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10 Reasons Why Further European Integration and the
Euro are Bad Ideas |
I believe that the
project of European Integration is the evil of our time. I
hope the reasons stated below will persuade you that this
project must be halted, and possibly reversed, as soon as
possible!
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1. One interest rate cannot be suitable for everyone
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Quite simply if there is a single currency there must
also be a single interest rate set by the European Central
Bank. For the single currency to work, this single
rate must be suitable for all member states. It
is difficult to see how a single rate could possibly be
suitable for all of the economies in all
foreseeable situations. Take for example Germany
and Ireland in 2001. The German economy is on the
brink of recession while the Irish economy is booming.
The Germans would ideally like a low rate while the Irish
needed a higher rate. The compromise rate is not
suitable for either Ireland or Germany. This shows
that in the long term the result is painful for both
countries as both countries have an unsuitable interest
rate. One size cannot fit all! |
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2. It is irreversible |
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The single currency experiment
has been designed to be irreversible. If a country feels that
it is not in their interests to remain in the single currency
there is no mechanism for it to leave. This feature alone makes
the single currency an unattractive prospect.
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3. It will lead to tax harmonisation |
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It is not that commonly
known but UK citizens pay less tax than anyone else in Europe.
Although denied by many, it is clear that continental Europe
will not allow Britain to have a different tax regime as it
would give Britain an 'unfair advantage'. It would also be difficult
to image that Eurozone interest rates can be managed effectively
by the European Central Bank if the tax policies (fiscal policies)
are different throughout Europe. It is inevitable that the Eurozone
countries will eventually move substantially towards tax harmonisation.
Continental Europe has a history of high taxation; so it's also
certain that 'tax harmonisation' is another way of saying that
British taxes would go up.
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4. Loss of control in managing our own affairs
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If the UK were to adopt
the Euro it would be handing over control of the economics of
this country to a group of people who are unelected by the UK
population. This seems wrong. It also seems inevitable that
once the EU started controlling the UK economy it will want
to control other aspects of government - what about taxes, the
legal system, the armed forces.....
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5. It is protectionist in nature |
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When asked about why Britain
should join the Euro some Euro-fans state that we cannot afford
to be outside of the Euro. Since we already have free trade
with the Eurozone, the implication is that Europe will form
a trading block that will block or tax our exports. Apart from
being illegal under international law and GATT, it is extremely
unlikely that the Eurozone would actually stifle trading link
with the UK as they have more to lose than we do. That aside,
one has to acknowledge that trading blocks are a thing of the
past. They are an old fashioned 1950s trick used to protect
industries that suffer from inefficiencies and lethargy. Britain
shouldn't be pinning it's hopes on such a backward looking regime;
Britain should be looking forward and forging new trading links
with the Americas and Asian continents.
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6. Economic 'shocks' will have different effects across
the Eurozone |
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Many people are saying
that the Eurozone will finally start to really work "when
the economic indicators of the constituent nations converge".
This type of comment shows a shallow understanding of what is
important. What really needs to happen is not only convergence
of the economies but also convergence of how the economies react
to changes. For example in Germany home ownership is much
lower than in the UK. This means that if there was an
increase in interest rates in both the UK and Germany, the slowdown
effect would be greater for the UK as more people have floating
rate mortgages. Likewise in business, suppose there was
another oil crisis. The types of industry varies from
country to country. A country that is dependent upon heavy
industry would most likely be hit harder than one which is predominantly
service based. In the past interest rate changes could
compensate for they discrepancies.
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7. It is undemocratic |
The whole Europe and Euro
project is undemocratic at many different levels. Take for example
Britain. There was a referendum in 1974 asking the British
people whether or not they wanted to be part of the Common
Market. Since then the British people have not been
given the opportunity to vote on further European integration
since all major parties have taken broadly the same position.
It has been mooted that Tony Blair will not call a referendum
on Europe before such a time as he thinks most of the electorate
will vote in favour of joining the Eurozone. If this is
the case then he is acting undemocratically - he should state
the date for a referendum and see what the people decide.
At another level, the whole of the EU is fundamentally undemocratic
as the EU commissioners are appointed and not elected.
Clearly, as the EU takes shape with a diverse population of
over 270 million people, the value of a single vote is going
to diminish. It will not be long before countries are
told that policy and decisions have been formulated 'for the
good of Europe', despite being clearly not in the interests
of a particular country.
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8. Why team up with one of the slowest growing areas
in the World? |
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Using today's technologies
of telecommunications and the internet it is just as easy to
communicate and trade with people on the other side of globe
as it is to do deals in the next city. So just because
the countries of Continental Europe are Britain's geographical
neighbours is not a good enough reason to link up with them.
There is no reason why Britain cannot create free trade links
with any country!
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9. Britain would do better outside the Eurozone |
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Britain would be in an
excellent position outside the Eurozone. At the moment
we can freely trade with the Eurozone and that is unlikely to
change. We would be in a position to establish further
free-trade agreements with the Americas and Asia. Britain
would flourish as a bastion of free trade, while France, Germany
et al languish at 'the heart of Europe'!
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10. It will lead to war in Europe |
The year is 2010, three
years after the creation of the United States of Europe and
Tony Blair is the first President. The European economy,
as a whole, is doing reasonably well. However, the people
to the South, the country that was called Spain, still have
high unemployment (19%) and their standard of living has
not increased at the same rate as the rest of Euroland.
They have been in recession for the last three years and public
confidence is at rock bottom. The local government for
the area has protested to Brussels but the official line is
that 'the European economy as a whole is at last starting to
show signs of economic grow'. Before the local elections
in the State of Spain the people feel isolated and frustrated.
The newly formed Spanish Independent Nationalist Party (SIN)
promises the people the return of their borders and a government
that will fight for the interests of Spain and Spain alone.
They win a landslide victory, capturing 63% of the vote.
SIN approaches Brussels with a proposal to re-establish the
old borders by 2012. The proposal is immediately rejected
by the European Government. President Blair says that, "it
would not be for the good of Europe". The people
start to protest on the streets of Madrid and Barcelona.
The ruling Government of Europe is nervous about these "right
wing extremists" and the civil unrest that they have created.
As a temporary step they send in the European Army (EA) as a
"peace keeping force". The local Spanish population
resents such a move and open hostility breaks out on the streets
of Madrid......
Is the scenario really so absurd?
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