Has the Treasury made any contingency plans for Britain’s leaving the EU?

One sincerely hopes so.

As quoted in “No Middle Way” by Stephen Bush, 1990 [1], the Vice President of the (then) West German Bundesbank remarked on the BBC Today programme on 2^nd February 1990, in the matter-of-fact tones of someone stating an incontestable fact, “Of course a country which merges its currency completely, cannot remain independent politically”.

Denial of this reality by the politicians in Europe has turned the general Euro debt problems into the present crisis which is quite separate from the financial system crisis itself.  A second reality pointed out in posts on this website recently, “Break-up of the Euro-Zone is profoundly in the British people’s national interest” (8^th August) and “Potential Greek Exit from the Euro” (21^st October), is that countries with as widely different economic efficiencies as the Mediterranean countries and the Northern countries cannot support the same currency for very long.

Cameron’s Euro-Fantasy

The various Euro-fantasies on the Continent have their exact counterparts in those of the British Prime Minister, David Cameron, and his Liberal Democrat allies in the British government.  The political situation in Britain today is not unlike that of the 1922 coalition government with Liberals and Conservatives reversed, when the then Liberal Prime Minister, Lloyd George, and fellow non-Asquith Liberals were maintained in office by his political enemies, the Conservatives[2].

The absurdity of Cameron’s embarrassing behaviour towards Euro-zone ministers is laid bare by the remark of a senior French official to the effect that Britain cannot have it both ways, demanding exemption for the City from the proposed regulation and a new tax on financial transactions in the EU, while at the same time demanding the right to influence the rules on fiscal integration which France and Germany in particular are determined to put in place to underpin their own currency – the Euro.

How the City can avoid new EU taxes?

The surest way for the City not to have a transaction tax imposed on it (which would amount to 70% of the total raised by the tax across the EU and give the European Commission what it has long yearned for – a tax base independent of national governments) is for it to help Britain rejoin the European Free Trade Association (www.efta.int), the USA, Canada, Australia, New Zealand, China, India, Japan and all the other countries which Britain does business with, and which are not in the European Union (see “Business, Industry and a New Relationship with the European Union” on the Performance of the Economy page of this website).

Almost certainly Sweden and Denmark would also seek to rejoin the United Kingdom, Norway and Switzerland in an enlarged European Free Trade Area, always assuming EFTA would agree.  EFTA has free trade agreements not only with the EU itself, but also with Canada, Korea, Singapore, New Zealand and South Africa among others, in all of which the UK would be free to participate. 

EFTA is headquartered in Geneva, conveniently close to the World Trade Organisation (WTO), the World Intellectual Property Organisation (WIPO), the International Red Cross, the World Health Organisation, the World Council of Churches all of whose headquarters are also in Geneva, with the Bank of International Settlements up the road in Basel – hardly a backwater compared with Brussels.

EFTA and EU bureaucracies compared

At the last count, for its current 4 member countries EFTA had 85 staff, including 4 translators, plus 4 trainees across its 3 offices in Geneva, Brussels and Luxembourg (i.e. 21 per member state).  This can be compared with the European Commission’s 25,000 civil servants in Brussels and Luxemburg, of which 2,200 alone are translators, for its 27 member countries (i.e. 900 per member state).

The UK in EFTA

Doubtless as a major new EFTA member, the UK would have a role in discussions with the European Commission about the operation of the famous “Single Market” which appears to have the status of Holy Writ in Cameron’s mind.  In fact if Cameron left the leaders of the Euro-zone in peace to get on with creating their reformed currency and new country, Britain, as part of a respected international organisation, would probably have more influence in “Europe” than it has today (with plenty of meetings for its politicians still to go to!).

Are there any real obstacles to the UK’s leaving the EU?

So what’s stopping the UK just leaving?  Not surely transitional financial arrangements.  As the Treasury will point out, not having to pay the EU £12 billion each year and rising will do a power of good to the UK debt reduction programme, and its huge £45 billion balance of payments deficit.  Instead of paying the EU to spend £9 billion of UK taxpayers’ money on “structural funds” in Poland and elsewhere in the East and Southern Europe, the UK could spend at least some of it on infrastructure in Britain, especially on desperately needed new roads.  On top of this, leaving the EU will mean recovery of our own fishing grounds, which would entirely transform the economies of British fishing ports.

Liberal Democrats are the chief apparent obstacle to Britain’s leaving the EU

Apart from a few old dinosaurs  like Lords Heseltine and Ashdown, no-one outside the leadership of the Liberal Democrats cares a fig about the “EU”, “building Europe” or seriously believes that the “Single Market” is something we have to pay £12 billion to trade in, when for instance Australia, Canada, New Zealand and the USA trade freely with the EU without paying a penny piece subscription to it.

Would the LibDems bring down the coalition government if Prime Minister Cameron accepted what he rejected two weeks ago, namely to hold a referendum on Britain’s membership of the European Union?  A straight choice is what is needed incidentally – “Leave or Stay” – no nonsense about the nonexistent, deliberately obfuscating option of “renegotiation”.  As Stephen Bush’s 1990 pamphlet expressed it, there is “No Middle Way” between the mutually exclusive options of being in the EU or out of it.

For the sake of Britain’s future, Cameron should call the LibDems’ bluff and put the issue to the British people, leaving the LibDems to turn in the wind.  If they try to bring the government down on a Leave or Stay Referendum motion, (they may not succeed if Labour supported the motion), they would be annihilated at the consequent General Election.  If they stay in the coalition and campaigned against what is now the clearly expressed wish of the British people to leave the EU, they would lose the referendum and face the loss of half their seats at the subsequent general election.

So Prime Minister Cameron should pluck up courage to confront the real EU issue for Britain: in the words of this post’s illustrious namesake, “Engage the enemy more closely”.

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