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Cameron needs an emergency renegotiation plan for a post-€uro Europe

Tim Montgomerie

Screen shot 2010-11-21 at 08.37.08 Behind the News of the World's paywall, Fraser Nelson writes (£) about the opportunity that Cameron must grasp if the €uro collapses:

"The Euro's collapse could happen in a year. Maybe three. But there's a good chance of it happening while David Cameron is PM. It'd be his historic chance to fight for Britain and to repatriate those powers which Tony Blair contemptibly signed away. Make no mistake: if the Euro crashes, Brussels will have to redraw EVERYTHING...

The PM would be able to dictate the terms on which Britain would stay inside the discredited, shellshocked EU....

Using Brussels' own research, two out of three Brits don't trust the EU. More Brits think EU membership is "a bad thing" than "a good thing"...

When the Euro crashes, Cam can go in and undo all those treaties he says he hates. It will be a modern-day Battle of Britain. Cameron could do more for British sovereignty than any Prime Minister since Churchill."

None of us knows if the €uro will survive for a few more weeks, months or years but Fraser is right. There is a very good chance of it breaking down. How much economic chaos do European leaders need to see before they realise that the €uro cannot ever work? The ERM was the €uro's forerunner. UK membership of the ERM meant we had much higher interest rates than our economy needed. Millions of homeowners and businesses were ground into the earth as a result. Ireland needed higher interest rates during the last decade when its economy was overheating but Frankfurt's Central Bank wasn't setting interest rates for Ireland but for sixteen diverse economies. A one-size-rate-didn't-fit the UK in 1992. It didn't suit Ireland, Greece or Spain over the last ten years. It never will suit a continent with economies that have very different labour, capital and technology markets.

Britain does need to prepare for the time when the €uro might collapse. Markets may well be in turmoil and the renegotiation might happen over a weekend rather than over weeks and months. It will be too late to start cobbling together a renegotiation plan then. We need to have a plan ready for that moment. Downing Street should be finalising it now.

Britain, as the nation that warned against the €uro, will have enormous moral authority to lead those renegotiations and finally a multi-speed, a la carte Europe might emerge, appropriate for the 21st century.

PS I have started a new Q&A briefing called 'Inside Politics' for The Sunday Telegraph. It has started today with a focus on the Irish bailout.


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