Lib Dems have gone remarkably quiet about Europe, whilst the Conservative Euro-sceptic agenda gains ground, certainly within its party conference, and probably within its party at large. Euro-scepticism flourishes in large swathes of the UK media. This swing of opinion is fuelled by the perspective that the Eurozone economy is in dire trouble, that the Euro might not survive, and that the UK was very sensible to have kept out of it. We are told all this every night on Newsnight. Gillian Tett wrote recently in the FT, that her father was correct in dismissing the Euro project as unworkable 16 years ago, and she had been wrong in her Euro enthusiasm.
All this current group think is parochial, misplaced UK gloating and hype. It ignores the reality of a host of pertinent facts.
First, the Eurozone has weathered the crisis better than either the US or the UK. Whilst US banks like Lehman, and UK banks like Northern Rock have failed, there has so far not been one failure of a major Eurozone bank.
Secondly, there is no possibility of the Euro failing, whatever commentators who use this phrase mean by it. It is not doomed. It will survive. The Euro is underpinned, not by Gadarene bond markets, but by the performance of the real German, Dutch, French etc economies ; by their Siemens, Philips, and Alstom, the equivalent of which, GEC, the UK has lost.
Thirdly, the European standard of living is higher than the UK’s. In 2011, Holland, Austria, Ireland, Sweden, Denmark, Germany, Belgium and Finland enjoyed a GDP per capita between $38,000 and $43,000, with Norway peaking at $62,000, against the UK performance of $35,494. Their standard of living is therefore some 12.5% higher than the UK’s. Within the Eurozone, only Spain, Italy and Greece have lower GDP/capita standard of living than the UK.
Lastly, even the much derided Spanish economy is not bust. UK commentators rarely point out that Spanish firms now own Heathrow airport (owner Ferrovial who also owns Amey UK), the UK O2 mobile network (Telefonica), and a consolidation of several former UK high street banks (Santander, now the UK’s 3rd largest bank measured by deposits). Meanwhile Germany’s Siemens employs 13,000 people in the UK, and for all the ongoing outrage at Siemens winning the Thameslink railway carriage order, the factory at Derby preferred by the critics, is in fact owned by Canada’s Bombardier.
Lib Dem MP Sir Malcolm Bruce used to tour the country explaining the irrefutable case for joining the Euro. The fundamental argument is that exchange rate fluctuations massively increase the risk of investment in UK manufacturing for the EU market, which is the UK’s largest customer. Malcolm apparently even presented this case to no avail to the doubting Gordon Brown when the latter was PM. The validity of Malcolm’s argument remains as strong as ever, and should remain core Lib Dem policy.
Sure, the Greek fiasco has to be resolved so that Euro members cannot simply issue as many Euros as they wish. Otherwise by definition a currency is common, and efficient trade needs a common currency. The Euro makes immense sense, and contrary to current ‘group-think’, we should join it.
* Geoff Crocker is a professional economist whose book A Managerial Philosophy of Technology is published by Palgrave Macmillan.