Last night I went to a meeting of the Bruges Group at the Foreign Press Association which is housed in Gladstone's old house in Carlton House Gardens. In the very room where the Grand Old Man once conducted occasional cabinet meetings, Professor Tim Congdon and John Redwood were scheduled to speak on the place of the Euro in the current economic crisis.
Well, except they did no such thing. All Tim Congdon did was point out that different countries in the Euro zone have different interest rates from Germany and that the UK was very lucky not to be involved. As to actual thought or justification for this "luck", well none came.
John Redwood, hotfoot from the House of Commons, was next up and made a competent attack on the polices of the current government, with which it was impossible to disagree. Yet on the subject of the Euro- the supposed theme of the evening- he said virtually nothing except that, again, we were very "lucky" not to be in the system.
Naturally the two speakers were playing to their audience, but I was actually pretty shocked that there was no organised or coherent argument at all- simply an assumption that the Euro would fail and that it was "bad" in some inchoate, nebulous way.
For goodness sakes, Gilts have been trading at big spreads over German Bunds for years! British monetary costs are still far higher than the majority of the Euro zone- and no one even mentioned it. Sterling has devalued by 40% against the Euro in the past year, and this was not even mentioned either. Despite this gigantic devaluation, The UK is still likely to be in recession for longer than the Euro zone and in the past quarter we have had a 10% fall in manufacturing output.
All the Bruges Group audience clapped when Congdon advocated withdrawal from the European Union- but frankly I think they have delusions of adequacy as far as the British economy is concerned. For decades, when faced with crisis, the UK has taken the soft option and devalued its currency- and as a policy it simply diminishes investor appetite for British assets over the long term and reduces British buying power in the global economy. Continuing devaluation, in the end, only impoverishes the UK- but the Bruges Group audience would rather take the soft option than actually force the UK to address its long term structural weakness, which membership of the Eurozone would certainly force us to do.
Even Tim Congdon does not believe, despite his woolly denunciations, that the Euro will break up or collapse- though his audience clearly did. The idea, as he said, that the UK "should not be a member of a club that would have us" is arrogance of a pretty high order. The fact is that the UK can not be a member of the Eurozone at the present, and still less so as the result of the massive bank bailouts that have just been undertaken.
Relative to the Eurozone, the UK has just lost 40% of its wealth- and the largely elderly audience were still predicting disaster in the Euro. Had they not noticed that disaster has already struck the Pound!
It seems to me wise to take the beam out of your own eye before mentioning the mote in the eye of another.
If that is the intellectual quality of the Europhobic argument, then it should not prove difficult to change people's minds. Although it will be several years before the issue of membership of the Eurozone even comes up for the UK, the fact is that this is not a position of strength, but of extraordinary weakness.