27th January 2016
Love it or hate it, nothing seems to polarise opinion quite like the letters “EU”. Since our entry into the European Economic Community (EEC) in 1973, it is a subject which has divided both opinions and indeed political parties ever since. With a referendum on the subject probably later this year, it has quite rightly been a topic that’s rarely out of the news.
Europe is in trouble. The Eurozone is struggling with low inflation, low growth and the ongoing financial burden of bailouts. Borders are under pressure as tens of thousands of refugees and economic migrants make their way via Greece into the EU and those states on the front line are struggling to cope. Many states within Europe are tightening their borders as a response which calls into question the fundamental principles which the European project is built upon, namely freedom of movement.
When David Cameron started talking about EU reform, he received a hostile reception from fellow EU leaders. As the various crises deepen, the fracture lines are starting to show and more and more EU leaders are coming round to the point of view that the EU needs serious reform if it is indeed to survive, let alone thrive.
Back in the early 1990s, I was studying for the Chartered Institute of Bankers qualification and I was asked to submit a paper on what was then called the ERM (the Exchange Rate Mechanism which pre-dated the “common currency” now known as the Euro). I wish I had kept a copy as my conclusion was that the whole endeavour was doomed to fail and they key would be Italy.
It seemed evident to me that with many different member states all with their own domestic agendas, central banks and fiscal policies, the administration of a single currency would be a nightmare. I believed that unless the European Central Bank was solely responsible for member states interest rates/fiscal policies, budgets, and borrowing/issuing of bonds, the whole exercise would be the financial equivalent of herding cats. Why did I believe Italy would be the key? Quite simply, their economy had many underlying and deep-rooted issues and the sheer size of the Italian economy meant there may not be the money (or the political will) to fix it if it all went wrong – you just need to look at the recent problems in Greece and multiply that by an order of magnitude or two.
Where does this leave the grand European project? I think we’ve come far too far and far too much has been invested for it to fail. It is likely that the Eurozone is the first of many steps that would ultimately end up as a federal superstate. This prospect is clearly horrific to all eurosceptics, but here’s the question….should it be?
Now, Brussels hasn’t exactly covered itself in glory – you only have to remember the ridiculous legislation on how bendy various fruit and veg can be. Those closer to home will lament at the demise of British culture and the ultimate surrender of our beloved British Pound should we remain involved. When you also factor in that many EU institutions have been accused of being undemocratic, its little wonder feelings are running high.
We really have to look at the bigger picture as the world has changed almost beyond recognition in a generation. The digital age has meant that we have markets without borders, with information available at our fingertips at a moment’s notice – everyone can find a voice on the internet, especially the nutters (when I was a kid, Trolls were something that hid under bridges in fairytales, not spouting hateful nonsense on the internet)! Human conflict has evolved beyond the traditional battlefields of the 20th century and we now find ourselves in pitched battles against extreme ideology and cyber-attacks. There is something to be said for strength in numbers.
Look to the east and you have Vladimir Putin and his annexation of Crimea (substitute “Sudetenland” for “Crimea” and the historic parallels will chill you to the core) – could we witnessing the birth of Soviet Union v2.0? Look to the west to see a special kind of crazy going on in the race for the presidency – I’ve never witnessed a debate in Parliament before about potentially banning a US presidential candidate (you’d have to ask who Trump would have as his Secretary of State should he get elected – Jeremy Clarkson perhaps?).
In all seriousness, the pace of change in the world is accelerating and we need to be ready to evolve to meet the new challenges we will face in the decades (and more) to come. I firmly believe that the UK belongs in the very heart of Europe where it can make a difference. The UK acts as a bridge between Europe and the US and like it or not, we need NATO now more than ever. What about British cultural identity? Look how this country has changed in the last 100 years – we have constantly adapted and I believe the cultural diversity that exists in this country has become one of our greatest strengths. Remaining as a key player in Europe won’t mean we’re any less British – we’ll just be European as well.
Of course major reforms are needed and quickly, but I believe recent events mean that there is far more political will across the continent to effect positive change. Of course it will be challenging and at times painful, but growing pains always are. It will of course be our generation that has the hardest time adapting, but what’s a single generation in a historical timescale?
May you live in interesting times indeed!
Please be advised that all views expressed in these posts are those of the author and not of James Rosa Associates ltd.