In this exchange from 2002 Lib Dem leader Nick Clegg, then an MEP, debates the single currency with Gideon Rachman of the FTby Nick Clegg / January 20, 2002 / Leave a comment
Published in January 2002 issue of Prospect Magazine
Nick Clegg addresses the Lib Dem spring conference in 2010
From Gideon Rachman
22nd November 2001
The euro is a huge economic and political experiment. Nothing like it has been done before so we cannot know how it is going to work out; the only responsible policy is caution.
Why should the British be cautious when our partners have taken the plunge? For good historical reasons. Britain has a political system which has delivered stability for centuries. It has never fallen to fascism or dictatorship. Unlike the French, the British have not been scarred by three German invasions in 70 years. I do not attribute this happy record to intrinsic British virtue-it is probably luck. But whatever the reasons for Britain’s stability, the country has, as a result, less reason to gamble with its political system. And let us be clear. The euro is, as Joschka Fischer says, “a profoundly political project.”
This is not to say that Britain has nothing to learn from the rest of Europe, or nothing to gain from European integration. We can agree about the superiority of Dutch schools, the Belgian health system and French trains. But making the trains run on time is not the measure of the health of a political system. Long-term peace, stability and prosperity are what count. On that score Britain, for all its faults, has an enviable record. For these reasons, it is right to treat a “profoundly political” project like the euro cautiously.
At this point, British supporters of euro entry respond by saying that any talk of the euro driving political integration is only scaremongering. The issues that matter to people, they argue, are the economic ones. So let me explain why I think Fischer is right to stress the political nature of euro-membership-why politics and economics are inseparable.
Some of the consequences of the euro are already apparent; others may emerge later. Let’s deal with what we know. A member of the eurozone will lose the ability to set a national interest rate and will be subject to the budgetary constraints of the stability and growth pact. The lessons of the last 30 years of British politics are that issues such as the level of interest rates and state spending are indeed “profoundly political.” One of the reasons for widespread alienation from the Tory party in Scotland was the feeling that the Tories were running an economic policy that suited a booming south, which needed high interest rates, but was crucifying industry in Scotland. If different views about the appropriate level of interest rates could cause such ill-feeling within a long-established country like Britain, what might they do across the EU? Take budget deficits. In the second Tory boom-and-bust cycle, Britain moved from a budget surplus in 1988 to a deficit of more than 5.8 per cent of GDP by 1993. Such a deficit would smash the 3 per cent limit imposed by the stability and growth pact and-in theory-subject Britain to fines of billions of euros. Try explaining that to your constituents.