When the Euro crisis first began to unfold back in 2010 it was greeted by many in the U.K.with a certain sense of schadenfreude. There was an air of smug satisfaction that we had decided not to join the single currency, and many argued that those countries that had joined should deal with their own mess and leave Britain to focus on its own painful economic recoveryIt was therefore highly contentious that British taxpayers ended up contributing towards the massive bailouts of Ireland and Greece through the IMF, with £7 billion provided by Britain to help rescue the Irish economy alone.
This problem has reared its ugly head once again in recent weeks as the Euro crisis has risen to the top of the global agenda. This time Cameron has made it clear that the British taxpayer will not be contributing to another bailout for Greece, while theU.K.has fiercely opposed plans for a Financial Transaction Tax which would be a significant strain on London,Europe’s largest financial centre. The question remains: facing our own unpopular and drastic cuts, why should theU.K.have to pay for the lavish and wasteful ways of other European countries?
This chaotic state of affairs endorses the view that Europe is in a state of relentless decline, and is therefore increasingly becoming a strain on theU.K.This then suggests that we should distance ourselves and look elsewhere to ensure our future prosperity. With the prospect of greater financial integration and tighter regulation within the Euro zone, it looks increasingly as if this will be the case as Britain faces being sidelined in a two-tier European Union.
Yet British aspirations to remain a global power independent from Europe seem increasingly unrealistic and outdated in the modern world. The cooling of Anglo-American relations under the Obama administration has shown how our special relationship with the U.S. is by no means guaranteed, whilst Cameron’s hopes to forge a closer union within the Commonwealth are undermined by a divide in preferences and ideologies between developing and developed countries. Both in terms of commercial interests and regional security,Britain shares many of the concerns of its European neighbours. If we want to maintain our influence and protect our interests it will therefore be increasingly necessary to act in concert with the rest of Europe.
Economically Britain’s fate is also inextricably tied with that of Europe. Already the major British companies do almost all of their business in Euros; the fact that their final balance sheet is in British pounds is largely more sentimental than anything else. Nearly 70% of our trade is with Euro-based economies, compared to 15% with the U.S.and less than 10% with the Commonwealth. Meanwhile the idea that emerging markets could replace the EU anytime soon should be met with caution, as Britain currently exports more to Ireland than to Brazil, Russia, India and China put together. The British economy has now become indisputably reliant on trade with Europe; whether we like it or not, we are essentially part of the Euro in all but name.
With this in mind it seems that closer political and economic integration with Europe is clearly in our long-term interests. Many British business leaders seem to agree that overall the U.K.would greatly benefit from joining the Euro, whilst many of the political class are keen for closer integration in areas such as foreign policy and fiscal regulation even if they do not dare to say it. However, recent turbulent events in the Euro-zone have given a boost of confidence to Euro-sceptics, dramatically symbolised by the Tory backbench rebellion which proposed holding a referendum on EU-membership. Meanwhile much of the public remain highly suspicious of Brussels and retain a nostalgic view of Britain as a major world player-a notion fostered by a fiercely anti-Europe right-wing media. Unfortunately, in the fiercely competitive and multi-polar world of the 21st century, we can no longer afford to stand alone. As a small island with few natural resources we have always been highly reliant on trade, and with no remaining empire our future prosperity and security undoubtedly lies with Europe. To deny this would be a big mistake, and one that could cost us dearly in the long-term.