Mr Cameron should of course be charming, polite and friendly to the German Leader. He should feel no need to seek favour or to apologise for the UK’s healthy Euroscepticism. He should speak truth to power. He should say that our scepticism about joining the Euro has made the problem of the Euro much less, and our scepticism about so much detailed European government regulating EU economies offers a way through to greater prosperity and freedom for the European peoples.
Those of us who opposed the formation of the Euro pointed out that if they rushed too many European countries into it before their currencies had stabilised and their economies converged, there would be trouble. We said that if they allowed some countries to borrow too much at the common interest rate it would create strains. We said that if a country like Germany worked hard and was very competitive, the other countries would have to cut their wages to stay in. Prior to the establishment of the Euro Germany was more competitive, and regularly revalued its currency against many of the weaker performers. This was the easy way of cutting living standards in Italy or Spain, and reducing their imports, and cutting back on Germany’s exports. Today, within the Euro, the adjustment has to be made by cutting wages in the importing countries, a more painful process as we are discovering.
By keeping the UK out of the Euro we made a huge contribution to its possible success. If the Uk had been in the Euro over the last year it would probably have broken it. The Uk is too different, and the level of UK state borrowing so huge. The UK had a large devaluation over the last two years to cut its living standards – the outgoing government which engineered that would not have engineered a similar pay cut if we had been in the Euro. Mr Cameron should say that the UK wishes the Euro well, and will help with advice and political support for measures to assist it, but cannot offer a pound of UK money given the state of the Uk finances.
He should then say that he is very worried about how the EU generally is becoming an area of slow growth or no growth. The EU has inflexibile product markets, owing to far too much EU regulation. It has inflexible labour markets, owing to labour regulations, social security systems and the wide range of languages spoken. If the EU wants to help the prosperity of its citizens it needs to cut out much of the damaging or needless government its visits upon us and our businesses. Decent welfare standards and different langauges are a given, so the adjustment needs to be made by less European government intervention.
He goes to see her just after she has personally triggered a major fall in world markets by her decision to impose a German ban on short selling government bonds and bank shares. She used inflammatory language to tell us all the Euro is at risk, and then introduced a panic measure which will ensure more financial business is transacted outside Germany. She did not even bother to consult her EU partners.
I am sure Mr Cameron will be too polite to rub salt into the wound of her clumsy interventions, but he should refer to how apparently popular regulations can make economies worse. We hear from Euroenthusiasts that now is the time for the UK to have influence. Those of us who are sceptical about EU policies and their impact on living standards will judge this claim by how far the Uk can now get in persuasing the EU that it is part of the problem.
We need a less expensive and less regulating EU to get Europe back on the road to prosperity. The Euro, the EU’s finest achievement to date according to its supporters, is visibly damaging growth and income levels. The EU which demands spending cuts of its member states should lead the way by cutting its own spending. I am not expecting it to see the problems it creates, as its answer to everything is more European government.