Dominic Lawson: If the euro fails, we must leave the EU

(Reuters)

The Prime Minister may be away on holiday, but that does not mean his staff are unable to answer letters on his behalf. Thus, over the weekend a Conservative activist, Anita Segar, revealed that she had just received a reply from No10, telling her why the PM would not satisfy her desire for a referendum on the future of Britain's membership of the EU. The PM's political private secretary wrote that "there is one argument in particular, against holding such a referendum that we find irrefutably powerful, namely that most people want to say neither 'yes' to everything from the EU, nor 'no' to everything".

This is a false dichotomy, based implicitly on the supposition that outside the EU the UK would not be able to emulate Norway, which has tariff-free access to the European single market – apart from agriculture and fisheries. These, of course, are the two aspects of the original deal which the vast majority of Britons would be most delighted to leave behind: the Common Agricultural Policy adds an estimated £1,200 to the average British family's annual food bill and outside the Common Fisheries Policy, Britain would have the right to regain control of about 65 per cent of the North Sea's stocks.

All these arguments are suddenly of pressing pertinence, because the whole future of the EU is in question, for the first time since its inception. Angela Merkel recently declared that the EU itself would be "unimaginable" without the euro – and yet the euro's destruction is now a distinct possibility. This denouement, or something very like it, was in fact anticipated by the young George Osborne, when he was working in the private office of the then Tory leader, William Hague. Osborne had drafted the 1998 speech in which Hague had warned that the single european currency under extreme financial pressure could end up with its members being "trapped in the economic equivalent of a burning building with no exits... my fear is that the creation of a single currency will take european political union well beyond its acceptable limits. The effect of imposing a one-size-fits-all single interest rate on a set of different economies with different cycles, structures and circumstances could be disastrous".

That speech, derided by so many at the time as outrageous alarmism, now seems profoundly prescient. Yet Mr Hague, now Foreign Secretary, will not refer to it and Chancellor Osborne urges the members of the euro to do all they can to maintain the currency, at the loss of national fiscal sovereignty which he would never accept for the citizens of this country. In part this is because these long-time eurosceptics are understandably concerned at the consequences for Britain if the euro entered terminal meltdown.

It is also because they find themselves in coalition with a party which still officially believes the euro is so wonderful that we should want to join it.

That, however, is not a point which the PM's office felt brave enough to mention to Ms Segar.