[Skip to Content]

Register to receive the OMFIF Daily Update and trial the OMFIF membership dashboard for a month.

* Required Fields

Member Area Login

Forgotten Password?

Forgotten password

Analysis
UK gains from EU multicurrency status

UK gains from EU multicurrency status

Chance to have best of both worlds

by Oliver Letwin in London

Wed 22 Jun 2016

As with any complicated public policy question, there are many different reasons why people are for remaining in the European Union or for leaving.

So why do I, as someone who battled for years against Britain joining the euro, and who has argued that we should resist being dragged into an emerging ‘United States of Europe’, now believe we should vote to remain?

The short answer is I believe the special status negotiated by Prime Minister David Cameron in Brussels in February gives us the chance to have the best of both worlds. We can remain within the free trade single market, which brings us jobs and prosperity, while staying permanently outside the euro area and its accompanying political and fiscal union.

This immediately begs two further questions. First, why do I believe it benefits Britain to remain within the free trade single market? To this I would say the single market gives us not only the most complete access possible to free trade within Europe, but also access to the EU's 53 global free trade deals.

And second, why do I believe we can now be members of the single market without being dragged into the euro and its fiscal and political union? The answer is that, for the first time in the EU's history, the international law decision negotiated by the prime minister explicitly states that the EU is a multicurrency area and sets up protections for countries like the UK which have decided to remain permanently outside the euro. While some countries will wish to form a fiscal and political union, other countries like the UK will not.

The decision establishes that the phrase ‘ever-closer union’ in the original treaty is neither a legal basis for expansive interpretations of the treaties by the European Court of Justice, nor a phrase applying to the UK.

These features of the UK's EU agreement offer what I believe most people in the UK have wanted for many years. This is to benefit from being safer, stronger and better off as members of the single market without being gradually subsumed into a European super-state.

I don't claim this is a route to heaven on earth. And I don't claim Britain leaving will be Apocalypse Now.

But faced with the high short-term uncertainties and costs to our economy from an exit, together with the opportunity to participate in the EU free trade area without having to participate in monetary, fiscal and political union, why shouldn't we take the opportunity – rather than taking a leap in the dark?

Oliver Letwin is MP for West Dorset and Chancellor of the Duchy of Lancaster.

This is No.99d in the series.

OMFIF’s series on the UK EU referendum presents a wide variety of perspectives from Britain and around the world ahead of the 23 June poll. We are assuring a balance between many different points of view, in line with OMFIF’s overall neutral stance on the issue.

Logo -Chart -99

Tell a friend View this page in PDF format