By David Hencke | 24 November 2011
Europe needs to embark on an “orderly” dismantling of the euro, according to former chancellor Lord Lawson. In his interview with Exaro, Lawson made the provocative call after saying that the argument he used against the euro more than 20 years ago still applies today.
Asked whether the euro will survive, he said: “Well, I hope not. Obviously, the extrication from the eurozone will need to be done in a carefully thought out and orderly way.”
“But the idea that it makes sense to keep the eurozone is mad because it was the eurozone that caused this problem [the European financial crisis]. The last thing you want is to preserve the eurozone because you will have problems coming again and again.
“You could keep the eurozone for Germany and a few northern European countries. The whole thing was an attempt dreamed up by one or two architects, some of whom did not know what they were doing.”
In a reference to the former president of the European Commission, he added: “Those who did know what they were doing, such as Jacques Delors, realised that a monetary union cannot work without a political union.”
He warned that setting up a eurozone without a political union would always do “great damage” and, to some extent, politicians had acted in an underhand way to achieve it. “What they did was not to pay any regard to the majority of the people’s views.”
“It is not just the British people who are against it. I live half the time in France, and, I can assure you, the French people do not see it this way. They want to be French; they want France. They do not want to be absorbed into some United States of Europe. It will never work.”
In 1989, Nigel Lawson, during his last year as chancellor to the then prime minister, Margaret Thatcher, gave a speech at Chatham House, the international-affairs think-tank in London, and said that the single currency would fail if there were not also political union, whether or not the UK was a member.
Lawson recalled, during his Exaro interview, that his audience included Lord Mandelson, a key figure in the Labour governments from 1997 and one of the strongest supporters in those administrations of the UK’s joining the euro.
“Economic and monetary union,” Lawson warned in his 1989 speech, “is incompatible with independent sovereign states with control over their own fiscal and monetary policies. It would be impossible… to have irrevocably fixed exchange rates while individual countries retained independent monetary policies.
“Such a system could never have the credibility necessary to persuade the market that there was no risk of realignment.”
He continued in his speech: “Thus EMU [economic and monetary union] inevitably implies a single European currency, with monetary decisions… taken not by national governments and/or central banks, but by a European central bank.
“Nor would individual countries be able to retain responsibility for fiscal policy. With a single European monetary policy, there would need to be central control over the size of budget deficits and, particularly, over their financing. New European institutions would be required to determine overall community fiscal policy and agree the distribution of deficits between individual member states.
“It is clear that economic and monetary union implies nothing less than European government… and political union: the United States of Europe. That is simply not on the agenda now, nor will it be for the foreseeable future.”
In his Exaro interview, Lawson also condemned the financial markets for being “superficial” in their assessments of the eurozone debt crisis.