LOSING THE PLOT ON EUROPE

Paul Anderson, Tribune column June 13 2003

I'M not sure exactly why, but I felt deflated this week after Gordon Brown's announcement that we shan't be joining the euro for a while.

It was hardly that I was expecting anything else. True, I'd felt a little twinge of hope when Will Hutton reported in the Observer a few weeks back that Tony Blair was so fed up with the Chancellor's obstructionism on the euro that he'd decided to shunt him off into the Foreign Office. And even as late as Monday morning, I found myself imagining Gordon stunning the world by declaring that there was a persuasive case for British euro membership now.

But these were idle thoughts. All the evidence suggested Hutton's story was just too good to be true - and that there was a close-to-zero chance of Brown springing a surprise and giving the euro the green light. I had only modest hopes of New Labour in government even in 1997. After six years of disappointment, I reckon I've learnt that wishful thinking gets you nowhere.

So why did Brown's performance on Monday get me down? The more I mull it over, the more I realise that it's because I simply can't stand the thought of another two years - or three years, or five, or whatever - of British politics being dominated by the grind of inconclusive arguments about the euro.

It's not that I don't have my own view about it. I think Britain should join as soon as possible and put its weight behind proposals to tone down the anti-inflationary zeal of the growth and stability pact and to give the eurozone the capacity to run a redistributive fiscal policy. Britain's best hope, I believe, is to become part of a social democratic federal Europe. And we won't do that outside the euro.

The point is that I've thought this for years - and just about every other protagonist in the argument, whatever their views, is in the same boat. For all the pervasive grumbling from the sceptics that Britain has not had a proper national debate about our relationship with Europe since the 1975 referendum, the truth is that our relationship with Europe has been minutely dissected as no other political issue has been in recent times. All the positions are so well rehearsed that the argument has become stale and utterly tedious. It should be decision time.

The reason it isn't has precious little to do with the mounds of documentation produced by the Treasury on Brown's "five tests". There are of course real arguments to be had about the technical economics of joining the euro, in particular over the exchange rate at which we join; and it should go without saying that it would be mad to join if the British and eurozone economies were completely out-of-kilter.

But the Treasury documents show no such thing. Their most serious claim is that there would be a danger of inflation if Britain adopted eurozone interest rates, which is true - but we're not talking serious inflation, and in any case fiscal measures, otherwise known as increased taxes, could effectively counter the danger (as the Treasury report acknowledges).

No, the real reason that Brown put off the decision yet again is purely political. To put it bluntly, the Government is scared shitless that it will lose the promised referendum on euro entry. Which is not to say that the Government shouldn't be worried. If Britain voted no in a euro referendum, as all the polls suggest it would, Labour's credibility would be shattered, and the only beneficiaries - and I mean the only beneficiaries - would be the Tories.

Labour's mistake was offering a referendum in the first place, way back in 1996 when it was in opposition. At the time, it was greeted by nearly every commentator as a clever political gambit that not only neutralised Labour's own divisions on the euro but also had genuine cross-party popular appeal. But even then it should have been obvious that a referendum campaign would have to be fought against the rabidly anti-European Right-wing press as well as the Tories - and winning would not be easy.

Had Blair and Brown gone for a euro referendum immediately after the 1997 general election, they might just have prevailed - but instead they lost their bottle and effectively ruled out the referendum for the duration of Labour's first term. Since that defining moment, the referendum has become an increasingly daunting prospect. Monday showed that it has now rendered the Government incapable of acting decisively just as decisive action has become urgent.

Some on the Tribune Left will no doubt find some satisfaction in New Labour being hoist with one of its own petards, but I can't join them. In 1997, Blair was handed the best chance anyone has ever had of making Britain a full member of the European club. That he has blown it is his greatest political failure.