Posted 9 May 2013
THE TIMES Tuesday May 7 2013 Opinion I'll be voting to quit the EU Nigel Lawson David Cameron has promised that in four years time the British people will be given the opportunity to decide in a referendum whether this country should leave the European Union. To validate this promise, of course, he first needs to win the 2015 general election, which is by no means assured. But as the British people clearly wish to be given this choice, it is unlikely that, at the end of the day, the Labour Party will wish to go into the next election denying it to them. So one way or another, an in-out referendum is likely to be held. It will be an event of historic importance. Meanwhile, the Prime Minister has already embarked on a series of preliminary talks with our EU partners, hoping in due course to be able to renegotiate improved terms for the UK within the Union, which he can then put to the people in a referendum in 2017. We have been here before. He is following faithfully in the footsteps of Harold Wilson almost 40 years ago. The changes that Wilson was able to negotiate were so trivial that I doubt if anyone today can remember what they were. But he was able to secure a 2-1 majority for the "in" vote in the 1975 referendum. I have no doubt that any changes that Mr Cameron ˜ or, for that matter, Ed Miliband ˜ is able to secure will be equally inconsequential. The theology of the acquis communautaire, the principle that any powers ceded by the member states to the EU are ceded irrevocably, is absolute. It is the rock on which the Union is built, and ˜ through the so-called Passerelle Clause of the Lisbon Treaty ˜ effectively an explicit part of the EU constitution. Moreover, to make exceptions for one member state would inevitably lead to similar demands from others and threaten a general unravelling. Some pin their faith on making use of the much-vaunted doctrine of "subsidiarity". But subsidiarity ˜ pushing decision-making down to the lowest appropriate level ˜ is something to which the European establishment pays lip service and then resolutely ignores. The doctrine that "more Europe" must ipso facto be a good thing is sacrosanct. My friends among the eurocracy assure me, too, that a precondition for any renegotiation would be that we agree to give up the UK rebate secured with such difficulty by Margaret Thatcher some 30 years ago. But all this is largely beside the point. The heart of the matter is that the very nature of the European Union, and of this country's relationship with it, has fundamentally changed after the coming into being of the European monetary union and the creation of the eurozone, of which ˜ quite rightly ˜we are not a part. That is why, while I voted "in" in 1975,1 shall be voting "out" in 2017. This has nothing to do with being "anti-European", a particularly bizarre suggestion in my own case, given that my home nowadays is, by choice, in France ˜ indeed, in la France profonde ˜ from where I commute weekly to work in England. The issue is not Europe, with its great history, incomparable culture and diverse peoples, but the European Union. To confuse the two is both historically and geographically obtuse. On the Continent it has always been well understood that the whole purpose of European integration was political and that economic integration was simply a means to a political end. In this country that has been much less well understood, particularly within the business community, which sometimes finds it hard to grasp that politics can trump economics. That the objective has always been political does not mean that it is in any way disreputable. Indeed, the original objective was highly commendable. It was, bluntly, to eliminate the threat to Europe and the wider world from a recrudescence of German militarism by placing the German tiger in a European cage. That objective has been achieved: there is no longer a threat from German militarism. That today German influence is increasing peacefully, largely at the expense of France, as a result of Germany's superior economic performance is not something to which anyone can legitimately object. But in the background there has always been another political objective behind European economic integration, one that is now firmly in the foreground. That is the creation of a federal European superstate, a United States of Europe. There is, of course, nothing disreputable about this either. Unlike the first objective, however, it is, I believe, profoundly misguided. It is certainly not for us. As far back as January 1989, as Chancellor and well before the single currency had come into being, I pointed out (in a major speech at Chatham House) that the only way that European monetary union could be made to work would be if it were accompanied by full fiscal union, which in turn required full political union. I warned that it would therefore be most unwise to go ahead with the project since, whatever many of their leaders and above all the eurocracy may have wished, a full-blooded political union was not wanted by the majority of the peoples of Europe. Unfortunately, a fundamental contempt for democracy has always been one of the most striking and least attractive characteristics of the European movement, however noble its intentions. But that was the clear purpose of the project, never mind that the lesson of history is that the sequence has to be the reverse, with political union coming first and monetary union a consequence. Hence in large part the continuing eurozone disaster and with it continuing European economic underperformance. But the coming into being of monetary union ˜ and there can be no doubt of the determination of the leaders of Europe to persist with it at all costs ˜ has fundamentally changed the nature of the European Union and of non-eurozone Britain's relationship with it.
Not only do our interests increasingly differ from those of the eurozone members but, while never "at the heart of Europe" (as our political leaders have from time to time foolishly claimed), we are now becoming increasingly marginalised as we are doomed to being consistently outvoted by the eurozone bloc. So the case for exit is clear. But would there be a heavy economic cost, making this unwise? There would indeed be some economic cost, partly transitional and partly as a result of the loss of the modest advantages of being within the single market. But in my judgment the economic gains would substantially outweigh the costs. The only gain that can be clearly quantified is that we would no longer pay our annual membership fee of some £8 billion. That is the size of our annual net contribution to the EU budget, even after the benefit of the Thatcher rebate (which Tony Blair, disgracefully and unilaterally agreed ˜ against strong Treasury advice ˜ gradually to surrender in almost his last act as Prime Minister). But there are other, and more important, gains than this. It is widely recognised throughout Europe that, safely removed from effective democratic accountability, the EU has become a bureaucratic monstrosity. This imposes substantial economic costs on all member states. These are perhaps greatest in the case of the UK, not principally because our own dear bureaucracy is inclined to goldplate the regulations that emanate from Brussels (although all too often this occurs), but more because we have a tradition of precision in law-making and respect for the law that is less pronounced in much, if not most, of the rest of Europe. That is not going to change, nor should it. Moreover, there is one area of regulation of particular importance to the UK, where the EU regulatory cost threatens to be even greater than it is already, and that is the area of banking and financial services more generally. Despite the banking disasters of 2007-08, London remains a far more important financial centre than the rest of Europe put together. It is one of the few major industries, with substantial growth prospects, where this country is indisputably a world-class player. As a member of the Parliamentary Commission on Banking Standards I am well aware of the need to clean up British banking, and proper supervision and regulation has to be part of it. But the ultimate purpose is not to cut British banking down to size but to enable it, shorn of the cultural decadence and scandals that emerged towards the end of the last century, to flourish globally. However, after the recent banking meltdown, the EU is currently engaged in a frenzy of regulatory activism, of which the foolish and damaging financial transactions tax, imposed against strong UK opposition, is only one example. In part this is motivated by a jealous desire to cut London down to size, in part by well-intentioned ignorance. The Bank of England, now through the Prudential Regulation Authority restored as the body responsible for the necessary and sensible supervision and regulation of British banking, is becoming increasingly frustrated by the mandatory nonsense emanating from Brussels. Escaping from this and reinforcing the escape by co-operation with the only other genuine world financial centre, the United States, would be a major economic plus. Those who claim that to leave the EU would damage the City are the very same as those who in the past confidently predicted, with a classic failure of understanding, that the City would be gravely damaged if the UK failed to adopt the Euro as its currency. But what of the loss of the advantages of being within the single market? In the overall scheme of things these are marginal. You do not need to be within the single market to be able to export to the European Union, as we see from the wide range of goods on our shelves every day. The statistics are eloquent. Over the past decade, UK exports to the EU have risen in cash terms by some 40 per cent. Over the same period, exports to the EU from those outside it have risen by 75 per cent. The heart of the matter is that the relevant economic context nowadays is not Europe but globalisation, including global free trade, with the World Trade Organisation as its monitor. Indeed, I strongly suspect that there would be a positive economic advantage to the UK in leaving the single market, quite apart from the more important economic gains I have already listed. Before we joined the European Common Market, as the EU was then known, far too much of British business and industry felt secure in the warm embrace of what was still known as Imperial Preference and was reluctant to look farther afield. It took entry into the Common Market to bring about a recognition of the opportunities on our doorstep. Today too much of British business and industry feels similarly secure in the warm embrace of the European single market and is failing to recognise that today's great export opportunities lie in the developing world, particularly in Asia. Just as entry into the Common Market half a century ago provided a much needed change of focus, so might leaving the EU, an institution that has achieved its historic purpose and is now past its sell-by date, provide a much-needed change of focus today. There is a saying frequently attributed to the eminent economist John Maynard Keynes. Charged with having changed his mind about economic policy, he is said to have replied: "When the facts change, I change my mind. What do you do, sir?" It is probably apocryphal, but it accurately encapsulates his approach to events. It also accurately sums up where I now stand on the issue of UK membership of the European Union and why I shall vote "out" in 2017 if given the opportunity to do so. Lord Lawson of Blaby was Chancellor of the Exchequer from 1983-89