One of the defining issues for me during my 13 years in politics has been campaigning against the transfer of further powers to Europe. In my early days as candidate and then MEP, I made speech after speech opposing UK membership of the Euro. It’s easy to forget this but both Labour and the Lib Dems were both supportive of joining the Euro in principle. For them it has always been a question of when, not if, the UK would join. It was the campaign led by the Conservatives, and a number of major newspapers, that kept us out of the Euro in the late 90s when Tony Blair would clearly have liked to join.
At the time, people labelled me as a hard-line eurosceptic – even an extremist - but events have proved I was right to vigorously oppose Euro membership.
I did so be because Euro membership would mean the UK being subject to a single interest rate set for the whole Eurozone by the European Central Bank in Frankfurt. So if we joined we would often have the wrong interest rate for our national economic circumstances. The instability this would have been caused is illustrated by Ireland whose boom and bust was made far worse because years of having the wrong interest rates fuelled an unsustainable economic bubble based on government and personal debt.
A second reason why I argued the UK should stay out of the Euro was because I didn’t believe the system was robust enough to be able to deal with external shocks. This has been graphically demonstrated by the sovereign debt crisis across many European countries which has its roots in the banking collapse of 2008.
Thirdly, I always believed that a single currency could not work effectively without a single tax and spend policy. Fiscal policy and monetary policy are two sides of the same coin. I predicted that launching the Euro would inevitably lead to more and more pressure for Europe to take over crucial areas of Government decision-making on taxation and spending. I also warned that once in the Euro, we could be asked to part fund ‘fiscal transfers’ (ie provide bail out money for struggling European economies): exactly what has happened in the Eurozone over the last few months.
My concern was not just about the financial impact this would have. I believe it is fundamentally important that the people we elect here in Britain are the ones who set tax levels and who decide how much money can be spent on our vital public services. To see these powers move to unaccountable institutions in Brussels would do fundamental damage to our democracy.
Unfortunately the problems in the Eurozone, as one of our biggest export markets, have a major impact on us. But keeping our own currency has given us far more options on how we rebuild our economy, enabling us to do it on our own terms and in our own way. While it may be difficult to see the light at the end of the tunnel right now, we’ve got a plan to deal with the deficit and support growth and jobs. Sticking to that plan is the best way to ensure there are brighter times ahead.