The idea of the UK at the heart of the EU is bizarre, writes Münchau in his FT column. His overall conclusion is that the discussion about EU membership is about barely visible shades of grey.
Should the UK remain at the heart of Europe? If you believe that this is where the UK is actually located, then the answer may well be yes. But then you would either look at it from a very long distance – the US state department for example – or suffer from perspective distortion.
Looking at this from inside the EU, the UK left the heart of Europe 20 years ago when John Major negotiated the opt-out from the euro. Tony Blair confirmed that position when his government took the opt-out in the later 1990s. It is completely unsurprising that there is now a debate inside the UK about membership. People are asking themselves a perfectly logical question: since we are not in the eurozone, nor likely ever to become a member, what is the point?
In macro-economic terms, EU membership is virtually irrelevant for a Member State that is simultaneously large and not in the eurozone. The EU budget is tiny, and free trade and free capital movement would continue under any conceivable scenario. There may be reasons to stay in the EU, but whatever they are, they are not macro-economic.
If you go one level down – to the level of individual industries, including finance – the impact of EU membership is more subtle. But here it is important to take a realistic look at how the EU itself will develop in the next 10 years, and not romanticise the liberal, free-trade EU of the past, when Mario Monti or Lord Brittan were still European commissioners.
I doubt that EU membership could ultimately protect the UK from an inevitable eurozone power grab. A single market in a single-currency regime is a very different beast than a single market in a customs union. In the first category the purpose is adjustment of wages and prices; in the second it is free trade. Italy needs a single European labour market. The UK does not.
What, then, would the UK leave behind by leaving the EU? Membership confers a series of fundamental freedoms – of movement of labour, goods and services and capital. Member States are part of a customs union and, of course, an unfinished single-market project, one that has stalled long before it has been completed. Britain may be able to maintain several of these benefits: not the customs union, but most of the rest.
The best reason to stay in the EU is not a pretence to be in the heart of Europe, but to keep things simple, and maybe to have the flexibility to change one’s mind about the euro later on – if the political or economic situation were to change. But in that case, the UK could always be readmitted, so even that is not a compelling argument.
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