I have passionately supported European integration since I first became aware of the European Economic Community around 1962. I am as die-hard a Remainer as you can find. Despite that, I consider calls within our Party asking our leaders to campaign for re-join to be naïve.
To re-join something means basically to restore what existed before. If I fail to pay my subscription to the Chartered Institute of Taxation, I will be expelled. If I pay the missing subscription in a reasonable timescale, I can re-join and do not need to take any membership examinations; examinations that must be taken by new members seeking to join.
To put it very simply, the UK has left the EU. If it wishes to become a member, it needs to apply for membership. The EU has a detailed process for dealing with membership applications, and of course every single EU member state has a veto.
If the UK does in future apply for membership, how is the EU likely to react?
For most of its historic period of membership, the UK was a somewhat curmudgeonly EU member. There were exceptions. For example, before she became anti-EU, Margaret Thatcher was probably the greatest European impetus behind the creation of the single market in goods. Overall, UK governments and most UK voters have not believed in the vision of an ever-closer union between the peoples of Europe that underlies the “European Project.”
That is why the EU has functioned noticeably better since the UK departed. (It also helps that the UK has provided the EU with a nearby “adversary”.)
If in future the UK does apply for EU membership, I would expect a rational EU to respond as follows.
Firstly, to insist that the UK signs up for membership in full. This requires signing up to join the euro in a relatively short and fixed timescale from which the UK cannot resile. When the UK was a member, much of its uncooperative behaviour derived from its monetary independence. (The other major source of uncooperative behaviour was the UK’s collective memory of imperial grandeur. The simple passage of time and generational change is slowly dealing with that problem!) Replacing the pound sterling with the euro is something I regard as a minimum level of commitment to EU membership by the UK. Similarly, I would expect the EU to require the UK to join the Schengen travel zone.
Secondly, to require evidence that the desire for the UK to have EU membership has widespread support within the UK and is not a transitory outcome of the UK’s peculiar politics. If there is a referendum, I think the EU should require an approval threshold of about 75%. Furthermore, if any major political party (meaning the Labour Party or the Conservative Party) opposes the EU membership application, or any of the devolved governments opposes the membership application, the EU should tell the UK “to get its act together” first and only then think about applying.
When do I think this might happen? In my view only when there is almost universal UK acceptance that Brexit has been an unmitigated disaster with no redeeming features. Given the speed of the UK’s decline post Brexit, this might be the case around 2030 or 2035. If we work hard, by then our Party might have succeeded in replacing the Conservative Party as one of the two major political parties in the UK!
* Mohammed Amin MBE is a member of the Liberty Network board. He is writing in a personal capacity.
Follow @LibDemVoice on Twitter
Like us on Facebook
Subscribe to our feed
Sign-up for our daily email digest
Lord Bonkers' Diary: Dominic Sandboy's 'What My Housemaster Told Me About the Seventies'
Weekly Road Report - West End Ward #dundeewestend
Ongoing huge cost of Brexit divorce
The Liberal Song, with Jo Grimond on the B-side
Nonconformistradical
Alex Macfie
David Evans
Helen Dudden
Joseph Bourke
68 Comments
You are absolutely right that there’s no easy way back.
I note – in the previous discussion – the enthusiastic over-interpretation of limited evidence of buyers’ remorse in the electorate at large. As you say, we will need to have overwhelming acceptance that Brexit has been a disaster – not merely a negative, to initiate any step back into the institutions in Brussels.
So far with the confounding impact of Covid, then the Ukraine War, it’s not clear to many voters that Brexit has even been a negative. I appreciate none of them turn up on this bulletin board; but remember, we are a political party: we need to win over Leave voters to make electoral progress; so we need to respond to their reality, not just have comforting consensus amongst ourselves.
I regularly speak to family members and friends who voted Brexit. Some say, it’s going OK, others say, no, Brexit isn’t going well up till now, but that’s down to the Tories. And in any case, we now have control of our own decisions. For example, we could control our borders, if the government got it’s act together. before, we couldn’t even in theory. BTW none of the said friends and family are stupid, racist, uninformed etc. A fair number are themselves immigrants.
This is the reality of opinion amongst Leave folk. Only a small minority have seen the ears of the wolf so far. That is to be welcomed. but we have a long way to go.
While I voted remain, and deeply regret Brexit, I would not support joining the EU conditional on using the Euro. Loss of our fiat currency would be a disaster waiting to happen – see Black Wednesday when the UK had to withdraw from the EMS. Sterling was effectively linked to the DM and heavy speculation against that link caused the withdrawal. However, had Germany wanted to keep the UK in that system, they could have printed DMs and bought sterling till the speculators gave in. They didn’t. And then look what happened to Greece when they elected a slightly socialist government. We were well off with the deal we had, but it won’t come again.
There is zero chance of the UK public accepting the euro. Nor should it. Nor is it clear the EU would demand it. There would be huge benefit to the EU having the UK part of it again. There is no pan European drive for a USE but there is for cm/cu/fom and combining on human rights and security issues. The euro is not the future for the UK.
I would not accept the Euro or Schengen however it is not a requirement of joining the EEA, single market and customs union to accept those so that option should be the immediate priority in my view.
I don’t think that arguments along the lines of “not every leave voter accepts Brexit is a mistake” are relevant. We are not trying to win every voter. Poll after poll suggests that the majority of voters now think Brexit was a mistake yet no other party except the Greens is talking about it.
So now is the time to seize the moment. At the moment we are like a footballer who has an open goal but misses on purpose!
Chris Moore writes:
This is the reality of opinion amongst Leave folk. Only a small minority have seen the ears of the wolf so far. That is to be welcomed. but we have a long way to go.
I agree. Until an overwhelming proportion of Leave voters change their minds (or just die of old age), there is realistic UK domestic political plaform to apply for EU membership.
A very good piece, from someone I know as realistic.
Too many in politics are either one thing or the complete reverse.
We need to be a centre ground party. Labour is now claiming it though half of that side are farther left of any in this party.
It is the polarised attitude that leads to the sensible but sad conclusion of this article. The EU are also on one farhter side, of the UK.
There is every reason to have a varied EU, like all my advocating for public services, being a mix. But oh, no way, far left, far right , want everything one way or the other.
Therefore the UK shall not rejoin the EU.
@Russell
I fear that you are looking at the theoretical UK membership application from only a UK perspective.
There is no benefit to the EU from having as a new member a UK that is going to be as troublesome as it was before. While it is one thing to have a few small EU economies outside the euro (and that number is slowly shrinking), from an EU perspective having one of the big 4 EU economies (as Britain would still be, despite our poor economic performance) outside the euro is not a good idea.
The EU had to put up with it because the UK was an existing member and the Maastricht Treaty would never have been ratified if the EU had insisted that the UK (or Denmark) sign up for monetary union. That is quite different from letting a new country that wants to join have an opt out.
The EU is simply not going to offer it, and I think it would be right not to offer it.
@Jenny Barnes
This is not the place to debate the pros and cons of European monetary union. However monetary union is quite different from the Exchange Rate Mechanism which Britain left on Black Wednesday.
In 2012 at the height of the euro crisis, I gave a talk which led to an article “The Euro – Conception, Complications & Prognosis.” I explan why the euro was desirable, what went wrong and why, and gave a forecast for what would happen which 10 years later has (so far) continued to be accurate.
You can read it on my website at the link below.
https://www.mohammedamin.com/Finance/Euro-Conception-Complications-and-Prognosis.html
@Lorenzo Cherin
Thank you for the kind feedback.
An interesting article, but what does it mean for Lib Dem strategy?
If the party looks as reluctant to join/rejoin the EU as Labour and the Tories, why would voters turn to the party in the event of “the speed of the UK’s decline post Brexit”? How will the party distinguish itself from Starmer’s or Sunak’s vanilla versions of their parties in order to replace either one of them?
Several years ago, someone posted on this site the analogy of three ice-cream sellers on a beach. The one on the left and the one on the right will always attract those customers from further out who can’t be bothered to walk past, and the closer the three come together, the fewer customers will be available to the seller in the centre. But it strikes me that this is only the case if they all sell the same ice-cream!
Perhaps join/rejoin could be a chocolate sundae policy for Lib Dems! 🙂
The UK cannot escape the need to find some sort of niche in the world that recognises geo-political, economic and environmental reality. A rapprochement with Europe is an unavoidable imperative; the logic points towards becoming a member again. However the key impediment for the UK is a Conservative Party riddled with extremists and headbangers for whom reality is an apostasy.
Unfortunately, before the UK can be considered as a reliable international partner the Conservative Party has to purged. Meanwhile EU leaders and governments may make encouraging gestures, but will sup with a long spoon.
Real politik means that Mohammed Amin’s expectations of the EU are mistaken. Becoming accepted as an applicant would be easier than full accession itself. The EU would never lay down referendum requirements nor make explicit demands for Euro membership, but that does no mean these issues are not significant.
I would expect integration in the Single Market to precede membership. The size of the UK economy and the advantages for Ireland mean that an EFTA type agreement could happen in time, but agreements with all member states could be laborious.
This article says clearly what I have been thinking. If we are asked, then We should say that we would like to see The UK in The EU again but we need to stress that its not going to be quick or easy & when we are asked if that includes Schengen & The Euro We need to say Yes.
I find it hard to see why The eu would want us until The Tories are reduced to Third Party Or we get PR. As long as The UK might get another Tory Government the threat of a second Brexit will remain.
Agree with this article’ partial premise that for UK to become part of the EU again, it’s not simply about internal UK politics, but how things look from the EU’s perspective, which will have a higher threshold for the UK to join the EU.
@Russell-the EU simply aren’t desperate for the UK to rejoin. Key Financial institutions have been leaving London and moving their Head Offices to Paris and Frankfurt, so London & the UK’s South East’s allure is starting to fade. There were senior people in the Commission like Michele Barnier who really hoped that the UK didn’t leave, partly knowing that it wouldn’t be a good economic outcome for either, and who were very much aware of the UK’s important structural contributions to the EU such as with the SIngle Market.
But there’s a view, still common in the UK, that somehow the world owes the UK a living, and that everyone loves the Brits. The truth is the ones who understand the UK and have closest common interests are our neighbours, not former colonies of the Empire, which are cutting their own future path in the world rather than recalling past glories they don’t even actually always share like many Brits think they do.
Paul Barker has largely answered Peter Watson’s question for me.
At the next General Election, people should vote for us because we have better policies on a range of issues, believe in the fundamental principles of liberalism, and also have higher standards than the sleaze ridden Conservative Party.
If someone asks about our views on the EU, we want the UK to have a trading relationship with the EU that is not pre-determined by Tory Europhobia. However joining the EU is simply not an issue for the forseeable future, because relatively few Britons want it compared to the overwhelming consensus that a decision to join would require.
If asked do we believe that EU membership would be good for Britain? Yes we do.
Do we think Brexit as implemented has been a disaster? Yes we do.
To add to my earlier remarks (that will no doubt appear in time), the role of our Party has to be to lead the way as a pro Europe voice that is reaching out to the EU.
We cannot wait for the Tories to purge themselves of extremism nor for Labour to make the running instead. It is not for us to imagine or magnify difficulties; although the Tories present the biggest obstacle, our sister parties across Europe will be looking out for us too as an indicator of constructive change. In turn we need to be in dialogue with Liberals and Democrats across the EU exploring steps towards reintegrating the UK in the community of European states.
I liked this article. I agree with all those who say that there is no chance of re-joining the EU, but in a generation’s time we could be a member of a much changed European institution probably not called the EU.
Martin writes:
the role of our Party has to be to lead the way as a pro Europe voice that is reaching out to the EU.
I think the emphasis is quite wrong. The main goal of our Party is to get more MPs elected in the next general election, so we can play a stronger role in achieving change in the UK. Everything else that we do needs to harmonise with that.
There are some interesting recent developments, such as President Macron’s vision of a European Political Community. See https://czech-presidency.consilium.europa.eu/en/presidency/prague-summit/european-political-community/ It is encouraging that the UK government accepted the invitation to attend.
I want the UK to apply to join the EU. However it is utterly unrealistic to make that a main Lib Dem theme at present, especially given the way I expect the EU to assess any British application to join.
I think a key premise of this article, the idea that a weakened economy will dissolve all eurosceptic attitudes, is incredibly optimistic (from the perspective of wanting euroscepticism to end)
This misreads the situation in 2 ways: 1) The consensus negative effects are forecast to be around 4% drop in GDP long term; this is bad but it just isn’t catastrophic enough; there are a number of countries that have been per-capita richer than the UK and now aren’t, (e.g. Italy, Japan) which haven’t had any revolutionary political shift as a consequence. 2) Brexit will be softened over the years, particularly with a likely Labour government and probably without much fanfare (so as not to upset Brexiteers); mini-deals that are likely to further reduce the negative impacts to a level that just isn’t socially harmful enough to shake off all euroscepticism, any time soon at least.
There is an argument that the party has not yet had about whether or not a fiat currency controlled by the UK is either desirable or necessary.
In general I think the Euro has been far more successful than anyone thought it would be and is now a far more desirable currency to hold than the pound.
The nostalgia for the pound harks back to times long ago when Britannia ruled the waves and the pound was a reserve currency, something it is not now. In my lifetime the pound has declined from something like $4.50 to the pound to $1.24 now. It has gone from being a strong currency to being a weak one,
There is only one cogent argument for keeping a fiat currency and that is given by Modern Monetary Theory, which argues that a fiat currency allows the government to spend freely as long as it controls inflation. This is not a policy currently supported by the Liberal Democrats, who still talk about deficits and burdening our children and grandchildren with debt and who supported austerity during the coalition.
I am not sure why Jenny Barnes is so in favour of the pound, but I suspect it is nostalgia rather than economics.
I do want to join the EU and think it’s time our party was open and honest about that. We can’t do so wholeheartedly unless we first resolve our approach to the pound.
@Mick Taylor
I agree with you about the substantive issue, although not about timing as you can see from the main article.
You write: “We can’t do so wholeheartedly unless we first resolve our approach to the pound.
I strongly agree with you here, in particular because I believe that the EU will not entertain a UK membership application if it is accompanied by a request for an opt-out from monetary union.
@Mohammed Amin “The main goal of our Party is to get more MPs elected in the next general election …”
When it comes to getting more Lib Dem MPs elected in the next general election, the Tories seem to be doing all the work 😉
Agreed that “joining” the EU as a full m member would be a very hard path to complete in the forseeable future, due on the one hand to entrenchec public opinion in the UK, and on the other hand to distrust of the UK in the EU community.
The most likely scenario. Is a new non-Tory government in 2024-5 and then steps toward a Swiss or Norwegian style concoction of adhoc agreements on trade, customs finamce and movement. This will repair most of the damage done by Brexit. Having repaired the damage, I believe there would be little incentive to apply for full membership. Ever.
Regarding some of the comments:
Article 49 has no requirement for a referendum although that would certainly be necessary internally.
Joining the euro zone might be demanded but would never be enforced. Look at Sweden.
On the other hand …. a cap in hand begging by UK to be re admitted would be 1. a powerfully propaganda boost for the EU project and 2. Mutually beneficial economically. Legally any single member could veto an application but the EU itself if keen on the idea could persuade any such member to agree to an application, for suitable ” recompense”.
However if I had my way I would make any application subject to the right of the EU Parliament to expel any MEPs that behave like the parasitic UKIP trouble makers !
Judging by the enthusiastic response to this subject it is clear that re-establishing strong ties with Europe should be a top priority for the Party. A firm and uncompromising position on Europe will pull many disillusioned voters from both the Tories and Labour.
It will also attract a large majority of the 3 million or so new overseas voters who have lived overseas for more than 15 years and who will have the right to vote again thanks to the 2022 Elections Act which the Lib Dems supported.
During decades of living abroad I took little interest in British politics until I saw the disaster of Brexit approaching. That’s when I joined the Lib Dems Overseas due to the Party’s strong pro-Europe stance. I could see perhaps more clearly from afar that it would be a commercial disaster, it would cause serious political problems for Northern Ireland and it would encourage pro-Europe Scots to seek independence. In short, the break-up of the UK as we know it today.
Boris Johnson had the backing of Donald Trump who liked to see strong competitors such as Europe weakened.
Worse, Brexit was music to the ears of Putin and no doubt emboldened him to think Europe was falling apart and would not interfere with his ambitions to restore his lost Soviet empire.
Call it join or rejoin, if the Lib Dems are going to play a bigger part in British politics an aggressive and united front on Europe is the only way to go.
Joining sm/cu/fom is no brainer. Joining euro/shengen will never happen.
@Brian Rogers
I have only seen your comment now.
While my views differ, you may well be right that the economic damage from Brexit may be sufficiently ameliorated that it does not end euroscepticism, let alone end europhobia.
If so, any application from the UK to join the EU becomes even more unlikely. The logical consequence is that our Party should devote its energy to other issues rather than risk losing europhobic votes by campaigning vigorously for the UK to apply to join the EU.
@Richard Bird
I don’t regard the “Norway option”, namely agreeing to abide by all Single Market rules without any vote in rulemaking, (aka “Government by fax”) as realistic for a large country such as the UK.
The EU regards the Switzerland arrangements as so problematical that they are never going to do that again.
My point on any referendum majority has nothing to do with the text of the EU Treaties. It is predicated on political reality. The EU will want to be sure that the UK if admitted to membership is not going to start talking about leaving yet again, and therefore wanting rock-solid evidence of overwhelming popular support in the UK for EU membership.
On Sweden, how the EU deals with member states is quite different with how I expect it to deal with an applicant country, particularly one that has left before. A key point about monetary union is that it makes leaving the EU much harder, which is why the French and Italian far right have stopped talking about it. Their citizens fear the damage from leaving the euro.
You write: cap in hand begging by UK to be re admitted would be 1. a powerfully propaganda boost for the EU project and 2. Mutually beneficial economically.
I agree. However a key priority for the EU will be confidence that the UK is not going to be troublesome, which is why I expect a firm line on monetary union and Schengen.
@Colin Bloodworth
You write: A firm and uncompromising position on Europe will pull many disillusioned voters from both the Tories and Labour.
To attract ardent EU supporters from the Conservative and Labour Parties, we only need to be more supportive of closer EU ties than either of those parties.
The key political question is how pro-EU we can sound without failing to attract disillusioned Tory and Labour voters who still believe that Brexit was a good idea. This is a difficult judgemental question.
On this, I am aligned with our Party’s Leadership, who will have spent many hours poring over polling data, focus groups, and what they can glean from direct voter contact.
The one thing I am very clear about is that talking about “re-joining” (the editor removed the hyphen I had put into the title when submitting the piece) is a conceptual mistake in the thinking of some Liberal Democrats. There is no going back to the situation before June 2016; only the question of whether and when the UK should apply to join the EU, and what terms it might negotiate as an applicant.
@Martin
I have now seen your comment of 22nd Jan ’23 – 5:37pm. It may have been delayed by moderation.
I think that I have covered your points in my responses to other comments. If you think that I haven’t, please post a new comment and I will respond to it.
@ Mohammed Amin I’m afraid voters don’t vote for a vacuum.
mick taylor “In my lifetime the pound has declined from something like $4.50 to the pound to $1.24 now”
exactly. Now, before the Greeks joined the Euro, every year their prices went up, and every year your £ bought more Drax, so for the tourist, Greek prices stayed more or less the same and cheap. After the Euro, it became as expensive to eat out in Greece as in London. Maybe that’s positive?
Anyway, l have no nostalgia for the £, but I certainly wouldn’t want my currency to be tied to the DM with no exit. Classic economics says that in this case, you can achieve the same ends by reducing pay rather than inflation, but public opinion – especially now – just won’t put up with that.
@ Mohammed,
“This is not the place to debate the pros and cons of European monetary union” ??
This is a place where you are firmly linking any future UK EU membership to an acceptance of the euro and so EMU itself. So, I’m afraid I can’t make much sense of your comment.
Accepting the euro wouldn’t be quite so bad if the dominant economy in the EU, Germany, wasn’t quite so mercantilistic. However, it likes to run a huge trading surplus. This means goods and services net flow out of Germany, but euros net flow back into Germany. Naturally the other euro countries run short, they can no longer issue their own currencies, their economies slump, and are forced to borrow them back to try to keep their economic wheels turning. This is nominally via the ECB , but really euros are from Germany and other surplus EU countries. At least this is the way German voters see it.
This however is contrary to EU rules! So conflict arises. This is the reason, in a nutshell, why many economists argue the architecture of the eurozone to be fundamentally flawed. You will need to convince voters otherwise if the EU insists on some commitment to the euro, which I agree they almost certainly will.
@Peter Martin
On the political issue, you appear to agree with my view that if the UK applies to join the EU, the EU will stipulate as a condition of membership that the UK gives a firm commitment to joining the European Monetary Union. That is my conclusion from your words:
if the EU insists on some commitment to the euro, which I agree they almost certainly will.
That is all my article is saying.
Those who think the UK joining the EMU is a bad idea will then decide not to support the UK applying to join the EU, or not support the UK accepting the EU’s predicted conditions which means not joining.
I regard any attempt by the UK to return to its pre June 2016 status as unrealistic.
My article is not about the merits of EMU, although as my piece at the link https://www.mohammedamin.com/Finance/Euro-Conception-Complications-and-Prognosis.html explains, I do regard EMU as desirable.
My article’s purpose is to kill off the word “re-join.”
To paraphrase Yoda, “Join or not join. There is no re-join.”
@Jenny Barnes. “After the Euro, it became as expensive to eat out in Greece as in London.”
I live in Greece and it’s most definitely cheaper to eat out here than almost anywhere in the UK. For example today I had chicken in mustard sauce along with mixed grilled vegetable for around £7.50. Even a large beer would only have added £2.65 to the bill. Find me anywhere half decent in the UK where you can do that?
Certainly Greece had a struggle adjusting to the Euro and being forced to actually pay tax rather than continue the national pastime of tax avoidance, but I have noticed a distinct improvement in the Greek economy and a real pickup of restaurant trade over the past 3-4 years.
As I said, the only doubt in my mind is the MME suggestion of the Euro limiting the government’s freedom to spend on services, because we would no longer have a fiat currency and since the party resolutely refuses to sign up to MME I don’t think that argument is relevant.
So we’re left with nostalgia, never a sound way to make economic decision.
What we LibDems have to do is think how we would sell the Euro not continue to defend a declining and evermore weak pound.
“so we’re left with nostalgia”
Oh no we’re not.
whatever, I would not vote to join the EU if it was conditional on using the Euro.
@Jenny Barnes,
So if we’re not left with nostalgia, please enlighten me as to what we are left with that justifies defending the pound.?
I cannot understand your hostility, on no defined grounds to giving up the pound.
@ Mohammed,
Now that you’ve established that we would be joining rather than rejoining the EU, and I wouldn’t disagree , maybe you would like to write a future article on the merits and desirability of the Euro/ERM. This is a far more important issue. You seem to have an understanding of most of the pros and cons.
The euro would work fine if the EU had one Federal government, with a sizable chunk of the the EU budget, to administer it. You say the USA Federal Government has about 16% of GDP. The US Federal Government also has political supremacy over the States. The EU would need to have the same political structure, but can you see German voters ever agreeing to that?
You are right to link rejoining, or joining as you prefer, to the acceptance of the euro but you’ll need to show that the architecture is viable first and so far you haven’t done that.
Re David Raw’s “I’m afraid voters don’t vote for a vacuum.”
– Bingo, spot on!
Polls have declined for us, despite a collapse of support for the Conservatives; membership has been in sharp decline. The current policy (pushed by this article) is not working, not at all. I ought to be more engaged in urging erstwhile members to renew their subscription, but I do need a better narrative to do this.
What is the point in advocating that the EU erect further barriers to engagement and association with the UK? The only point in inventing problems with moving towards a rapprochement with the EU is to obstruct and delay a process that in the end is essentially an economic imperative. Our Party should have no part in it.
In the interests of clarity it is worth looking at the precise wording of the accession criteria on the subject of economic and monetary policy and the euro. See https://neighbourhood-enlargement.ec.europa.eu/enlargement-policy/conditions-membership/chapters-acquis_en
What the EU says is: “The acquis in the area of economic and monetary policy contains specific rules requiring the independence of central banks in Member States, prohibiting direct financing of the public sector by the central banks and prohibiting privileged access of the public sector to financial institutions. Member States are expected to co-ordinate their economic policies and are subject to the Stability and Growth Pact on fiscal surveillance. New Member States are also committed to complying with the criteria laid down in the Treaty in order to be able to adopt the euro in due course after accession. Until then, they will participate in the Economic and Monetary Union as a Member State with a derogation from the use of the euro and shall treat their exchange rates as a matter of common concern.”
That is, new members do not have to adopt the euro. They simply have to put themselves in a position in which they could adopt the euro if they wanted to ‘in due course’.
“Government by fax” is not an accurate description of how the process works for EEA member states as the EEA Joint Committee has an input into EU legislation from an early stage. The UK joining would strengthen their hand.
Of course it would be better to rejoin the EU if we don’t have to accept the Euro. Richard Bird makes an excellent point about Sweden and there is also the Czech Republic, a more recent accession state who have made no plans to join the Euro due to public opposition.
Our Polling went down from August to November, after the boost we got from the last Byelection wore off. Since then we have been steady on 9%. If we get a Snap Election I would expect our average to rise over The Campaign, it usually does. Failing that I expect Our Recovery will be slow, maybe 2% a Year with temporary boosts confusing the picture.
I don’t believe in silver bullets.
@ Mick Taylor,
“I cannot understand your hostility, on no defined grounds to giving up the pound.”
The grounds are pretty much the same as they are for Canadians, who could in principle use the US dollar but instead choose to have their own dollar. Or the Kiwis who could use the Australian dollar but instead use their own.
An ability to issue your own currency is possibly the defining feature of an independent state. Sure, a currency can depreciate in value but everything is relative to the level of inflation. A loaf may have cost a penny in years gone by but it would have taken a hour or more to earn that penny. Give me 2023 wage and price levels any day!
Peter Martin 23rd Jan ’23 – 4:41pm:
[Mohammed says] the USA Federal Government has about 16% of GDP.
It’s 25%…
‘How much has the U.S. government spent this year?’:
https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/
…you’ll need to show that the architecture is viable first…
Not even the euro’s architect, Otmar Issing, thinks it’s viable….
‘Now He Tells Us, Architect Of The Euro Says It Will Never Work – So Milton Friedman Was Right’ [October 2016]:
https://www.forbes.com/sites/timworstall/2016/10/23/now-he-tells-us-architect-of-the-euro-says-it-will-never-work-so-milton-friedman-was-right/
‘Otmar Issing on why the euro ‘house of cards’ is set to collapse’ [October 2016]:
https://www.centralbanking.com/central-banks/economics/2473842/otmar-issing-on-why-the-euro-house-of-cards-is-set-to-collapse
Mohammed Amin 23rd Jan ’23 – 11:07am:
The EU regards the Switzerland arrangements as so problematical that they are never going to do that again.
Indeed. And those arrangements didn’t cover services, showing how little influence the UK had over EU trade policy when a member (the UK is the world’s second largest exporter of services). As with our other trading partners we can do much better by negotiating our own bespoke trade agreement…
‘UK kickstarts work on new trade deal with Switzerland’ [April 2022]:
https://www.gov.uk/government/news/uk-kickstarts-work-on-new-trade-deal-with-switzerland
Mohammad is basically right, the UK has missed the boat on “rejoining the EU”; that was only possible if the UK had acted before January 31st, 2020.
The EU is now sailing on a course independent of the UK and will in coming years put in place things that it continental members see as being of benefit to them. Thus the UK will, if it desires, be joining a different EU – it might even have by then a single central bank (obviously not located in London) etc.
I therefore think those who argue pro’s and con’s based on where the EU was when the UK was part of it and where it is now – directly after the UK’s departure are being a little disingenuous.
Excellent article about what is involved with joining/rejoining (not going to argue about semantics) the EU.
Too many, even on the ,”Remain” side still have a UK exceptionalism outlook that thinks the EU should simply roll over and accept us back as before just because some in the UK want it.
The EU members (and any member can veto a UK application) were scared by Brexit and will have no wish to let’s us back in until any chance of a rerun has disappeared. Also, for them, a positive outcome of Brexit has been to kill off anti-EU movements all member countries.
The EEA is a cooperation between EFTA & the EU. As we are notbin the EU & not in EFTA, we can’t be in the EEA. We might be able to negotiate an agreement to access the SM/CU, either formally or informally, but that means we would have to agree to accept all the associated rules (including freedom of movement of workers) and any changes made by the EU in the future.
Whatever road to getting back into the EU we take, it will be hard & long. We need to recognise that and not be fooled by those who say we can get back soon.
Dear me Jeff, US economists have been predicting the downfall of the Euro since it started and it’s still here 23 years later and is much stronger than the pound.
Keep on taking the tablets mate, your analysis is flawed and relies on dodgy assessments by dodgy economists. I imagine you know that Friedman ignored all the data that didn’t fit his theories and he’s not alone in sidestepping inconvenient truths.
Great article and absolutely correct. We must face up to the fact that we are out of the EU and to join/re-join (I am not going to argue the semantics) we need to apply afresh and as part of the conditions for becoming a member again, we will need to accept the conditions of entry as apply now. That includes accepting the Euro & joining the Schengen Area within a defined timetable. As some of the comments show, I am not sure if even all Lib Dems are willing to accept that yet.
What we must get away from is UK exceptionalism (prevalent among former Remainers almost as much as Brexiteers) that thinks the EU will simply do what ever the UK wants. It or its members won’t. Indeed, the big benefit of Brexit for the EU has been to virtually kill of the anti-EU movement across Europe, so there will be no rush to let us back in.
I suspect we will not be rejoining the EU anytime soon but common sense and less right wing bias, should dictate that we have a much closer working relationship than is being revealed at the moment, with our close allies!
@ Mick,
The euro started trading during the mid 90s when it was pretty much the same level as it is now. However the level of any particular currency isn’t an indication of its longer term viability. There are times when the pound needs to be lower to assist our export sector. The problem in the UK is that we have a “higher the better” mentality about the currency value whereas many countries choose to have a lower value, than they could have, to help their export sector.
David Howarth, in an earlier comment, quotes the EU rules as: “……the independence of central banks in Member States, prohibiting direct financing of the public sector by the central banks…” The prohibition of direct financing is hardwired into the EU treaties yet it is routinely flouted by the intervention of the ECB in the bond markets of the deficit EU countries. It buys up Italian bonds, for example, in the secondary market to keep the price in the primary from collapsing.
This is much to the consternation of the political right in Germany who see it as the ECB spending German taxpayers’ money to support the likes of Italy and Greece. So far the German courts have found enough wiggle room to prevent legal cases getting very far.
The surplus countries are accumulating financial assets they can never realise and the deficit countries are accumulating debts they can never repay. So what happens when German taxpayers decide they have had enough?
https://www.euractiv.com/section/economy-jobs/news/german-top-court-rejects-complaint-against-ecbs-bond-buying-scheme/
People who are continuing to assert that new member states *have* to join the Euro please do read David Howarth’s post and link above. Professor Howarth knows what he is talking about.
Notwithstanding my comments re: the EEA I am increasingly convinced we should just call to rejoin the EU rather than any halfway house as it is a clear and easy to explain message.
In one of Mohammed Amin’s comments he gave a link to an article on the Euro in which he states that the USA Federal budget is about 17% of US GDP (25% according to Jeff) while the EU’s central budget is only 1.1% of EU GDP. And he points out that ‘the eurozone has much less scope than the USA for redistribution between regional economies that are performing well and regional economies that are performing badly’. He continues, ‘This means that a poorly performing region is likely to experience extended periods of high unemployment even though there may be unfilled job vacancies in well performing regions in other countries’. This is why it is not a good idea to be in the Eurozone. The Euro would only be acceptable if the European Central Bank was the ultimate guarantors of each nation’s national debt and can create more Euro’s when required like the Bank of England can with pounds , and the limit on government deficits was changed to 3% of GDP plus the expected decline in the economy. (So for example if it was forecast that a national economy was going to decline by 2% next year the national government would be able to run a deficit of up to 5%.)
For me the price of unemployment in the UK for membership of the Euro outweighs any benefits to businesses that export to the Eurozone from being in the Euro. It is nothing to do with nostalgia, it is about how the economy is managed.
I think Peter Martin, Michael BG, are correct. It is not nostalgia it is reality that reveals why it is better to keep the pound.
Funny how some can be so defensive of the NHS, disliking changing it or offering better utilisation of integrated private sector elements, but so radical about tearing up our economic independence in favour of a complete change. This party is conservative with a small c as is Labour often, say on pr or basic income.
Labour under Starmer is now a party of realism and reality on the NHS and EU. As is this one under Ed Davey. If this party returns to its fanatical obsession with how great the EU is and at the moment Labour is obviously doind well, it is asking to be on two or three points in polls.
Why debate that which is not going to happen, for reasons this excellent piece reveals, plus sensible comments.
Gordon Brown’s 5 tests are still the criteria for assessing UK entry to the Euro Gordon Brown’s 5 Economic Test for Joining Euro
I expect Mohammed is right to say there would be no opt out should the UK reapply.
I believe that the EFTA option is the most likely route for reestablishing a more stable relationship with the EU and one that the party should be promoting.
It perhaps it is too obvious to state that we had our currency and much else until we through it away with the disastrous Brexit referendum!
Apologies, should have checked before sending “threw it away”!
@ Peter Martin 23rd Jan ’23 – 4:41pm
You write maybe you would like to write a future article on the merits and desirability of the Euro/ERM. This is a far more important issue. You seem to have an understanding of most of the pros and cons.
Firstly, you last sentence is true. I never exaggerate my abilities, but also do not practice false modesty. As a chartered accountant, an associate member of the Association of Corporate Treasurers, and having spent a reasonable amount of time on formal economics studies, I do believe that I understand the issues. (That is different from being able to predict the future.)
However a proper article would be far longer than the standard length on Liberal Democrat Voice.
As part of earlier responses, I have mentioned my 2012 article “The Euro – Conception, Complications & Prognosis”, but that is just under 2,400 words + illustrations. See the link below.
https://www.mohammedamin.com/Finance/Euro-Conception-Complications-and-Prognosis.html
Despite a decade having passed, I think it still give a good explanation of why the euro was created, risks that were anticipated, unanticipated developments, the eurozone sovereign debt crisis, remedies, and my prognosis. The prognosis has remained valid for a decade, although you will see that I hedged my bets with Greece, but still gave it a more than 50% chance of remaining in the euro, which it has to date.
@Martin 23rd Jan ’23 – 4:51pm
Not advocating but predicting.
The EU will make its own mind up how to respond to any UK application to join.
I am giving you my prediction of how I expect the EU to react. You appear to have read my article as specifying how I want the EU to react.
For our Party to campaign for the UK to promptly apply join the EU would be unwise in the context of current UK politics.
Also our Party’s policy needs to take into account the expected response of the EU to any UK membership application.
@David Howarth 23rd Jan ’23 – 6:05pm
Your quote is fine, but I believe that you have interpreted it incorrectly.
The key provisions is New Member States are also committed to complying with the criteria laid down in the Treaty in order to be able to adopt the euro in due course after accession. Until then, they will participate in the Economic and Monetary Union as a Member State
It then goes on to say what happens until they adopt the euro in due course after accession. It specifies that they will participate in the Economic and Monetary Union as a Member State with a derogation from the use of the euro and shall treat their exchange rates as a matter of common concern.
I suggest you compare the language there with Protocol No 15 of the Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union and the Charter of Fundamental Rights of the European Union (30 January 2015 version) which set out the text of the opt-out from EMU originally negotiated by John Major at the time of the Maastricht Treaty. They are like chalk and cheese.
To summarise, New Member States must commit to adopting the euro. Given the UK’s past history, I expect the EU to be particularly firm in this stipulation, as my article sets out.
Personally I would find it very convenient and useful to join the Euro. For far better currency stability, less ability for speculators causing runs on the currency and shorting it, less bank charges and inconvenience changing money, but an economist friend tells me it removes one or two economic tools, although that means basically debasing the pound by producing more of it, such as QE, or borrowing more and again risking debasement.
But Denmark and Sweden have stayed out of the Euro forever and Poland is no closer to going into it as a newer member. The EU is aware the public sentiments can be trouble and would not push the issue beyond the mañana principle.
After endless austerity, public services falling apart, a lack of pay rises, shortages in shops, supply chains not working for factories, flat GDP and productivity, collapsed exports and investment, people are increasingly fed up with it. I suspect public opinion is ahead of the politicians and it is only FPTP voting and the way the remaining Leave support is spread that keeps Brexit alive, just, for now. It will end.
Part the First
QUOTE
But Denmark and Sweden have stayed out of the Euro forever
UNQUOTE
Is not Denmark effectively in the EURO (but has no say in Eurozone policy) although using Danish bank notes?
Before the EURO, the Danish Krone was pegged to the Deutsche Mark, and is now pegged to the EURO at 1 € = 7.46038 kr +/- 2.25% in the ERM2 system.
For the past 5 years the value of the krone has been kept between €0.1325 and €0.1345 although for most of the time the range has been the in the much closer range of €0.1337 and €0.1344.
In order to maintain the band, the National Bank of Denmark lowers or raises interest rates in tandem with the changes made by the ECB.
The Mises Institute (Austrian School) describes the independence of the Danish krone under current arrangements as only an illusion.
Sweden did not join ERM2 following the Treaty of Maastricht, claiming that it was a voluntary requirement and not compulsory.
Part the Second
It must also be remembered that in order to join the EURO, a member state has to first meet the convergence criteria required. Joining the EU (post Maastricht) indeed requires a commitment to convergence and adopting the EURO but the obligation lacks an enforceable timeline,, hence Poland is still on the journey at a speed of their own choosing.
From the Official web site of the European Union:
QUOTE
The zloty is not yet within the exchange rate mechanism (ERM II).
Poland does not have a target date to adopt the euro, but aims to do so as soon as possible. Adopting the euro is one of the top priorities of the Polish government.
UNQUOTE
A top priority since 2004 and still is nineteen years later; a goal still to be reached sometime in the future …
I would suggest that it is the ability to devalue the currency as well as the manipulation of the interest rates which have been the real reasons why there has been so much opposition to the EURO from the economic naysayers on both the left and right of the political spectrum. Nothing to do with nostalgia about bank notes which have only had the monarch’s image on them since 1960. To get back to that 1950s vibe that is so beloved of Brexiteers, the image of Charles III should not be printed on the bank notes.
@ John Littler,
“……it removes one or two economic tools, although that means basically debasing the pound by producing more of it, such as QE, or borrowing more and again risking debasement.”
No it doesn’t. The ECB has been doing the same thing as the BoE and the US Fed. This has not pleased the German political right as mentioned in a previous comment. The difference is that the BoE and US Fed are at least under the democratic control of all those who use the £ and $.
” The EU is aware the public sentiments can be trouble and would not push the issue beyond the mañana principle.”
The EU cannot wait around for ever. The EU needs to have one Federal government in charge of one currency. This is what works fine in the USA and would work well in the EU too. It isn’t realistic to leave it all to a central bank.
“The Mises Institute (Austrian School) describes the independence of the Danish krone under current arrangements as only an illusion.”
The krone can be decoupled from the euro just as easily as we decoupled the pound from the US$ in the early 70’s – if the Danish Govt chooses to. The loss of independence, caused by any currency peg, although not ideal, is nowhere near what it would be if the krone were to be replaced with the euro.
The petition to have the consequences of Brexit
debated has reached its threshold. Will our MPs take the opportunity?
If our economic woes continue there will be an irresistable desire to rejoin. It will be a matter of survival as a democratic freedom loving country. The actual terms will be negotiable as previously. It will be as much a no brainer as PR is to increase the number of Lib Dem MPs.
“BoE and US Fed are at least under the democratic control of all those who use the £ and $.”
How is the BoE under democratic control? It was specifically made independent so that it could not be messed about with by politicians eager to manipulate the economy to meet electoral requirements. Who did they ask before stepping in to prop up UK pension funds with £60bn? Democracy would not work in this context.
The Federal Reserve is also removed from the political pressures., so why should the ECB be made democratic. That would be counter productive.
Your comment is predicated on the right wing view that the EU is not democratic while western nations are. The EU has a Parliament elected by PR, whereas the Uk Parliament does not reflect votes cast. The EU Council is elected heads of government. But the EU Commission cannot initiate legislation and is their Civil Service. It is appointed by an open process by their elected. Our Civil Service is a lot more closed and secretive.
@Mohammed Amin
You wrote in reply to my post “the EU regards the Switzerland arrangements as so problematical that they are never going to do that again”. Who in the EU has said that? Adhoc arrangements are already being discussed for example re Northern Ireland and other regulatory issues. I don’t see how the size of the country concerned makes much difference to the principle.
@Mohammed Amin
You wrote
“The EU will want to be sure that the UK if admitted to membership is not going to start talking about leaving yet again, and therefore wanting rock-solid evidence of overwhelming popular support in the UK for EU membership.” Agreed. But since there was 67% support in 1975 I wonder what criteria could be applied to satisfy the EU next time. (!) In any case no UK government could conceivably make a move towards membership without an internal referendum. IF – IF there were to be a referendum, there would need to be thresholds set, such as 60% supermajority of the votes cast, or a vote equal to 51% in number of the entire UK electorate. The absence of such thresholds in 2016 due the ‘smoke and mirrors act’ by David Lidington in Parliament in 2015 is the reason why the Brexit farce occurred.
I doubt that adoption of the euro would be a deal breaker for the EU. Sweden joined in 1995… and still using the kronor. What could be a condition is monetary support for the euro/eurozone, something that the UK was specifically exempted from, but may not be so in any new deal.
However, most of this discussion is academic, at least the next UK government is established. I would hope for a LibDem/Labour coalition to get some common sense back into Uk politics.