European Union Membership (Economic Implications) Bill [HL]

Lord Bilimoria Excerpts

Friday 25th November 2011 Lords Chamber

[Lord Bilimoria]

My Lords, we are caught between Utopian ideology and harsh reality which, throughout the eurozone crisis, has yielded to illogical, irrational arguments and behaviour. Just this week we have had President Barroso imploring Europe to unite. In a way, he is saying, “United we stand, divided we fall”. We have a constant clamour for whether we should have an “in or out” referendum. We have the noble Lord, Lord Heseltine, saying that we will ultimately join the euro. One of the best decisions this country made was not to join the euro.

We have people calling for and predicting a two-track euro, with the inner core consisting of France, Germany and a few other countries, with an outer core of the PIGS et al, and then you have others saying that there will be a shrunken eurozone with the PIGS et al going back to their own currencies. Then you have those saying that the euro will disintegrate altogether, which would have a catastrophic domino effect around the world. Then you have everyone putting pressure on Germany to save the euro, including our own Prime Minister and Chancellor, while just this week the Bundesbank had to pick up 39 per cent of the German bond sale after commercial banks bought just €3.6 billion of it. What a lot of confidence we have in Germany. We have German Chancellor Angela Merkel saying that Germany would be prepared to give up a piece of national sovereignty in order to survive. Then she said:

“No one should take it for granted that there will be peace and affluence in Europe in the next half century … If the euro fails, Europe fails”.

We are just refusing to accept the elephant in the room. The European project, which has been so brilliant, and instrumental in keeping the peace and promoting free trade and the free movement of people between the countries of the European Union, has pushed the envelope too far with the creation of the euro. We talk about countries being run by technocrats, but to satisfy the Utopian dream of our Eurocrats—of creating a United States of Europe—we stand where we do today.

We may have a European Parliament but we do not have a federal Europe and we need to wake up to this. I have said from day one that the only way that the euro can work is for us to have complete political, fiscal and emotional union. That means being an India or a United States of America, which have true federal systems and where the centre is in control of currency, interest rates and national taxes. That is a fiscal union. Most importantly, the centre is responsible for the defence of the united federal country. A true fiscal union needs to have a central bank as a lender of last resort. The European Central Bank has shown itself to be completely powerless. It is the IMF that we must rely on, although the IMF showed itself to be useless in the financial crisis three years ago and needs to be reformed.

Being a federal system means a complete surrender of any sovereignty by the states that make up these countries. Can we realistically see that ever happening in Europe? If we are relying on political will to make this happen, we are fooling ourselves. With the euro, a one-size-fits-all approach cannot and does not work. You cannot have countries and economies as extreme as Germany and Greece under one exchange rate and one interest rate: they will never be in sync at any one time.

Now is not the time to get out of Europe. I am a supporter of Europe. Now is the perfect time for Britain to lead in restoring the European Union to what it should be: a trading bloc of goods and services, and of people with shared principles and values. However, even with those shared values, the European Union has lost the plot. Day after day we are being hampered by European regulations that are stifling our businesses and removing the flexibility of our labour force.

The noble Lord, Lord Pearson, suggests that a committee should be formed to perform a cost-benefit analysis of being in or out of Europe. Surely such a committee is unnecessary. Surely the Government carry out this cost-benefit analysis every single day. I am confident that the Minister, in his response, will give us this cost-benefit analysis in detail in this House today.

We have huge strengths in Britain. We are by far the most international country in Europe. We are looked upon as the gateway to Europe. That could be because we have London, the most global world city and the greatest of the great cities, because of our financial markets or because of the English language. We are not to be led by Germany and France. Kipling’s words were:

“If you can keep your head when all about you are losing theirs”.

In spite of our awful financial predicament, we have the confidence of the global financial community with our interest rate yields, which are better than Germany’s, and our AAA rating.

Trying to keep the euro together in a shrunken eurozone, or trying to keep the whole project together, is just postponing the inevitable. Logically, the euro cannot work without full fiscal union and I cannot see that happening in Europe. Historically, it has never happened. We need to work towards an orderly, staged shrinking—and perhaps even eventual dismantling—of the euro and, most importantly, redrawing the European Union and going back to basics to make it what it is meant to be. We have to wake up; these are dangerous times. Even the Governor of the Bank of England is saying, “I don’t know what’s going to happen tomorrow”. Will we go back to when Her Majesty the Queen, on a visit to the London School of Economics during the financial crisis, asked, “Why did nobody notice this?”?

To conclude, as a country, we are best when we are bold. That is the spirit of this country. Now is the time for Britain to take leadership. It was not many years ago that Britain was referred to as the sick man of Europe. Today we should be seen as the sensible man of Europe. The euro is not only underwater but dead in the water. I quote:

“The era of procrastination, of half-measures, or soothing and baffling expedients, of delays, is coming to its close. In its place we are entering a period of consequences”.—[Official Report, Commons, 12/11/36; col. 1117.]

Those were the words of Winston Churchill in the House of Commons in 1936. We have to wake up and face the consequences.