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Britain and Its Place Within the Eurozone

Posted: 04/07/2012 00:00

Some time ago, nearly 20 years ago, the members of the European Union, decided to split between those countries that wished to be part of a single currency - the euro - and those countries that did not wish to be part of the euro.

The United Kingdom emphatically decided that Britain did not wish to be part of the euro.

John Major negotiated for Britain a specific 'opt out' from the euro at the time of the Maastricht Treaty.

Successive Conservative Party leaders have made it clear that Britain would never join the euro under a Conservative government.

A sizeable number of countries, including France and Germany, are member of the eurozone.

They are also our neighbours and significant trading partners.

It is not in our interests that the eurozone collapse.

There is a general consensus within the eurozone that for the eurozone to stabilise and to have greater stability in the future there needs to be even greater integration of central tax and spending policies within the eurozone - i.e more centralised decision-taking, greater central control, reflecting one currency and one currency reflecting the need for one tax policy and a single approach to public spending within the eurozone.

Britain is clearly not going to be part of this ever more closely integrated eurozone.

This is going to mean that there will be a number of countries within the European Union outside of the eurozone, made up of

• countries such as Britain that have made a conscious decision that effectively they never wish to join the eurozone;
• newer members to the European Union who may have been contemplating joining the eurozone but had not yet been accepted for membership; and
• the possibility that some countries, such as Greece, which have been members of the eurozone, may for various reasons fall out of the eurozone.

Can the European Union copes with two such distinct blocs?

If so, how do the institutions of the European Union, particularly the Commission, fairly reflect the interests of both countries within the eurozone and countries outside the eurozone.

If not, do the EU member states outside of the eurozone start to have a completely new relationship with the EU Member States within the eurozone?

Somewhat akin to the relationship that EFTA (European Free Trade Association) countries used to have with the Common Market before many of the EFTA member countries joined the EU.

However, in these circumstances, would the UK still nominate Commissioners, attend meetings of the Council of Ministers, and be part of the European Parliament.

Would it be in our interests to help set up a new Trade Association of countries within Europe but outside of the eurozone?

Or if everyone just goes their own way?

What would all of this mean for the City of London?

UK Banking, insurance, chartered Surveyors, Lawyers and other professions, directly and indirectly provide huge numbers of jobs in London and the South of England. What would happen to the City of London if it were to be outside of the European Union?

There are many similar issues.

For the last nearly 40 years, UK agriculture has been based on policies of a Common Agricultural policy. If Britain were to leave the EU, what impact would this have on UK farming and the cost of food?

What is for certain is that at some point in the not too distant future, the European Union is going to look different from that which it looks today.

However, at the present moment, everyone is "doing immediate fire-fighting" on saving the eurozone.

It will only be once the eurozone is stabilised and working reasonably effectively, that it will it be possible for people to give time to working out the shape of a new European Union.

At that point it is clearly going to be sensible for the United Kingdom to negotiate a different relationship with what will be a different looking entity and at that time for Britain to have a referendum on determining Britain's future.

 

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