In July 2010, I wrote an article for ConservativeHome, setting out the inevitability of economic and political centralisation when interventionist nations are combined in a customs union. I referred to the book Omnipotent Government: The Rise of the Total State and Total War, published as World War II ended, which made the case in its discussion of Peace Schemes, such as “the union of western democracies”.
Today, the Commons will be asked to give second reading to the European Union (Approval of Treaty Amendment Decision) Bill.
The Bill’s text is trivially short: its purpose is to confirm the Government’s view that a referendum is not required to approve the European Council’s decision on the European Stability Mechanism. As the ESM applies to Eurozone countries only, there is a good case. I feel sure that the Government will argue that permitting the Eurozone to establish the ESM is in our interests, as it did in the Lords,
This brings me back to why this Bill is important. It represents Parliament giving a simple yes or no to amending part of the TFEU that does not actually apply to the UK at all. However, as I have made clear, by giving approval to this decision the UK avoids liability for future eurozone bailouts under the EU budget and gives the eurozone the legal clarity-this may reinforce the point I have just made-that it wants to back the European stability mechanism. We also uphold the commitment made by both the Prime Minister and the Chancellor to help the eurozone to get itself out of a crisis. Whichever way the situation goes, that must be to the advantage of us all.
If we were to refuse to agree the decision, the impact on our trading partners in the eurozone would not be positive, to put it mildly. We are under no illusion that the ESM alone will resolve the eurozone crisis, but, as the Prime Minister said last week, an effective firewall is part of the solution. It is safe to assume that markets would not view favourably any uncertainty about the eurozone’s ability to establish a permanent support mechanism. That is just what would arise if we failed to ratify this decision.
As the Prime Minister, my right honourable friend the Foreign Secretary and the Chancellor have repeatedly made clear, a stable Europe is directly in the UK’s interests. That must be so. We rely on the eurozone states for over 40% of our trade. London is Europe’s international financial centre. Stable progress in the eurozone states is vital to stable progress in the United Kingdom.
Therefore, agreeing to this treaty amendment is in our best interests. As I have said, it means that the UK will not be exposed to any future programmes of financial assistance for the eurozone through the EU budget, specifically the European financial stability mechanism-that will be closed-and it helps our neighbours in the eurozone in their search for financial stability in the currency area. Your Lordships have already agreed that the Prime Minister could sign this treaty amendment, as he has done. I hope that we can now take the necessary steps to allow us to ratify it. I beg to move.
Whether the ESM is indeed a good idea is another question. The text of the treaty establishing the ESM is here and this video provides a brief summary, from a German perspective, of some of its downsides:
My own view is that deepening economic and political centralisation is not in Europe’s interests, for all the reasons which Britain has historically used to oppose such moves. That’s why I have joined like-minded individuals and organisations across Europe in supporting the Initiative for a Free and Prospering Europe. Read more here.