The government's unnoticed Europe crisis

Hands up who didn't see *this* coming when Britain opted out of the Euro? Anyone? Beuller? Anyone?

So presumably what happens next is Britain pretending the Eurozone core doesn't matter for a while, then frantically trying to join and being rejected, then eventually joining and grumbling about how the rules aren't the ones they'd have written. Repeat to infinity.

It may be true that in the British popular press "European decisions end up being judged against the sole yardstick of sovereignty," but I fear that your recent writings on this subject have suffered from the opposite error. That is, judging British decisions against the sole yardstick of influence.

As someone who finds few new EU regulations or agreements positive I prefer the government not be bound by decisions it didn't influence than bound by decisions it did. Rather escape the EU's new hedge fund rules than be subject to a watered-down version.

CensorThats right, no one can now say that the EU is NOT a nationalist expansionist project.

"Bring it on, would be the response of many Conservatives"

You'll find that in the Liberals too, as the country, except a few deluded EUrophiles, are hardly happy with the expansion of the EUs soveriegnty or its greedy and corrupt grabbing at power.

Rennie should not be taken seriously on his predictions for how the EU will evolve. Until recently he was claiming the intergovernmentalism was winning over supranationalism, despite the Lisbon treaty making the supranational 'community method' the norm in EU decision-making. He believes mood-music is more important than international law and so is a serial mis-reader of the evolution of the EU which is pre-programmed towards euro-federalism. That destination is not in the UK interest which is why we have to de-couple ourselves from an unreformable system designed to take us there. The Economist is intensely backwards looking in still supporting the EU for it's origins in an economically liberal Common Market long after the EU has become something else. Rennie does not make any argument for a euro-federal system. He misreads EU treaties to suggest it is not happening. He falls back to calling those who do 'crazy' rather than make any coherent argument of his own. Here he trots out the old 'influence' argument not realising perhaps that Lisbon reinforced the voting weight of the Franco-German alliance precisely to ensure that those countries have a de-facto joint veto not available to the UK which allows them to dominate EU agenda setting and ensure UK 'influence' is a lost cause. 

it is not 'crazy' to oppose the formation of an undemocratic super-state which imposes a high regulatory. What is 'crazy' is the Rennie position of still supporting  an inherently undemocratic political system with a proven track-record of economic failure (the eurozone is, alongside Japan) the slowest growing region in the developed world) on liberal economic grounds or the 'influence' argument which he should know is entirely bogus in the post-Lisbon era. I would not say Rennie is 'crazy' but I do ask his readers to look at his track-record of past failure to predict where the EU is heading when judging this piece urging the UK to get sucked into eurozone decision-making.

Whatever Rennie believes (and it is clear he does not understand EU treaties), the eurozone will be a federal core inside a looser (but still too restrictive) association of states where the Franco-German voting weight will be decisive in setting an agenda that other states within the core can delay but not resist. The UK has to avoid that fate if it is wishes to preserve it's real ability to influence the performance of it's own economy and the real influence of British voters to throw out any government that performs so poorly as the eurozone has since it's inception. Rennie doesn't offer this real influence because he does not understand EU treaties. The influence he
has in mind is being outvoted and
compelled to follow policies designed in the interests of France & Germany which their combined 30% voting weight ensures will form the basis of anything agreed in the EU (because they can easily form the 35% block vote to veto anything proposed by others). That is not real influence. It is being dragged into a system where you lose influence.

The hubris of a supposedly expert (and paid!) commentator insisting that the EU is still beneficial for the UK amazes me.

For bleedin' obvious macroeconomic reasons the Eurozone is tearing itself apart. It could never have worked without central political control, as any fule kno, and the structural damage the Euro has done and will continue to do is writ large for all but the most Fascist europhile.

And, to a student of both history and economics, 'Fascist' is indeed an appropriate epithet: not the goose-stepping, preening racism of Hitler's wartime ally, but the devotees of the methodology that did indeed 'get the trains to run on time': centralized control by a bureaucratic elite.

The thing is, the EU superstate constructed on such lines actually does work, sort of. Think 'Five Year Plans' and you can see how the trick is carried off. With structural funds/development agencies, vanity projects such as Galileo, and cross-border super-regions such as 'Transmanche' the bureacrats buisily manage, and cascade control down to the smallest entities. Busy (very-well-paid) little bees indeed.

But this system carries with it exactly the same drawbacks as Fascism too - economic, social, and moral even - that both communism and its close relative Fascism did. To order such a society, to ensure conformity, micro-management of the population is necessary.

The plethora of regulation and petty bureaucracy we experience now is but one outworking of this. Others, such as punitive taxation, production quotas and even control of population movement, have yet to manifest themselves (quotas are of course already with us to an extent), but they will come, as winter follows autumn.

The Soviet bloc fell, not because Thatcher and Reagan out-ideologued it (laughable), but because it ossified. The lack of individual freedom and of publicly-espoused libertarian values stifled innovation and industrial creativity, and eliminated the one thing that makes enterprises really work - a sense of genuine shared ownership amongst the participants. This isn't communism, it's the very essence of free enterprise.

To those who shout 'China!' at this point, the riposte is simple and fatal: the very essence of the Chinese economic transformation is through liberalization, and it too is proof that the centralism so beloved of 'ancien communism' and Schumann is as self-defeating as it is burdensome.

Over time, like a 60-a-day smoker, or a thirty stone weakling, the EU's will kill itself through its daily habits. Already, despite two centuries of industrial knowledge and experience, it is being out-engineered by the economies of the Subcontinent and the Far East, and its sovereign debt will ensure it can never again afford the military clout to demand a place at any international table to which it is not already admitted.

Oddly, Libya may yet prove the tipping point: those EU countries who have the resources to act won't, and those who want to can't afford it. Until now, other watching power blocs, in South America, Africa China etc., have considered Europe 'important' and a grouping they dare not offend. From Libya onwards they will see it as old, tired, broke, and ultimately toothless. It's even a poor customer for Chinese high tech, as it has little to offer in exchange and shortly won't be able to pay its bills either.

'Britain is too small to stand alone on the world stage' has long been the mantra of the federalist, along with fantasy tales about the EU maintaining peace for decades. It's true we wouldn't ever recover an empire if we left, but why would we want to? Anyway, in an irony evidently too complex for UK europhiles to appreciate, China is even now quietly establishing its own new empire. Decades of belligerency having failed, it now finds it can simply purchase in Africa and South America what it couldn't take by arms.

Such is the power behind liberalization. The Single Market in comparison is but a truly vast Ponzi scheme: bureaucratic, expensive, inflexible, and constraining. It sucks dry every poor mug-state that is duped into signing up. Once 'integrated' the country is drained of initiative and wealth, and ultimately fresh fools, from another appellant group, are necessary to maintain the pretence.

What little wealth the UK has now is sustained by global, not EU, trade, in other words mutually beneficial transactions that we are good at making. Freed from the sclerotic grip of what is essentially a failed ideology (and economy), we can exercise this, our strongest 'muscle', whilst we diet-off the cholesterol of bureaucracy and fat from our obese state.

If we remain inside the EU, the burgers, fries and fags will just keep coming.

The first day of our independence from the EU will be the first day we start to live healthily again.

"The first day of our independence from the EU will be the first day we start to live healthily again".

And then just who will the UK trade with? Overnight barriers (both seen and unseen) will fly up in the EU, the rest of the world (especially China and the US) will now see the UK as a smallish nation quite on its own and in no club, that has little quid pro quo to offer and can be leaned on quite easily. The UK will soon find that it is in a very unfavorable situation.

"Yet there is a non-trivial chance that Britain might fall out of the EU one day. Such a falling-out would involve a hasty withdrawal from a Europe that had taken an impossibly unpalatable turn."

It took an unpalatable turn DECADES AGO!
Most of the stuff you write is ok given the Economist is a Fabian Organ. But to defend the EU is equivalent to defending the Mafia. If this were a democracy instead of an elected dictatorship under the manacles of the EU Soviet, we would leave TODAY. If you can't understand the absolute damage the EU "Projekt" has done to the UK then you're part of the problem. If your magazine is so good then do a cost benefit analysis of our membership of the EU or shut the hell up.

EUROTOME
And then just who will the UK trade with? Overnight barriers (both seen and unseen) will fly up in the EU, the rest of the world (especially China and the US) will now see the UK as a smallish nation quite on its own and in no club, that has little quid pro quo to offer and can be leaned on quite easily. The UK will soon find that it is in a very unfavorable situation.

Get real - I am an exporter and most of our business goes to the developing world. What trade barriers are the French and Germans going to erect when they only buy perhaps 11% of our exports? (See Pink Book en passim for details)- when you look at the cars on the road they are all imports, the wine is from the EU the cheese and the electrical goods. Trade barriers my foot!

eroteme: "Overnight barriers (both seen and unseen) will fly up in the EU"

A fitting end to the French wine trade, as its been held up by the British consumer for the last decade. The death of EDF in the UK, and many other European owned firms. The all those French thart work in London, what will they do? That is around 40,000-400,000 depending on who you believe.

As for Clubs, the UK is part of one of the biggest clubs in the world, the Commonwealth of Nations, which as a free trade area is worth more than the EU and US combined.
No, there will be no sudden barriers, the continent cannot afford it.

I won't even bother to debate the issue. Every extra day in the EU is an unnecessary extra day in the EU prison. As 'The Box of Frogs' so wisely infers, the EU is a proto-Fascist collectivist grouping. Not composed of democrats keen to be ensure what is fair to all its members, but instead a bureaucrats' paradise where officials paid by its members punish its members according to arbitrarily decided rules & for arbitrarily identified transgressions. As I said: every extra day in the EU is an unnecessary extra day in the EU prison.

excellent article! Thank you!

Excllent article and the best confirmation to me that Britain never should have been a member of the EU.
DeGaulle knew better.
The best dicision for the future of Britain will be to leave the EU as soon as possible.
The British do not like the EU and the British are definitively disliked in the EU. They are not welcome and therefore isolated having no friends inside the EU.
To France Britain since ever stands in a mutual contrast and the rest of the nations in the EU is regarded by the British as inferior nations which are far under their dignity.
Britain should go its own way without the EU because Britain does not belong to Europe.
Unfortunately the new government did not keep its word.
Nobody in Europe would regret if the British would leave and stay at their own.
Britain is just overestimating its importance for Europe.

This is as much a comment on the related leader as this article - up to now Germany has always maintained that the eurozone doesn't need governance because the EU has this and there is only one union. This (while probably delusional) was maintained because a) new joiners had to commit to join at some point as part of membership and b) countries like the UK and Sweden left the option open - the UK with it's 5 tests.

But this changed during Cameron's first Berlin visit. He said something like: "the UK is not in the euro. The UK is not joining the euro." There was no mention of tests and no qualification at all.

So the theoretical view that at some point membership of the euro and EU would be one is proven wrong - or to put it another way the delusion underpinning Germanys no to euro governance could not be maintained

So from that moment Germany moved to a much more logical position. The euro needs proper governance, the membership of the euro will be different and smaller than the EU and so it's governance will need to be separate.

So the leader is right - in her memoirs Merkel will blame Cameron - and I suspect those few words spoken at the press conference will be given as the moment policy changed

'Get real - I am an exporter and most of our business goes to the developing world'.

Well Enemy of the State, with the UK out of the EU you will soon find out that the reason you had easy access to markets in the developing world is that they have been forced to open them due to the collective (and often brutal) soft negotiating power of the EU bloc.
If the UK leaves the EU then all trade agreements it has will have to be renegotiated and you as an exporter will soon find that the developing world is very protectionist unless forced not to be. They have no love for the UK.

The UK is better off in the EU fighting hard for it to remain a collection of co-operating sovereign states rather than a federal super state. The UK has powerful allies in this view - Sweden, the Netherlands, Poland, Denmark and even Spain.

eroteme: You'll find that it is the UK leading the way on opening those markets, while they feel that many in Europe rip them off. Most are former colonies of the UK and are more likely to ditch the EU than the UK, as they are mostly part of the Commonwealth of Nations, the Secretariat of which does a lot to stop the EU from taking the piss.

Look it up, this is all verifiable.

You should learn your facts, because you are looking ignorant from here.

Cutters
The whole Commonwealth thing is a joke. If you think that the former British colonies will roll over and easily negotiate favorable bilateral trade pacts with the UK if it leaves the EU, then you are deluded. All harbor residual quite hard feelings to the UK and other former colonial powers whom they blame for pursuing policies that treated their nations and peoples badly and de-developing them. There is some truth to this assertion although not to the extent that Franz Fanon would have you believe. However his ideas have a lot of traction and so some of the bigger former colonies like South Africa have joined up with like minded rising powers like Brazil to form a bloc to ensure that they have a counterweight to the EU, US and China, and are determined to reset the trade flows between the developed and underdeveloped world.
As to former the British Dominions, Canada, Australia, New Zealand, they have all become 1st world nations with their own regional and world trade relationships and find the idea of a special relationship with the UK tiresome.

@ Anthony Z:

"So presumably what happens next is Britain pretending the Eurozone core doesn't matter for a while, then frantically trying to join..."

Your argument is a straw man. What you don't (in fact, cannot) do is make any credible case for joining the eurozone.

There is no conceivable circumstance in which such a move would be beneficial, to anyone (not even the eurozone!), UNLESS your political objective is a federal, centrally-governed Europe without direct democratic accountability. For that is indeed the EU in a nutshell.

Is that your objective? It certainly appears so for 'Bagehot'. This is especially ironic, given my favourite quote of the prototype: "Men are not ruled by their imaginations, but governed by the weakness of same."

"Too small to stand on our own as a nation... no future outside Europe... independence would threaten our EU trade..."

We've heard this so many times down the decades of our involvement with the EU. But who really is small-minded, the man who wants to finally relinquish the little autonomy we still have to a corrupt and wasteful oligarchy, or the man disgusted by the naked Emperor's parade and determined on better governance and a liberated self-determining society?

Our future does NOT have to be tagging along on a miserable trudge toward some mythical, last-century, socialist Nirvana. We can be released to do the things historically we have excelled at: enterprising innovation, and mutually beneficial global trade.

The EU, and the euro it's twisted creation, are both fatally flawed and so last-century.

Wake up and smell the coffee...

What's wrong with being "on the periphery"? Anyway, it will only be "on the periphery" for those who believe Europe to be the centre of the world, which it isn't. In fact geographical location is unimportant.

eroteme: Your verification for this is where? so much band width with no proof.

There has been no testing of the theory since 2007 during DOHA talks, and then the only member of the Commonwealth that was not up for a free trade pact was the UK under Brown (a EUrophile).

The only person who is deluded is yourself. The biggest joke is the EU, that cannot even function enough to act on Libya, other than strong words.

schadenfreudejunior: Come to join the party... there are a number here that could do with an eduction.