This peculiar abbreviation for a British exit from the European Union is the latest in a stream that includes, of course, Drachmageddon, Grexit and the one that should be the main concern of commentators and citizens alike – a Gerxit.
The Economist article that introduced the possibility of a British exit from the common market may have been right in asserting that “the chances of Britain leaving the EU in the next few years are higher than they have ever been.” But Bagehot’s notebook neglects to consider that even if the Eurozone ploughs ahead with further integration, Britain has no reason to think that it cannot remain on the periphery of the single currency, yet still reap the benefits of the single market.
Politicians and citizens alike may think that we are poorly placed in the wider historical context of European integration, but at the rate such integration is occurring, Britain would do well to bide its time. By remaining politically involved in the matters that most concern it, whilst avoiding matters that are best left to mainland Europe, we are currently walking the tightrope regarding voluntary involvement in certain sectors very effectively.
Such a position is necessarily tenuous, but in its vulnerability is flexibility. Mr. Cameron received mixed reactions for his treaty veto back in December 2011. By acting thus, he became the first UK prime minister to reject a European treaty, and rightly distanced Britain from the woes currently being suffered by the single currency.
The difficulties the Euro is suffering are having a detrimental overall impact on our economy. Nevertheless, it should not be ignored that Britain’s strength lies in its financial services. It is through the facilitation of growth of this industry that Britain are likely to be able to retain its diplomatic importance, its ties to the US, and its seat on the permanent council of the UN. By maintaining our distance from the current plans to integrate the Eurozone’s banking system, many analysts expect Britain’s financial services sector to receive an influx of capital. Any type of debt mutualisation will certainly drive funds away from the Eurozone’s traditionally stronger members – Germany and France.
With this in mind, perhaps we ought to be focussing on the possibility of a German exit from the Eurozone. Unthinkable? Maybe. But World War II was famously unthinkable until it was already underway. Without wishing to over-emphasise the extent to which surprising German diplomacy has affected the last century of European history, they certainly have made all of the key decisions at key times.
And make no mistake, this crisis does represent a crucial moment for the European Union and the Eurozone, and the peculiar ideological amalgamation of the two that may yet be Europe’s surviving legacy. Just because the debt crisis has been dragged out to such an extent should not hide the fact that Europe’s nations face a key decision over their political future.
Unfortunately, neither politicians nor citizens seem to have the slightest idea of what they want the European project to look like. Nationalism remains fervently important, reducing the scale at which European leaders are able to pool sovereignty. Debt mutualisation only worsens the incentive on the part of governments to overburden their public accounts in order to stay in power through extravagant spending plans.
In such times of uncertainty, no-one should rule out the possibility of a Gerxit. Throughout the crisis they have been singled out time and again as the outlier in the single currency, while for the most part, the weaker nations have been viewed as a group – the PIGS.
What’s more, no-one really knows quite how costly such a turn of events would be.