Thursday 22 March 2018

Hamish McRae: In a three speed Europe, would it be unfair to put Ireland on the hard shoulder?

SO would a two-speed Europe be such a bad thing? Actually, in economic terms, we already have one. This division, however, is not between countries in the eurozone and those outside it but rather within the eurozone itself – between the core countries that are benefiting from the single currency and the fringe ones that are struggling to cope with its disciplines. Strange as it may seem, some of the "outs", such as Sweden and Denmark but also to some extent the UK, are performing more like the eurozone core, and less like the fringe.

This week has seen Angela Merkel set out her vision of a fiscal and political union as a way of coping with the sovereign debt crisis. That is a completely rational and reasonable position to take. She would not put it in these terms but, if Germany has to give at least a partial guarantee for the debt of other eurozone countries, which is pretty much what is de facto happening, then it has to have control over their fiscal policies. And the only way that can be sustained is by political union.

This is rational and reasonable, and to present it as some sort of Anschluss, reminiscent of the German link-up with Austria in 1938, is both offensive and wrong. The alternative vision, in effect welcoming a multi-speed Europe, has been set out by David Cameron. That idea of two speeds, with Britain in the slow lane, has led to worries about the status of this country. But if you look at the economic speed, as opposed to the speed of political integration, the results are very different.

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