I'm one of those Liberals who was sceptical about the euro from the start. Not because I was sceptical about Europe - quite the reverse: it seemed to derive and encourage Europe's darker side.
I even said so in a speech to the Lib Dem conference in 2000. I can't find that now, but just over nine years ago, I gave the New Economics Foundation's Alternative Mansion House Speech at the Old Bank of
England pub in Fleet Street,
warning that the
euro was like the disastrous 1925 return to the Gold Standard – an illusion
that currencies were based on real, objective values.
This is what I said in 2002:
Let me say quickly that I'm a convinced European. I am not a Europhobe, still less a xenophobe. But there is still a fundamental problem at the heart of the euro, and any currency based on the idea that money's the same everywhere, like gold. And it's this: single currencies tend to favour the rich and impoverish the poor.
They do so because changing the value of your currency, and varying your interest rate, is the way that disadvantaged places can make their goods more affordable. When you prevent them from doing that, you trap whole cities and regions - the poorest people in the poorest places - without being able to trade their way out.
Now of course the USA has one currency. So does Britain. But if we're honest about it, we know that hasn't been satisfactory either - because central banks set their interest rates to favour their capital cities. Eddie George admitted as much on the Today programme just before Christmas.
Look at the great gulfs between rich and poor in the USA. Look at the plight of cities like Detroit or states like West Virginia. And over here, look at the way interest rates are set to suit the City of London, while the manufacturing regions of the north struggle as best they can.
Across a continent, the effects are so much worse. That's why Ireland's economy has been overheating, while east Germany's is languishing in poverty. That's the danger of the euro as presently arranged, and don't underestimate it. It means success for the cities that are already successful. It means a real struggle for the great reviving cities like Newcastle and Sheffield. It means a potent recruiting ground for Jean-Marie Le Pen.
Different cities, different communities, value different aspects of life. And single currencies are not the universal measuring rods they claim to be.
So common currencies, yes – that is the logic of European integration. But single currencies are Napoleonic projects which inevitably require iron control if they are not to spiral out of control, as this one is doing.
The real question, now that the euro is being re-organised, is this: can a civilised and peaceful Europe survive that kind of Napoleonic control where the rich countries are so favoured by the currency?
