The project at this week’s European summit is to rebuild the economies of the entire continent. And Britain, as one of the big four, should be right in there – signing up to the new rules, helping to rescue our fallen comrades and securing the single market we all need in Europe.
The fact is that nearly everyone has broken the fiscal rules that they all agreed to at Maastricht in 1991 – especially over recent years, as they struggled to contain the banking meltdown and the world recession.
The rules insist that budget deficits be less than 3 per cent of gross domestic product (GDP) and that government debt be less than 60 per cent of GDP. According to the European Union’s latest figures (2009–10), only Germany of the big four has stuck to the 3 per cent rule. France had a budget deficit of 7.5 per cent, Italy 5.3 per cent and the UK 11.5 per cent.
On the size of the national debt, the figures reveal that Germany had a debt of 83 per cent of GDP, France 82 per cent, Italy 118 per cent and the UK 79 per cent.
So none of us is perfect. Well, none of the big boys. Some of the smaller countries have behaved themselves – Poland, Sweden, Croatia, the Czech Republic. Others, like Greece, Iceland and Ireland, have not.
It may be that the golden rules are too strict, as golden rules often are. And it looks like they will be interpreted gently, even under the new measures to be agreed in Brussels on Friday. But, looking over the wasteland of the European economies over the last three years, we are now rueing the days we ignored the golden rules entirely.
It brings us back to what the European Union – and its euro currency – is for. It is to try to make life better for ordinary citizens across the continent. They all want much the same things: peace, a job, a decent standard of living, a good home, good schools, a public health service and a fair society. A common market and good government can help them achieve these fine aims.
No one wants a Europe that is unstable, has a poverty-stricken southern fringe, where countries race each other to the bottom with devaluations, low wages, poor public services and where only corrupt officials and the super-rich flourish.
So far, so good – but then a troublesome concept enters, stage right, like the bear in A Winter’s Tale. Sovereignty. David Cameron does not want to hand sovereignty over to Brussels. Like an ancient king, he appears to believe it is his, or at least the Tory party’s. I thought the modern world had finally established that sovereignty belongs to the people and can be pooled, to our advantage.
Pooling sovereignty in the European Union has brought us great advantages: peace, prosperity undreamed of in the 1950s, a common market, a common currency which 60 per cent our exporters use, and a set of minimum standards for business, labour, agriculture, the environment, etc. There are some things you cannot do in these days of globalisation without a larger union: establish a minimum wage, levy tax on aircraft fuel, introduce a transactions tax, stamp down on tax havens, tackle climate change.
At the same time, there have been some efforts to balance this centralising force with the principle of “subsidiary” – passing decisions down to as local a level as possible. Hence devolution. (Admittedly, there is an unsettled will over how far that should go.)
For all these reasons, I don’t think standing back from the European project is a wise option. Making the euro zone strong again is in Britain’s interest because it is such a huge market for around a third of our economy. We may, after all, have to join the euro one day. The speculators may come for us next. Our economy is not exactly flourishing, with 8 per cent unemployment, 5 per cent inflation, growth almost non-existent, the public services being cut, and manufacturing and exports flatlining (despite the devaluation of the pound).
And as for a rewriting of the treaty and the threat of referendums across Europe, what is being proposed by Chancellor Merkel and President Sarkozy is not so much a rewrite as a re-emphasis of the agreements already reached at Lisbon and Maastricht. The new Brussels deal is simply a calling-to-order of Europe’s political leaders who have so far shambled their way through the bankers’ recession and let their peoples down.