10 Euro myths busted

Roger Helmer MEP

Those who espouse the cause of European integration have a range of suspect propositions which they repeat again and again. Perhaps they are working on Goebbel's dictum, that if a lie is big enough and repeated often enough, the people will start to believe it. Indeed some of their myths are in danger of creeping into the public subconscious - and into the Today programme - as "self-evident truths". No one wants a super-state, they say. To oppose EU integration is "isolationist". The benefits of Britain's EU membership are "self-evident". The euro, with all its faults, will at least deliver "stability". Let's examine some of these propositions in more detail.

1. "No one wants a super-state".
I have heard politicians from Ken Clarke to German MEP Elmar Brok repeat this mantra. "No serious political leader in the EU wants a super-state".

Imagine for a moment that we see a man laying brick on brick, building walls, installing windows and doors, adding rafters, roof trusses, tiles, and topping off his work with chimneys. There is no earthly point in him coming down his ladder and telling us that he's not building a house, because we can see the house with our own eyes.

The EU has a flag, an anthem, a passport. It has a currency, a central bank, a parliament. It has common policies on agriculture, fisheries, industry, employment. It is pressing for harmonisation of fiscal policy, and a common judicial system. It has a common foreign and security policy, and (at least on paper) an army. It has ambitions for a constitution, a legal identity, common diplomatic representation, unitary representation on international bodies including the UN Security Council. The "occupied ground" of the acquis communautaire grows by the day.

What attribute of a state is missing from the list of those that the EU already has, or is busy acquiring? What is it, if not an aspiring state? Welcome to the Peoples' Republic of Europe.

2. "The euro will deliver stability"
The euro was launched at US$1.17, and dropped close to 80 cents. As I write, it's worth about 98 cents, so the stability argument is looking a bit tattered. But it's more fundamental than that. Over recent history, the pound has been more stable against the dollar than against continental currencies. If we join the euro, our new currency will therefore be less stable against the world's major trading currency, the dollar.

Does this matter, ask the euro-luvvies, if we're locked into the EU's great internal market? Yes it does. Contrary to Robin Cook's assertions, more of our trade is outside the euro-zone than in, and most of the external trade is in dollars. Three quarters of our massive global investments are outside euro-land, and mostly denominated in dollars. The US is the UK's largest inward investor. The dollar, not the euro, is the biggest currency for the UK's non-Sterling international trade settlements. Indeed, if we saw the need to join a larger currency, there's a powerful case that the dollar would be a better choice than the euro.

But there's a still bigger reason why the euro will undermine stability. A single interest rate for euro-land means the wrong rate for most countries, most of the time. That means inflation when rates are too low, and recession and unemployment when they're too high. In plain words, boom'n'bust. Not only currency volatility against the dollar, but demand-cycle volatility as well. The Treasury's own economic model suggests that joining the euro would increase demand-cycle instability in the UK by around 75%.

3. "Opposition to EU integration means isolationism"
Britain has one of the most externalised, globally-engaged economies in the developed world. We are the world's second biggest global investor. We are a great trading nation. By contrast, continental economies tend to trade and invest incestuously with each other. The EU is notoriously inward-looking and protectionist. The one way we could isolate ourselves in the world would be to accept our new status as a mere off-shore province in the European Empire - the most over-taxed, over-borrowed, over-regulated, over-governed block in the world.

It is a false dichotomy to say that we are either positive Europeans or we are isolated. The true choice is almost the opposite - either to remain a great global trading nation, or to sink ever deeper into an introspective Europe.

We are the world's fourth largest economy. We are in the G8, the OECD, the WTO, the World Bank, the UN Security Council. We are leading members of NATO and of the Commonwealth. And we have a unique and powerful transatlantic bond. The idea that without the EU we would be isolated is not just wrong. It is absurd.

4. "Winston Churchill wanted Britain in a United Europe"
Many EU apologists - not least Hans-Gert Poettering, leader of the European People's Party in the European parliament - love to quote Winston Churchill's positive comments on European union, and imply that he would therefore have approved of Britain's involvement in the EU. Nothing could be further from the truth.

Churchill saw a union of continental European nations as a way of achieving a rapprochement between the old enemies, France and Germany, and thus preventing yet another continental war. But never in his wildest nightmare would it have crossed his mind that Britain might be subjected to supranational institutions in Brussels.

Churchill had a vision of Britain at the conjunction of three major spheres of influence - Europe, the Atlantic alliance, and the Commonwealth (or as he would have seen it, the Empire). In particular he had a passionate commitment to "The English Speaking Peoples", the USA and the old Commonwealth countries.

Churchill's view is crystal clear in one of his most famous quotations:

"We have our own dream and our own task. We are with Europe but not of it. We are linked but not combined. We are interested and associated but not absorbed. And should European statesmen address us in the words that were used of old, 'Shall I speak for thee to the King or the Captain of the Host?', we should reply with the Shunamite woman 'Nay sir, for we dwell among our own people'".

5. "France is no less French, Germany no less German, within the EU"
France and Germany are proud, historic nations, they say - even though Germany was invented by Bismarck as recently as the nineteenth century. Would these countries accept the EU, and monetary union, if it meant a loss of independence and sovereignty? As it happens, monetary union has never had the popular support of the German people. A recent poll said 54% of Germans would have the mark back if they could.

Frederick Forsyth gave a robust answer to this canard in a recent letter to the Telegraph. He pointed out that France was just as French in 1942 as it had been in 1938. The people still ate baguettes and smoked Gauloises. Onion vendors still pedalled their bicycles. The only difference was, in 1938, the French were ruled from Paris, whereas in 1942 they were ruled from Berlin.

If we allow the process of European integration to roll on, there will be no threat to our British culture. We will still be allowed Maypoles and Morris dancing. All we shall have lost is the right to govern ourselves.

6. "The UK derives enormous benefits from EU funding"
In many parts of the EU we see signs adorned with the EU's yellow crown of thorns on a blue ground, telling us that projects have been supported by EU money. Here at last we have a clear, undeniable benefit from EU membership - don't we? Well no, actually. We get back from the EU far less than we put in. If we compare the net amount we get back with the payments we make, and take off a discount for the cost of administering EU funds, we find that each pound we receive in EU grant funding costs us about £2.60 (see my 2000 book Straight Talking on Europe for a detailed analysis).

Even this isn't the end of the story. The money we get is hedged around with bureaucratic restrictions and conditions, so we end up spending it on things we would probably not have chosen to do ourselves.

They give us back a little of what was our own to start with. They tell us how to spend it. Then they expect us to be grateful.

7. "Commission Vice President Neil Kinnock is reforming the EU institutions and rooting out graft"
One of the first things that happened after the 1999 Euro-elections was that the parliament prepared to fire the Santer Commission, following revelations of fraud and mismanagement from whistle-blower Paul van Buitenen. Amazingly, the new commission included four from the discredited Santer Commission. Even more amazingly, one of them, our own Neil Kinnock, was put in charge of institutional reform - a classic case of poacher turned gamekeeper.

Several months ago, there was a scandal over fisheries policy and Kinnock told us that the official at the eye of the storm had been moved in "a routine re-assignment" - when it appeared to MEPs that he had been fired for upsetting the Spanish. Then in August we saw Marta Andreason, the Commission's Chief Financial officer, demoted after whistle-blowing to the parliament. Kinnock told us it was "a clash of personalities".

Andreason had refused to sign off the accounts, because she said accounting systems were so bad it was impossible to tell if the figures were correct. A spokesman for Kinnock said that "The Commission had known about these problems for years" - but apparently had done little or nothing about them! According to Andreason, it is simply impossible to track funds in the Commission and to see if fraud has taken place or not.

There have been a few moves to improve employment policy and staff contracts in the institutions (mainly prompted by excellent work from Tory MEP Malcolm Harbour), but in terms of accountability and financial management, it's difficult to find any progress that has been made since the Santer Commission fell on its sword. According to the EU's own Court of Auditors, £3 billion a year goes walkies - and that's probably on the low side.

8. "It would be an economic disaster for Britain to leave the EU"
It's a very facile argument. Three million UK jobs depend on trade with the EU, so they would be at risk if we were to leave. Sixty percent of our trade is with the EU (so they say - the true figure is around 45%, and declining). This too, they tell us, depends on EU membership.

It is true that many jobs and much of our exports depend on trade with the EU. But they do not depend on our membership of the EU, still less on joining the euro. Millions of jobs in the US, in China, in South East Asia depend on trade with the EU - but these countries are not EU members.

In 1973 when we joined the (then) Common Market, average industrial tariffs were between 30 and 40 percent. Today, as a result of the good work of the GATT and WTO, the figure is three to four percent. The tariff wall that prompted us to join the EU is only a tenth the size it was, and declining.

In any case, we import far more from the EU than we export to it. We are a net customer. It is inconceivable that we would not be able to negotiate a free trade deal even if we were not members. After all, Switzerland, Norway, even Mexico have free trade deals with the EU - and arguably get most of the benefits of membership while avoiding many of the burdens.

The Institute of Directors estimates that the cost of EU membership amounts to between £15 and £25 billion a year. Other economic commentators have estimated that the economic effects of withdrawal would be broadly neutral. There is no credible case that Britain would be either isolated or economically damaged outside the EU.

9. "Continental economies outperform the UK"
There is a widespread belief that we in Britain are poorer than our continental cousins - based perhaps on the poor state of our public services. In debate recently with East Midlands Lib-Dem MEP Nick Clegg, he claimed that Britain was in the bottom third of the fifteen EU countries for per-capita GDP. When I checked the figures, I found he had been using seriously out-of-date statistics. In fact, we are in the top third.

From the end of the Second World War until the end of the seventies, Britain was in relative economic decline compared to continental Europe. Then in the early eighties, two things happened. In Britain, Margaret Thatcher broke the stranglehold of the unions and set industry free. At the same time over the Channel, the dead hand of the European Social Model was starting to bite. We have been playing catch-up ever since. Latest figures show our per capita GDP ahead of Germany.

But our relative recovery is under threat. Now that Labour has abandoned John Major's social chapter opt-out, the European disease is starting to infect our economy. A torrent of social and employment regulation is damaging productivity and labour market flexibility.

The EU economies will decline long-term compared to the rest of the world, and especially compared to the USA, for three key reasons.

First, the contradictions inherent in the euro. Milton Freidman has said recently that he thinks the euro will not last beyond ten or fifteen years. Certainly it will do great damage to EU economies, as they have to cope with sub-optimal interest rates. Unwinding the euro will be hugely expensive and disruptive.

Second, European social policy, far from delivering the vaunted "most competitive knowledge-based economy in the world" promised at Lisbon, is progressively degrading competitiveness and productivity in the EU. EU social and employment policies are a disaster in the making.

Thirdly, there is the looming demographic time-bomb. Over the next fifty years, according to the UN, the EU's population will suffer a drastic decline. As the population ages, the work-force will shrink even faster. This will cause the EU's aggregate economy to shrink. It's a discouraging prospect.

10. "The EU doesn't have rules about straight bananas - it's a Euro-sceptic myth"
I remember a debate a year or so ago in Leicester with Keith Vaz - then Labour's Minister for Europe. A questioner asked if British suspicions of the EU were caused by excessive regulation, like the Rickety Ladders Directive.

Oh no, replied Keith Vaz. There's no truth in this at all. Rickety Ladders are like straight bananas, just another Euro-Sceptic myth, designed to frighten the unwary. I promised to send him a copy of the regulation (Number 404/93, if you're interested) on straight bananas - and did so next day.

But the Rickety Ladders "myth" was even better. In those days, I was on the Environment Committee which dealt with this safety issue. Not only had I sat through debates on the measure - I knew that the "rapporteur" who had steered it through the committee was none other than Peter Skinner MEP, one of Keith Vaz's Labour colleagues!

It was a daft measure full of absurdly detailed advice about how and when to go up a ladder, what to carry, how to place it on its footings, whether to steady it or not - everything except whether you should be required to carry a handkerchief in your pocket. Worthy stuff, but it should have been in a safety manual, not an act or parliament.

Of course some stories about the EU are exaggerated or even wrong. But mostly the news from Brussels turns out to be even worse than you thought.