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In judging the merits of EU membership, we should look at the future, not just the present. In particular, can we make it more competitive and less centralised? The crisis in the eurozone and rising euroscepticism throughout the EU mean we are well placed to do this.
This argument, it has to be admitted, is contrary to the conventional wisdom that the eurozone will have to integrate further to solve its problems. Germany, France, Italy and the other countries will then act as a single bloc, with the ability to dictate what happens in the EU without taking account of our interests – even on matters that are vital to us such as how the City is regulated.
But the eurozone probably won't rush towards so-called political and fiscal union. The growth of euroscepticism across Europe means the elites won't be able to bamboozle the people into agreeing more transfers of power to Brussels, as they have done in the past. Political union is also unnecessary because the main problem with the periphery is one of competitiveness. Centralising power and giving hand-outs won't solve that. The solution, rather, is to restore competitiveness and boost productivity by freeing up markets. This is not a pleasant process, but it is beginning to happen in places such as Greece and Spain.
The peripheral countries have to solve their own problems. But the EU can help in four ways: it can complete the single market in services, which is patchy; it can open up Europe's markets to trade with other parts of the world, especially the United States and China; it can help develop a modern financial system based more on capital markets rather than banks; and it can lighten the burden of regulation on business by cutting red tape.
The euro crisis is an opportunity for Britain, because all these things would be beneficial for our economy. Just think how Germany is the big winner from the single market in goods because of its prowess as a manufacturing nation. Extending it fully to services, where Britain excels, could be correspondingly beneficial for us. Or think about what would happen if the EU was less "bankcentric" and relied more on capital market instruments, such as shares and bonds, to channel funds from investors to companies. The bulk of the business would flow through the City of London with its army of investment bankers, lawyers and accountants. More trade and less red tape would help our businesses, too.
The time is ripe to persuade the EU to sign up for such an agenda. Germany's Angela Merkel made clear on a visit to London in early 2014 that she saw Britain as an important ally to make the EU more competitive and less bureaucratic.
There are no good alternatives to membership. We should stay in the EU and put our energy into reforming it. We should fix it, not nix it.