give more details of the review of the balance of competences” – in other words, set out the possibility that some of the powers surrendered to Brussels over the past 40 years might be brought back to Britain: this is not something foreseen in the original treaty of accession. Yet this will be only part of “the establishment of a new settlement in Europe”, which, in the fullness of time, will require a fresh referendum in this country.

None of this sounded earth-shattering in Hague’s low-key, nasal delivery. And, in general, the talk in Britain of cutting ourselves adrift from Europe remains subdued in comparison to what you can read just by opening a French or German newspaper.

A lot of Frenchmen, it seems clear, would just say je m’en fous if the Brits walked: what did you ever expect of la perfide Albion? The Germans are more generous, as the ones who have to run a show with some far fickler performers, but there are signs of impatience creeping in at a general British attitude to the show which seems ever more perverse. A membership of the EU appearing to consist largely of opt-outs is hardly worth the name.

This was all really written in the stars on 3, October 1990. Both François Mitterrand and Margaret Thatcher had shown themselves underwhelmed by the prospect of German reunification, and for the same reason. It would make Germany a good deal bigger and, in the long run no doubt, stronger than their own countries. But because Britain and France belonged, with the United States and the Soviet Union, to the Four Powers that still needed to sign a peace treaty with the restored Germany, Mitterrand and Thatcher would both have a say on what happened next.

Mitterrand exploited this loophole more subtly than Thatcher, who only lamented: “We beat the Germans twice, and now they’re back.” He identified the source of Germany’s strength as the Deutschemark and he made it a condition of French support for reunification that, in the fullness of time, the enlarged Federal Republic would get rid of it. That was how the common currency, the euro, came into existence in 1999.

Thanks to Gordon Brown, rather than Tony Blair, Britain did not join. This seemed to confirm what had been Whitehall’s official doctrine on European integration since 1973: it was an à la carte menu from which we could pick and choose and if we did not like a common currency, then we did not have to swallow it. In fact, there was a permissive attitude all round. The euro itself was run from Frankfurt on a rein so loose that Blair could speculate out loud how we might yet join it: he is still saying the same today. But for all other participants in these events, there has been a reality check. With hindsight, we can see that the euro was so badly designed and run that it could not survive in its original shape.

It would have been a disaster for Britain to join. It has been something of a disaster for Germany, except that Germany has the economic strength to withstand disaster. But now there can be no more illusions and delusions. If the euro is to continue, it has to be on German terms. These terms are the ones Germany already imposes on Greece, Italy, Portugal, Spain, soon perhaps France, too. Or rather there is only one term, austerity, to be endured as long as it takes for the economies of those other countries to become as much like the economy of Germany as makes no difference.

The menu now looks like one you might have found in the German Democratic Republic: sauerkraut und wurst or wurst und sauerkraut. It was laid before European leaders at the crucial summit in Brussels on 8-9 December, 2011. They read it with a sword hanging over them, of monetary followed by economic and possibly political or even social collapse. Not only countries in the euro but also those outside it concluded that they had to take what was on offer, a fiscal pact for deep cuts all round. Only two, the Czech Republic and the UK, turned up their noses. Cameron imposed the diner’s ultimate sanction and walked out.

I was living in Germany at the time, and I still remember the kindly puzzlement with which Cameron’s grandstanding was greeted by politicians and commentators. They value us as partners, but they have long accepted we are impelled by motives of our own, something to do with our history and geography, that make us reluctant Europeans. This they are reasonably prepared to indulge, too, but not at the price of themselves refraining from further integration. During an endless economic crisis, they have grown used to giving the aim of that integration its proper name: European federalism. To Germans, federalism is an entirely positive concept. It has helped to keep their country on an even keel since the Second World War. They do not grasp the horror the word inspires in the Brits.

So, Germany will carry on with what it has set out to do. My bet would be that, if only at high cost and over years of toil and trouble, it will get to where it wants to be, in a Europe reshaped pretty much on German lines.

The real change is among us in Britain because from now on nobody here can pretend we are in a position to pick and choose from a European menu, which anyway looks different from year to year. In future, it will be unmistakably obvious what is on offer in Europe, a single fiscal policy with implications of uniformity right down the line in everything from pensions to VAT. Into that common mould, the rest of European politics will be steadily poured.

Cameron refused to sign up to this in Brussels and it is hard to think of another British politician who would, at least in the two big parties. So, whatever happens, we face a future outside that core of European countries that will coalesce into an ever closer union – some because they have a positive desire to do so, some because they see no choice, some because they fear what might happen otherwise.

In these circumstances, is it worthwhile for Britain to stay in the EU? One of the arguments often deployed in favour of membership is that without it we would have no influence on decisions bound to affect us. But in this EU of the future, the same would be true. Countries inside the fiscal union of the eurozone would raise taxes and set expenditure according to their own priorities, foremost among them the stability of the common currency. The rest can go hang, including us.

To say the least, it is hard to see how Britain could be worse off by restoring its full freedom of monetary and fiscal action, or any other sort of action. There may be stormy waters in the world outside, but a lot of useless ballast could be jettisoned.