It seems weird now, but there was a point during those heady early days of the Blair government when it seemed possible that Britain would join the Euro at its launch. Nobody had done much of the technical preparation, but it seemed plausible that the government would announce its intentions and everything would swing into place. We now think that would have been an awful decision, but would it have been quite as catastrophic as the consensus would now have it?
If the UK had been part of the Eurozone from the outset, the Eurozone would have looked very different. The UK is the second or third largest economy in the EU, so what happens in the UK would have been of interest to the policy-makers in Frankfurt. The first few years would have been quite tough, probably, because money would have been too tight. Back in those days, UK interest rates were significantly higher than those in Germany et al.. Our boom would have been much more bubbly, or the government would have had to try and hold it back with fiscal restraint, or perhaps a bit of both. But Euro interest rates would have started to catch up if Britain's inflation rate had started to take off, albeit not as responsively as under an independent monetary regime.
Ireland's boom and bust might not have been quite as bad if the UK had been included. Spain's boom might not have got so quite out of hand. Overall, the EU economy might have done quite a bit better if Eurozone rates had been higher, earlier. When the crash hit things would have been dire, of course, but perhaps the UK would have been arguing for looser money sooner, so we may not have had quite the same tight-money-led depression that has engulfed Spain and others.
Despite the facade of virtue of Brown's famous five tests, at heart of his veto on Euro-membership was the Chancellor's political ambition. He knew that the treaties would hold him in check when it came to election-winning spending sprees. While he preached "prudence for a purpose", Gordon Brown was (as we know now) planning a massive expansion of the British state. Brussels would have soon been criticising and even censuring Britain for its profligacy. Who knows quite what the outcome might have been, but even if spending had been a couple of percentage points lower in the run-up to the crash we may have been in much better shape to deal with it.
Why am I doing a post about joining the Euro when there is basically no prospect of it? Because the lessons of outsourcing economic policy to the EU still implications now. We keep hearing that the UK government cannot bail out Port Talbot because of EU rules, both on external trade and internal state aid.
The state aid rules are basically a British imposition on the rest of Europe. They absolutely make sense. The alternative would be a constant competition between members of the single market to undercut each other with subsidies and preferential treatment. The current setup is a victory for Britain, so how ironic that many (even on the supposed "right" of politics) are calling for state intervention in the steel industry. Thank goodness that it is all virtue signalling, for nothing much can be done while we are bound by the EU rules.
This is the best single reason I can think of for staying in the Union. To get our childish politicians from making absolutely horrendous decisions, just to meet the needs of today's news cycle.
The second best reason is to have the weight of the biggest consumer market behind you at the trade tariff negotiations. Nobody would say that the EU is brilliant at negotiating trade deals, but when China slaps on protectionist tariffs what better leverage than to be able to respond on behalf of 500 million prosperous consumers?
Then there is TTIP, which looks like it ought to create a huge planet-spanning single market with the US and EU at its core. I have briefly looked at the trans-pacific deal which includes the US, Aus, NZ, Japan, Malaysia and others. Despite what the lefties tell you, it is mostly perfectly reasonable. If minnows like Kiwiland can do it, think how much stronger the EU's hand is in those talks. TTIP and TPP combined basically creates a massive single market with sensible membership. We basically get the "Anglosphere" economy which Hannan et al. have been calling for, but get to carry on popping over to France when the cellar gets a bit empty. This is the bigger picture.
So what we should do after we have voted strongly to stay In (which is what is going to happen), is to ignore the inevitable whinging from the cyberkippers, and crack on with embracing reality. We should start with closing down the national institutions which double-up with continent-wide ones. In one of the areas I work in, we have an EU agency and 28 national agencies (OK, not quite, because the Benelux countries have a joint office). The EU agency sets its fees deliberately high so as to maintain demand at national level. So not only are taxpayers supporting a massive duplication of effort, businesses who use the central agency are paying well over the cost price for doing so. By getting rid of the national agencies we would all save twice. In other areas there are massive barriers to intra-EU trade where national regulators - whether deliberately or not - protect incumbents.
We should join the Euro, and convert the Bank of England into much needed flats. We could have a clear-out of Westminster and free up office space and infrastructure capacity for productive businesses. We could slash red tape and "gold-plating" by simply legislating for Directives to have direct effect. Government efforts in Brussels negotiations could be redirected from trying to opt out of individual measures to making the whole system itself work better - and goodness knows the system needs to be improved. Instead of nationalising policy areas, we could push for the sorts of market-based reforms which were so successfully implemented in the 80s and 90s. Imagine, for example, if we could get the other 27 countries to copy our employment rules. Think how much more dynamic the continent would be and thus how much better the UK economy would perform. We could push for a sensible EU-wide welfare and pensions regime to make it much easier to move our jobs and homes and investments about. Starting from scratch would be a boon for every member state, and the whole thing could be put on a much more sustainable footing.
The future in a properly-constructed EU, trading freely with our prosperous allies around the world, could be bright and free.
So let's stop playing the underdog, and (re-)embrace our place in the world as leaders.