Lord Mandelson will deliver a passionate defence of the euro in a speech in Singapore today, insisting it is in everyone's interest it is saved.
Lord Mandelson will deliver a passionate defence of the euro in a speech in Singapore today, insisting it is in everyone’s interest it is saved, Left Foot Forward can reveal. The former European Commissioner and advocate of British entry will warn that saving the eurozone, and “the evolution of genuine European Union” is “the one thing that can arrest the slide” in influence to the Asian emerging economies.
Defending the euro, Mandelson will take the fight to the sceptics, saying:
“We have got so used, so quickly this year, to talking about the single currency as a source of weakness for the EU that it is easy to forget its strengths.
“Ten years of high growth and low inflation. The reduced transaction costs, the reduced exchange rate volatility, the price transparency, the deep integrated capital market. The benefits of reserve currency status.
“To say that the euro is a political project is not to say that it does not have huge potential economic benefits, although eurosceptics often imply that this is the case.”
Going further, he calls on Europe’s leaders to be bolder in making the political case for union:
“Some say that our approach as far as the public is concerned should be “don’t ask, don’t tell”. That the less the public knows, the less they will have to contest. But that attitude is precisely what has contributed over time to the erosion of public support for European construction.
“It is simply not possible to save the eurozone without explaining and making the political case for further integration. It may be that Europeans are fundamentally not ready to take that step. If that is the case then none of this will matter.
“Yet at the moment no one is putting the political case for deeper economic union in anything other than the most evasive and oblique terms. I hear leaders insisting they will do whatever it takes to preserve the euro from the scepticism of the bond markets. But I don’t hear why. And we are fooling ourselves if we don’t see that that omission is part of the problem.
“Until Europe’s political leaders re-make a believable political case for “doing whatever it takes”, they will not succeed in restoring their credibility, whether in the markets or amongst the public, and it is credibility more than credit which is currently in such short supply.”
On the “colossal” consequences of failure, and the need to be more “honest and up front”, he will add:
“Without wanting to oversimplify the problem, it does seem to me that what we have is a particularly acute version of the problem the EU has now had for a while: that it is easier to describe how it might work in principle than to explain to Europeans why it should work that way, and to be honest and up front about that.
“The big early political arguments for European Union have lost a lot of their force for a generation that has no memory of European conflict, or even the Cold War. As a result, for many the legitimacy of Europe’s construction has faded.
“So it’s important to ask: why should the Eurozone be saved? If we think that is not really a relevant question we are getting the politics of all this badly wrong. Of course we can argue that it has to be saved simply because the alternative to a move into greater fiscal union at this point is so much worse. But that is close to a counsel of despair, even if it is true.
“If the single currency union unravels in Europe, the costs in GDP to each and every one of us – and indeed for the global economy as a whole – could be colossal.”
Mandelson will conclude with a call to “fight back” against the sceptics, once more stressing how we’re better off in Europe, with a strong and stable eurozone:
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“Helmut Kohl famously said that the question of European integration is the question of war and peace in the 21st century. The fact that that sounds a bit exaggerated to us now ironically demonstrates why he was right. It may be less elevated, but the question of European economic integration will also be the question of European global credibility and influence in the 21st century.
“Not just our currency but our position in the world is at stake, our ability to command the attention of investors as well as our capacity to deploy our ‘soft’ continental power.
“If we see one domino fall, others will follow. That’s why we have to fight back. Not against the markets – that’s fool’s talk – but against a decline in our own self-belief, a failure of nerve which, if we are not careful, will engulf Europe with disastrous consequences not just for our economy but for everyone else’s too.
“That’s why we have to stand up, win the argument, act decisively and lead. And to do so without further delay.”