The “debate” about the EU and Euro remains higgled by misunderstandings that serious people peddle out. Let’s just deal with a few of them.
1. If the UK makes a stand or declines to support the Merkel plan, we could lose the 10% of our National Income based on exports to the EU.
Response: Whatever happens at summits, Germany will still want to sell us cars and France will still want to sell us wine. The UK will still be selling products and services in the EU, under existing EU rules and WTO controls. That does not change, whatever we do or say on the architecture of the EU and Euro.
2. The Merkel plan for greater fiscal controls will save the Euro.
The Merkel scheme does not suddenly shrink the Greek deficit, or miraculously refinance the large Italian debt. Printing money could buy them a bit of time, but is not conditional on changes to rules and Treaties. Nothing in the Merkel plan solves the twin probems of too much debt and too little competitiveness in the problem countries.
3. If the UK does not agree with the Merkel Plan, we lose our influence in the EU!
Response: If we capitulate to the Merkel Plan it shows we already have no influence in the EU.The UK has imposed on it vast swathes of legislation and regulation we would not choose for ourselves. We do not have the influence to change or repeal this. That is why we need to negotiate a new relationship with the EU, that does allow us to make more of our own decisions about how we are governed.
4. The UK must do nothing to damage the Euro. Break up would be a disaster.
Response: Orderly but rapid break up would be the least cost option. It would liberate the countries allowed out, and permit them to adjust their competitiveness by a devaluation which would be swift and easier to sell than large wage cuts. There is no foundation to the proposition that the EU would lose 10-50% of its output if they changed currencies. To my knowledge 87 countries have left currency unions since 1945. In most cases they have prospered more after exit. The successful break up of the 16 member rouble bloc could be the model.