How the Europhiles plan to dumb down the debate
The director-general's plot is unravel- ling. Adair Turner, the DG of the CBI, is determined to throw his organisation's moral and intellectual weight behind the government's propaganda campaign on the euro. The British people are to be told that business is united in favour of a single cur- rency. There are no remaining questions to answer; there are buses and trains to catch: quick, quick, everyone, or we'll all be left behind. But there are two problems which Mr Turner has not solved. The first is that business is not united; nor are his members. The second is that his organisation has no moral or intellectual authority.
It is not the only one. The Financial Times is a core member of the euro-ramp. Earlier this week, its Lex column tried to deal with the argument that the euro would be worse than the ERM by claiming that the difficulty with the ERM was that we had joined at too high a parity. That is plain wrong: the diffi- culty with the ERM was not the sterling rate, but interest rates. Our membership locked us into an unsustainable relationship with German interest rates and that would have applied at any parity which we could have negotiated with our partners.
But the FT is not only guilty of suggestio falsi; there is also suppressio yen. Ruth Lea, director of the policy unit at the Institute of Directors, is a good writer as well as a good economist; there seems to be no one at the CBI who can do one-third as well. Miss Lea often appears in broadsheet letter columns, with one exception. Over the past few months, she has sent four letters to the FT, rebutting the claim that business is united in support of EMU. None of her letters has been published. That would have been inconceivable under Gordon Newton, Fredy Fisher or Geoffrey Owen, serious editors who relished debate and who would not have tolerated elementary mistakes about the ERM. The present incumbents seem content to dumb down the FT in order to deceive its readership.
The CBI, the government and the Tory Eurosceptics are also engaged in dumbing down. None of them is prepared to address the real issues at stake over the euro: all of them want to keep the debate at the level of soundbite and photocall. This has one amusing consequence. All of these gentle- men insist that they are in step with Europe and that anyone who disagrees with them is ipso facto a purblind Little Englander. Yet over the euro, it is they who are in dishar- mony with almost every other European, whereas the Eurosceptics are in complete agreement. The Eurosceptics insist that the motive force behind the euro is political; that those who favour it do so because it will lead to a federal Europe. Outside Britain, it would be hard to find any sup- porters of the euro who disagree; they would merely find it odd that it is still nec- essary to make such a self-evident point.
To be fair to our Europhiles, they can be acquitted of ignorance. It would be absurd to suggest that they are unaware of their Continental equivalents' aspirations; how could they be, when they share them? They are merely using the same tactic that most British Europhiles have employed for many years: lying to the British people about the consequences of Euro-engagement.
Last week, British interest rates went up, to prevent the economy from overheating. That was necessary in Mayfair, but it may have been unfair on Manchester — not much overheating there — and it certainly was on Middlesbrough, which is still in the fridge. This illustrates one of the disadvan- tages of using a single currency; even in one country, one size will not fit all. But in Britain the problem is manageable, for three reasons. Middlesbrough and Mayfair are or ought to be — bound together by a com- mon patriotism and allegiance. It is also pos- sible for people from Middlesbrough to move to more prosperous regions of the UK in search of work; there is a common lan- guage and, to a degree, a common culture. And if all else fails, there are fiscal transfers; tax revenues raised in Mayfair are redis- tributed to Middlesbrough.
In a European single currency, the prob- lems of making one size fit all would be far greater: the discrepancies are much larger. There would be no common patriotism, lan- guage or culture. If the euro was to work, there would need to be fiscal transfers on an enormous scale; the euro would have to be underpinned by a European fiscal policy. But is it possible to imagine the British peo- ple signing up to European control of taxa- tion? No wonder the Europhiles want to dumb down the debate.
Even on the Continent, doubts have been expressed about the fiscal implications of a single currency. Herr Issing, the chief economist of the Bundesbank, who would obviously prefer a euro without Italy and Spain, has said that the euro could collapse because Europeans would not be prepared to pay enough tax to make it work. But Herr Kohl brushes aside unhelpful advice from economists in the way that Hitler dis- regarded his generals' anxieties: retreat is not an option.
A European fiscal policy leads on to the matter of pensions. From 2010 onwards, in almost every country in continental Europe, the public finances will be under threat because of a growing number of elderly peo- ple, most of whom will be dependent on the state pension. But in Britain, this problem will not arise, because private pensions take much of the strain; the combined value of UK pension funds exceeds that of all the pension funds on the Continent. So if there is a euro, the British youngster about to enter the labour market will spend much of his working life paying higher taxes to reward European pensioners for their and their governments' past imprudence. Will those young people who are all supposed to be uncritically pro-European remain so when this is pointed out to them?
As long as we remain disinflationary and competitive, the euro is no threat to the UK. But euro or no, the economies of Europe will become more integrated over the next few decades. That could put Britain at a serious competitive disadvan- tage. As geography condemns us to higher transport costs and a worse climate, we could lose to the sunbelt nations, where housing is cheaper and — at least in France — the middle classes do not have to beggar themselves to educate their children.
So apart from dealing with education, we must cherish the competitive assets which we possess: a deregulated labour market and relatively low rates of income and corpora- tion tax. Both are already under threat, and when the government signed the social chapter it assisted those in Europe who would like to see our unemployment rates converge with theirs. If Britain joined the euro, we would rapidly forfeit both our advantages. If the British were ready to merge their identity in Europe, our people's new Euro-patriotism could help them to sur- mount the difficulties. But the British are not ready to amalgamate with Europe, as the Europhiles know perfectly well. That is why they claim that the euro is in the nation- al interest. But those who make that claim do not believe in the national interest.