For the first time in more than 40 years of integration the European idea is no longer associated with economic prosperity. Europe is becoming a scapegoat for the sometimes harsh economic reforms required to qualify for, and then stay in, the European single currency. Domestic politicians, on both the left and the right, often support the logic of cutting large deficits and reforming labour markets quite independently of European integration. But it is so much easier to shuffle responsibility for the associated sacrifices on to "Europe."
This is now taking its toll on attitudes even in traditionally Europhile states. According to Eurobarometer figures, in 1990 more than two thirds of people thought that the EU was good for their country-the latest polls show the figure is barely 50 per cent.
I have always thought that monetary union is probably inherent in the single market. I now believe that the attempt to drive it through ahead of popular demand is dangerous, and will exacerbate disillusionment with Europe.
Klaus Hänsch, the president of the European parliament, has rightly said about Emu: "There is nothing comparable. Not the treaty of Rome, not the single market. This is totally different to anything that has happened before because it will have a direct, tangible impact on every individual citizen."
The arrival of the single currency will also require a loosening of national control over vital economic decisions. Hitherto-I know from my time as a European commissioner-EU decision making has been both very slow and highly political. A great deal is still done by consensus and by bringing people along at their own pace (known as "derogations"). But you cannot have that in the conduct of monetary policy. A European central bank must be able to act quickly and decisively, and its decisions must be implemented throughout the jurisdiction to which they apply. What is more, the decisions of the central bank are bound to have a differential impact on jobs and profits and even on the existence of individual companies in the participating states.
One of the functions of an independent central bank, whether it is the Bundesbank, the Federal Reserve or the Reserve Bank of New Zealand, is to act as a scapegoat. It is one of the things that central banks are for-enabling politicians to blame them for doing what is necessary but unpopular. But it is one thing when the central bankers are "our" central bankers; it is quite another when they are foreigners sitting in another country. Unpopular economic decisions will become a gift to every xenophobic and chauvinistic politician in Europe.
Is it likely that a European institution will have the necessary moral and political authority to push through the unpopular decisions associated with the maintenance of price stability? I very much admire the steadfastness of French policy in recent years. French institutions have so far shown that they can bear the strain of economic convergence. But what will happen when the blame for the level of unemployment in France and the hardships that the French have put up with are attached no longer to French institutions and French politicians, but to a European body outside French frontiers? If Emu is to have a chance of success, it is vital that in all relevant countries there should be an explicit and conscious act of approval by the electorate.
Another problem concerns those who wish to be included in Emu but fail to qualify. What will happen in Spain and Italy if the hardship suffered in pursuit of qualifying for Emu turns out to have been in vain? I worry, too, about those who do qualify for a system with no exchange rate or fiscal flexibility, no transfer payments to compensate, and complete insensitivity to particular economic problems or shocks. Moreover, the nearer we get to Emu the more demands there seem to be for further rigidities. Most recently there have been suggestions in Germany that VAT rates across Europe must be harmonised.
Meanwhile the integrity of the single market could be put at risk if demands for protection against the advantages-imaginary or real-of the states outside the single currency are successful. It would be ironic if the single currency, the most ambitious move that we have yet seen to extend the scope of European integration, led to the weakening or even undoing of the EU's central achievement to date: the single market.
In most EU countries people are simply not used to unpopular things being done in the name of Europe. We are entering on to new and possibly unstable terrain and we must tread carefully.
