The Euro will remain a favourite theme of the ‘Leave’ campaign, not the ‘Remain’ campaign, during this referendum, writes Sunder Katwala.
The crisis of the Euro has damaged the European Union’s reputation as a driver of prosperity. The European recovery has underperformed against the UK and other major economies with the overall level of economic activity remaining behind the pre-crash levels of eight years ago, while UK GDP went past its 2007 peak in 2014.
While the Euro was a political as well as an economic project for those who joined it, its design flaws partly reflected the lack of political appetite among Euro members for the level of economic policy coordination that a shared currency requires. Major clashes, particularly between Germany and other member states, have exemplified the difficulties of creating an approach suitable across northern and southern European economies facing distinct economic challenges.
British voters could hardly be any more certain that the UK was right to remain outside the Euro. A pan-European Gallup International poll found British voters overwhelmingly opposed to joining the Euro, by 85% to 6%, while opinion across the 13 countries surveyed was evenly split overall, with 44% preferring a national currency and 42% joining the Euro. It found majorities in favour of the Euro in several countries including Belgium, Ireland and Spain, while a plurality of the public would have preferred to have kept their national currencies in both France and Germany. An important consequence for the British Europe debate is that there is no longer any viable mainstream proposition for Britain to be ‘at the heart of Europe’, certainly in terms of joining the Eurozone core as those 19 countries embark on a further round of integration. That marks an historic shift in traditional pro-European advocacy.
Those promoting Brexit will question the credibility of those pro-Europeans who argued, a decade ago, that British influence depended on joining the Euro. This is a point made by Mayor of London Boris Johnson who says “The people now issuing the bloodcurdling warnings against Brexit are often the very same . . . as the people who prophesied disaster if Britain failed to join the euro. In fact, the opposite turned out to be true.”
If a handful of the most prominent pro-European voices – including Richard Branson, Michael Heseltine and Peter Mandelson – continue to suggest that they have not yet given up on the idea of Britain one day joining the Euro, that will certainly be a welcome gift to those campaigning to leave, allowing Brexit campaigners to try to argue that ‘there is no status quo in this referendum’, seeking to balance the risks of leaving with potential future risks of staying in a shifted EU.
It is no coincidence that the ‘Remain’ campaign have chosen a figurehead in businessman Stuart Rose, who was always opposed to the Euro and will now need to make a virtue of Britain’s semi-detached status. The Prime Minister has argued that he is seeking a new ‘British model’ reflecting a ‘best of both worlds’ approach. The case for ‘Remain’ may turn out to be that joining the Euro core would be too hot for Britain, but leaving the club entirely would risk going too far into the cold outside. This is how Prime Minister David Cameron defined what the new role of Britain in Europe would look like, saying that Britain should “Be in the parts of Europe that work for us, influencing the decisions that affect us in the driving seat of the world’s biggest single market and with the ability to take action to keep our people safe … But we will be out of the parts of Europe that do no work for us, out of the Euro, out of the Eurozone bailouts, out of the passport-free no borders Schengen area and permanently and legally protected from ever being part of an ever closer union.”
Should that case become countered by a post-Brexit plan to seek to safeguard the economic benefits of membership by negotiating a free trade deal, then the boundaries may begin to blur around what Britain being ‘in’ or ‘out’ of a changing EU may mean.
A version of this article appears in How (not) to talk about Europe, published by British Future in January 2016.