European Affairs

No, I am not listening to another account of the incomes of European Commissioners. We have the foreign policy post, which escalates in title even as it diminishes in power. It is now High Representative—or perhaps it is Lord High Representative now. It is a job as important as herding cats—a collection of cats that do not particularly want to go in any direction that we might, whether that be into Iraq or into Afghanistan. In this situation, we have the rather useless foreign policy portfolio of the High Representative, but the French have grabbed the key economic portfolio of the internal market, which the City sees as a terrifying threat. The Chancellor tells us that the City's interests will be safeguarded and that it will not be ruled from Europe, but I am afraid that when we signed the Lisbon treaty that is what we signed up for, and I am sure that that is what will happen. We can observe all this with great fondness. It is an entertaining spectacle. What is more, it is free to air, like ITV. But we must pay for it in the long run, and that is what I want to talk about today. The costs of Europe to this country are heavy, as the hon. Member for North-East Cambridgeshire (Mr. Moss) said. At a time when we are moving into a climate of cuts, economies and straitened resources, we are paying a heavy price to stay in Europe and contribute to it. For instance, we are paying the increased rebate, which I thought was agreed to by Tony Blair while he was Prime Minister as the first down payment on the job of President in the future. Unfortunately, the down payment was taken but the item was not forthcoming in the sales. Thanks to that, our net contribution rose to £6 billion. It rises again with devaluation, which reduces the value of the pound, to about £8 billion. That is only the budget contribution; we also contribute to other projects, such as Galileo and others. With Galileo, a satellite guidance system is being designed, and we are being charged for it, even though the Americans provide such a system for free. That will cost £2 billion to £3 billion. Then we have the common agricultural policy. The OECD estimates the cost of that—the resource cost, anyway—to be £15 billion. The cost to us of the common fisheries policy, which has not been mentioned but certainly needs to be abolished, is about £3 billion. That is the cost to us in fish from British waters that are landed not in Britain but at other European ports, where they are processed. That all represents a huge cost across the exchanges, and we have to finance it with a declining pound. Our balance of trade deficit last year was £48 billion, and the cost of Europe adds up to between £20 billion and £25 billion. In other words, about half our balance of trade deficit goes on financing membership of the European Union. That is not the only cost, because there are other, more internal costs. We have the cost of regulation, which the CBI estimates to be between £20 million and £40 million, and the cost of low growth, because European economies, including ours, have grown about 1.2 per cent. less than other advanced countries outside Europe. The cumulative loss of growth amounts to 0.5 per cent. of GDP a year, which is about another £7 billion, so the total cost of Europe is more than £50 billion—to an economy that will be crippled and straitened by the need for economies and cuts in the years ahead. What are the British people going to say when they are told that we have to cut the health service, education, and other services or benefits, in order to maintain this large contribution to Europe? Will they be dancing in the streets, as our Government might like, or will they become angry, upset and alienated? It is a tremendous burden to bear for membership of a club that is actually damaging our economy—an economy in which we are running a massive and growing trade deficit. My hon. Friend the Minister said in his speech that in dealing with the recession, a unity of purpose had emerged. Well, it has not. What has emerged is the propensity of individual countries to do much the same thing, because the obvious thing to do in a deflationary situation is to expand one's spending—to introduce stimulus spending along Keynesian lines. I know that the Conservatives do not want to do that, but it is the obvious and sensible thing to do. The only commonality is that all countries have done so as a matter of individual volition, but Europe has damaged that process, because the euro makes it impossible for countries with a deficit, countries in difficulties or countries that have been hit by recession to devalue their currency as we have devalued ours. The pound is down by about 25 per cent., and that is good. It is an enormous economic stimulus; we will benefit from it, and manufacturing will grow and improve. Other European countries cannot devalue their currency, however: Ireland cannot do so, and that is why it has plunged deep into recession; Spain cannot do so; Italy cannot do so; and the Greek situation, whereby public sector borrowing is drying up because people want a premium on the interest rate paid, will spread like a contagion to the other euro countries. In that situation the euro becomes a tremendous burden to bear, and thank heavens we do not have to bear that burden. It was very far-sighted of our Prime Minister and the Labour party to keep us out of the euro.