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A liberal case for scepticism of the EU
Samuel Brittan The Financial Times 28/09/12

Since anything that can be mis­understood will be misunderstood, I must start with some disclaimers. I am not urging the EU should end. Like the Holy Roman Empire, it may spend many years in gentle decline doing little good and little harm. Nor am I urging that the UK or any other member state should leave the EU. What I am saying is that the EU no longer deserves the devotion of practical idealists. When voices in Paris or Berlin say the answer to any problem is "more Europe", by which they mean more centralised power to EU institutions, we should turn a deaf ear. And when some leaders say that "without the euro there is no Europe" we should shrug our shoulders and look at an atlas to reassure ourselves.

Although there was always a strong federalist element in the background, the post-1945 European movement began in earnest with the Schuman Plan, designed to integrate German and French coal and steel industries so that war between the two countries would be impossible. There followed the common market, designed to free up trade in western Europe; and I can remember urging Harold Macmillan, the British prime minister, to get on with his application to join. But as time went on, the EU, as it became, acquired more and more ambitions and a whole cadre of eurocrats developed, concerned with increasing EU power and influence for its own sake. At this point they lost me.

In recent economic policy it has achieved the worst of both worlds. It has constructed a network of regulation and red tape, of which business rightly complains. But it has combined this with highly restrictive macroeconomic policies, suggesting that the Bourbons in charge have learnt nothing and forgotten nothing from the catastrophic experiences of the 1930s.

Mario Monti, the "technocrat" now leading Italy, has said that his role model is Luigi Einaudi, the distinguished anti-fascist economist who became the country's second president after the second world war. But in Einaudi's time the world was a seller's market; and a courageous government only had to restrict home demand for buyers to come to its doorstep. Today such orthodox policies would have to be accompanied by a free exchange rate, ruled out by the euro.

Let us, however, continue in a lower key. The UK National Institute of Economic and Social Research recently published growth estimates for the EU showing no rise this year and 0.9 per cent for 2013. For the eurozone they showed rates of minus 0.4 per cent and plus 0.5 per cent respectively. For comparison global estimates are in the 3-4 per cent bracket. These may be swollen by high-fliers among emerging economies such as China. But even the US and Canada are shown with growth rates just above 2 per cent. The EU is also shown to be lagging in earlier years. And, for what they are worth, the forecasts show the gap increasing in years ahead. Nor by way of compensation are inflation rates any lower than the average of the OECD - if anything they are slightly higher. But to be fair they are slightly lower than the UK has achieved recently.

Tim Congdon, the economist, has estimated that EU membership costs equivalent to 10 per cent of UK gross domestic product. This should not be brushed aside because the research is published by the UK Independence party, for whom Mr Congdon stood at the last general election. The biggest losses are shown to be the "costs of regulation". But the next biggest item is said to be the costs of resource misallocation, no longer mainly the common agricultural policy, but other backdoor protection. However I disagree with Mr Congdon in attaching a negative to the free movement of labour in the EU. This is a gain in human rights terms, not expressible in terms of GDP. Such free movement does not apply across the Atlantic nor the Commonwealth. It should be preserved in any future, looser UK-EU arrangement.

But the most devastating case against the EU's direction of movement is provided unintentionally by a federalist MEP, Andrew Duff, in a Policy Network booklet "On Governing Europe". His object is to try to make sense of the complex network of bodies, policy chiefs, bailout funds, international agreements and much else that has emerged since the financial crisis. He makes a man-sized attempt and remembers to mention the idiotic commitment to balanced budgets. The author hopes yet another treaty revision conference in 2015 will make sense of these arrangements. Anyone who supposes that this rigmarole will advance the welfare of Europe's citizens is an optimist indeed; and Mr Duff has little hope of convincing his fellow Brits, as his last few pages explain how the UK can remain honourably on the sidelines.

But of one thing I am sure. I know the language of intolerance and authoritarianism when I hear it. Words such as unthinkable, unmentionable and undiscussable are hurled at anyone who dares question EU orthodoxy, not only on the euro. Even if everything else in this article is wrong, EU intolerance of criticism is enough to turn me off the project.


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Published on www.samuelbrittan.co.uk
Contact - samuel dot brittan at ft dot com