Europe is a question of heart, not head

Politics is in one of those in-between moments. Last week, the local elections, tomorrow, the state opening of Parliament and the Queen’s speech, and today—a gap. Filling today’s gap is the question of Europe. Will Ukip’s electoral success force the government’s hand? Will Cameron respond by offering the electorate a date—or even a rough timescale—for a vote on EU membership?

Today Nigel Lawson became the most high profile Tory to speak out on this point, writing in the Times on the pressing need for Britain to leave the EU as soon as possible.

It is intriguing to read Lawson’s comments, both for what he says, and what he does not. He makes a familiar, and eloquent, case for departure—but his argument contains a number of large and highly significant assertions. The EU is bad for the City. The EU produces too much red tape. The EU’s bureaucracy imposes costs on member states. The EU is un-democractic.

One or all of these arguments, common among eurosceptics, may be true. The trouble is that they are conjecture. They are not subject to verification. It is impossible to quantify, for example, the effect that the EU has had on the City. It is a common refrain that European rules are tedious and ill thought-out. But if the new European banking regulator, which is based in London, has damaged the banks located here, how can its “cost” to the City—and hence to Britain—be judged? The Alternative Investment Fund Managers Directive, a piece of EU legislation that seemed aimed directly at London’s hedge fund industry, has done little to quell its vivacity. Similarly, “Basel III,” a series of rules on how much money banks must set aside to protect themselves from sudden shocks, is set by an independent oversight authority, hits all banks with equal force, and does not single out the City for special treatment. Can any measurements be taken that yield an economic cost to the UK of any of this?

Anecdotal evidence from speaking to financiers is that new rules imposed by the FCA, Britain’s new financial regulator, which earlier in the year took over from the FSA, are giving City organisations much more trouble than anything imported from the continent. (It is worth recalling that the FCA is a creature of the present, Conservative-led government.)

The pro- and anti-EU membership arguments tend to be presented as rock solid and factual in nature—but they are not. In essence, this is an argument concerned with identity and hence one founded on emotion, not reason. That is why even the arguments of the most thoughtful commentators, such as Lawson, are full of assertion. As Nigel Farage has recognised, for Britain, Europe is a question of heart, not head.