Euroscepticism has become the intelligent option ?

http://www.timesonline.co.uk/newspap...151186,00.html

Focus: UK PLC is top dog - who needs Europe?
Those who stand against EU federalism are cast as Little Englanders,
too dim or prejudiced to be taken seriously. But, says David Smith,
they are right. Britain is better than Europe. Euroscepticism is the
intelligent way ahead



In his Whitehall office, a cabinet minister was bemoaning the fact
that the government does not get enough credit for cutting
unemployment — which last week dropped to 860,000, its lowest
for nearly 30 years.
There have been plenty of articles, it was pointed out to him, that
contrast Britain’s low unemployment with the high jobless totals
in Europe.



His response was illuminating. “That’s not good
enough,” he said. “Doing better than Europe is easy. The
real compliment would be to say that we’re doing better than
everywhere else.”

Such a response would have been unthinkable even five years ago. A
decade ago it would have been regarded as the height of absurdity. But
it is true and it represents — more than anything else —
the reason for the profound shift in Britain’s attitudes to
Europe.

After last weekend’s strong performance by the UK Independence
party (UKIP), in which it took 16% of the vote and 12 seats in the
European parliament elections, the pro-European Union lobby has been
desperately looking for excuses.

UKIP’s elected members of the European parliament, all white
middle-aged men aged between 50 and 65, appeal, it is said, to
Britain’s “golf club tendency”: men in blazers still
harking back to the war. Perhaps this month’s D-Day
commemorations set them off. Add a perma-tanned former television
presenter who has made some explosive comments about Arabs and the
lure of UKIP to Little Englanders is irresistible, but will fade as
quickly as it emerged.

Or, to take Tony Blair’s favourite tack, the people of Britain
have fallen prey to the lure of the Eurosceptics because of
“unrelenting” Fleet Street misreporting of Brussels.
Voters, according to the prime minister, have been fooled into
genuinely thinking that the EU will give us straight bananas,
compulsory driving on the right and the replacement of the Queen as
head of state.

It is, of course, complete nonsense. Polls show that a hard core of at
least 25% of people would vote to withdraw from the EU and that
“softer” Euroscepticism — stay in but limit
Europe’s powers and influence over Britain — is also
rising. The real surprise was not that UKIP did so well but that it
did not do better.

The message of these polls is quite straightforward. The pro-EU lobby
would want to paint opposition to Europe as the preserve of the
uneducated who, if they could only find out properly about Europe,
would be much keener on it. But the reality is very different.

Euroscepticism has become the intelligent option. There is nothing
irrational about it. For the first time in half a century, Britain is
doing demonstrably better than the rest of Europe. It used to be that
we feared missing out on prosperity by not integrating more closely
with Europe.

Now the rational worry — which applies to both the constitution
and the euro — is that we will risk prosperity by entangling
ourselves more tightly with Europe.

Britain’s unemployment rate, on a comparable basis, is 4.8%,
against 9.4% in France and 9.8% in Germany. Unemployment stands at
under half the EU average.

Per capita gross domestic product in Britain, according to a new
report from Capital Economics, is higher at $30,200 (£16,440), than
Germany’s $29,200 or France’s $28,500.

The economic momentum is with us. Britain has been growing
continuously for 12 years, during which time other EU countries have
suffered at least one recession and in some cases two. The sick man of
Europe has made a remarkable recovery.

“The divergence in economic performance between the main
continental economies and us began about 10 years ago and will
continue for the foreseeable future unless we get dragged down by the
constitution and the charter of fundamental human rights,” said
Ian Milne, a businessman and author for the think tank Civitas.

The contrast with Britain’s shaky economic past during the
painful dismantling of empire, sterling crises and strikes could not
be more stark. International businessmen, says Milne, now regard
Germany as a “flyover zone” and France, despite a few
niche opportunities, as an overregulated “nightmare”.

In a policy that would have been regarded as dirigiste in Britain even
in the days of prices and incomes policies, Nicolas Sarkozy,
France’s finance minister, has ordered the country’s
retailers and their suppliers to cut prices by 3%.

The CBI, once regarded as unquestioningly pro-EU, is increasingly
critical. “The model that took the EU through the 1950s, 1960s
and 1970s is now failing the people of Europe,” said Digby
Jones, its director-general.

“It is not British arrogance or Little Englander to say this.
Britain has taken some very hard decisions over the past 25 years,
both the Tories and Labour, and these policies have delivered the most
successful economy in Europe.

“I don’t blame anybody who says, ‘We’re not
going to give up on this’. So much of what I see coming out of
Brussels wants to take us back to 1970.”

The recognition that Britain has turned the economic tables on Europe
is starting to go deep. Even for voters sceptical about the claims of
governments, there is a recognition that the attraction of Britain for
migrants, while it may have a bit to do with benefits and lax
controls, has a lot to do with the strength of the job market in
contrast with most other EU countries.

“The argument is not a negative one about Europe; it is a
positive one about the UK,” said Gerard Lyons, head of research
at Standard Chartered, the international bank.

“We have proved that we can set economic policy to suit our own
domestic needs. In a global environment where competitiveness is
vital, it is clear that the European economic model is not
working.”


INTELLIGENT scepticism about Europe, based on economics, does not
imply that everything is perfect about Britain. We know we have some
of the worst football hooligans in Europe.

When Matthias Matussek of Der Spiegel, the German newspaper, wrote two
months ago of Britain being a “troubled nation”, with
understaffed hospitals, drunken brawls reaching epidemic proportions
and an island with “more delinquents, more queueing patients and
more gymslip mums” than ever, we can recognise elements of truth
amid the hyperbole.

But we can also see the sour grapes from a writer who happens to be
the brother of the German ambassador. The Thatcher revolution
apparently “removed the nation’s core” and made
workers “dispensable”. But employment in Britain is at
record levels, unlike in Germany.

Many EU countries have better public services and transport systems
but some of that, too, is starting to change. Health systems are
beginning to creak in some countries and in others are being pared
back. Germany, for example, is introducing charges for GP
appointments.

Not only that, but the time is fast approaching when Blair will have
met his commitment to match health spending to the EU average. The
intelligent sceptics among voters also know that public services do
not pay for themselves. The more that Europe struggles economically,
the more difficult it will be for governments to sustain services and
maintain the infrastructure.

The European commission’s own surveys bear out the shift in
attitude. Brussels has been publishing twice-yearly surveys of public
opinion in member states since the 1970s. One of the standard
questions asked is whether people think of the EU as a “good
thing”.

In 1975, the year Britain voted “yes” in Harold
Wilson’s referendum on staying in the old European Economic
Community, 50% of people thought Europe was a good thing. That
proportion slipped back sharply after Margaret Thatcher’s
election in 1979.

After that, and despite her frequent clashes with fellow European
leaders and with Jacques Delors, the commission’s feisty
president, it rose during the rest of the 1980s.

The high watermark of pro-European opinion in Britain came at the end
of Thatcher’s time in office and the start of John Major’s
era, when it reached nearly 60%.

In 1989 interest rates in Britain had soared (they were on their way
from 7.5% to 15%) and house prices were starting to crumble. Salvation
appeared to lie in joining the European exchange-rate mechanism (ERM),
and getting a taste of Germany’s low interest rates and
inflation. But Thatcher was blocking the way.

She was also taking an increasingly Eurosceptical tone. Tory
advertisements for the 1989 European elections featured a plate of
steaming sprouts and boasted that the government would not let the
country live on a “diet of Brussels”.

Thatcher’s great obsession was with Germany. The last of a
generation of politicians who had lived through the second world war
as an adult, she was beset with enormous doubt after the collapse of
the Berlin Wall in October 1989. One part of her wanted to celebrate
the West’s victory over communism. The other was obsessed with
the rise of a German “Fourth Reich”, a united Germany,
economically powerful and politically dominant.

She assembled a group of experts, including Hugh Trevor-Roper, Norman
Stone, George Urban and Timothy Garton Ash, to brief her on Germany at
a day-long seminar at Chequers. None predicted that German unification
would mark the start of a period of pronounced relative economic
decline for Germany. Most said Germany had changed markedly in 40
years of democracy and would no longer throw its political weight
around in an aggressive way.

That was not what Thatcher wanted to hear. The note of the meeting,
drawn up by Charles Powell, her foreign policy adviser, spoke of a
Germany with national characteristics that included
“aggressiveness, assertiveness and bullying”.

Underlying it was a profound economic fear. During the long post-war
German economic miracle, Britain had got used to playing second
fiddle. Unification, it was feared, would turbocharge the already
powerful German economy. Even after a decade of Thatcherism, the
government was afraid of the European economic challenge.

Thatcher was out of step with public opinion. Soon after the Chequers
summit Nicholas Ridley said in an interview with The Spectator that
European integration was “a German racket to take over the whole
of Europe”. The magazine’s cover featured Helmut Kohl, the
German chancellor, with a Hitler-style moustache. In the outcry that
followed, Ridley was forced to resign.

At the time of Thatcher’s obsession, 52% of people thought
Europe was a good thing. In the Euro elections of 1989, the Tories
lost to Labour in a national vote for the first time since 1974. The
protest vote that year went not to a withdrawalist party but to the
Greens, who got 15%.


THE pro-European swing continued as the Tory boom of the late 1980s
turned to spectacular bust and Major, who had declared his aim of
putting Britain at the “very heart of Europe”, succeeded
Thatcher. Major, as chancellor, had succeeded in taking Britain into
the ERM in 1990.

This decision, with the overwhelming support of business, public and
media opinion, was the ultimate recognition of European economic
superiority. “We were saying, in effect, that we could not run
these things ourselves so let’s hand it over to Germany,”
said one senior Treasury official of the time.

For two extraordinary years, the most important decisions affecting
Britain’s economy were taken in Germany. Every fortnight,
anxious eyes would turn to Frankfurt and the interest rate verdicts of
the Bundesbank. If the Bundesbank raised rates it was bad news for
Britain. If it cut, mortgage rates could come down here.

Thatcher, dangerously obsessed with Germany’s economic might,
had by conceding ERM membership in one of her last acts as leader made
reality of it. Britain’s economic subservience to the German
economic giant was, it seemed, set in stone.

Even at the time there were signs that things were changing.
“Whether it was Mrs Thatcher or something else, Britain stopped
falling behind Germany after the second oil crisis of the late
1970s,” said Martin Weale, director of the National Institute of
Economic and Social Research.

Not many people believed it. Under Major and the ERM, Britain suffered
her longest recession since the war. Falling house prices,
repossessions, negative equity and soaring unemployment were in sharp
contrast to Europe’s stability and prosperity. In 1991, the
depths of Major’s recession, 57% of people in Britain thought
Europe was a good thing.

By the time Major left office in 1997, after his battles with his own
party and after Germany’s unification boom had turned to bust,
only 36% of people thought Europe a good thing. Now, according to the
latest Euro-barometer, published last month, only 29% of people are
positive about Europe, the same proportion who are actively against
it.

The catch 22 for the government is that history suggests that we would
become more positive about Europe only if we suddenly started doing
more badly here. The better the British economy, the worse Europe
looks.

How do we square this with the fact that Britons seem keener than ever
to live there? A survey earlier this year showed that a third of those
planning to buy property in Europe were doing so because they had
“had enough of life in Britain”. Television programmes
such as A Place in the Sun and Get a New Life are popular enough to
suggest that a new life in Europe appeals to many. With 1.4m
properties abroad, Britons are the largest second home owners in
Europe.

Relatively few of those who quit Britain for Europe are doing so for
economic reasons. Some have set up businesses, not always
successfully. Some have moved for career reasons. Most, though, do so
on retirement or because they have earned enough to quit work early.

Jacques Attali, former adviser to François Mitterrand when he was
president of France, once warned that in the 21st century Europe could
turn into a “Venetian continent”, in which it would be
“visited by millions of Asians and Americans and inhabited by
tourist guides, museum caretakers and hotel keepers”.

His warning, intended to be a wake-up call, appears to be the
motivation for a lot of the Britons who move there. Many European
countries have more space, cheaper properties and a more relaxed
lifestyle than in Britain. You would not, however, want to do business
there.

People used to want to retire to Cornwall, drawn by pleasant
surroundings but with not much of an economy beyond tourism. Now they
appear to view parts of Europe in the same way.

Is all the talk of Britain’s superior economic performance
merely a flash in the pan? Will it all come crashing down under the
weight of £1,000 billion of debt and an overvalued housing market, so
that the European tortoise trundles serenely beyond us once more? The
answer, almost irrespective of what may happen in the next two or
three years, is that long-running economic trends are firmly against
most of the big economies of the EU.

A study published by Makinson Cowell, the City consultant, points up
the grim consequences for Europe of falling fertility rates and
greater longevity. By 2010 the EU’s working-age population will
have begun a permanent decline.

“Over the next 40 years the working-age populations of Germany,
Italy and Spain will all fall by a third,” said Christopher
Smallwood, chief economic adviser to Barclays Bank and one of the
report’s authors. “And it will just not be possible to
make up the difference through immigration.”

France is worse off than Britain but in a better state than the other
big EU economies and has for several years confortably outperformed
Germany. If Thatcher were to repeat her exercise today, she would
invite French, not German, scholars to Chequers.

Rising population is a key ingredient of economic growth. The
EU’s own projections suggest that economic growth in Europe will
be only half that of America between now and 2050. Projected forward,
the EU’s share of global gross domestic product will slump from
18% now to just 10% by the middle of the century, while
America’s share rises from 23% to 26%. Europe is becoming an
economic backwater.

France’s Institute for International Affairs, in a report for
Pascal Lamy, the EU’s trade commissioner, concluded that Europe
was heading for “the exit ramp of history”. Faced with
competition from fast-growing China and India, Europe will be left
behind.


THE world is tilting to the east. As a trading nation, Britain has
prospered from going far afield before. That, barring a sudden and
unlikely shift in economic trends, is where the future lies.

Where does intelligent scepticism take us? Most would stop short of
the UKIP line. Studies suggest that the impact of withdrawal could be
modest and might even produce net gains for Britain. The pro-European
argument that more than 3m jobs would be lost if we left the EU is
based on the ridiculous notion that all trade with European countries
would cease and there would be no diversion of trade to markets
elsewhere.

However, the economic argument in favour of some loosening of ties and
certainly no further integration is a powerful one. Faced with the
challenge of competing with China, India and America, the EU begins to
look like a millstone — and an irrelevance. Anglo-Saxon
economies — Britain, America and Australia — are
outperforming Europe.

“So much of what has been happening in Brussels this weekend is
about whether France can get one up on Britain or vice versa,”
said Jones. “But the big fight is against India, China and
America, and that is being ignored.”

Blair, like Major, insisted that he would put Britain at the heart of
Europe. Since then he has lost the battle with Gordon Brown, his
chancellor, over the euro, split with France and Germany over Iraq and
infuriated his EU partners by insisting on “red lines” on
the constitution.

Perhaps, rather than dismissing the Eurosceptics out of hand, as he
did last week, he should recognise that that is where his natural
— and intelligent — constituency lies.

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