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European Affairs

That is a perfectly fair point, but there are two problems. The first goes back to the claim that we would have trade surpluses if only every country were like Germany, but things do not work that way. The second problem is how such a strategy would be policed. There is a third difficulty, too. Every successful single currency requires significant transfers from the centre to deal with asymmetric economic shocks, and those transfers would be of the order of between 20% and 30% of the overall tax take. In Europe, that would require a European economic and political Government. The approach could not work in any other way, because we cannot expect countries to behave like that in the absence of any mechanisms for policing or transfer that would compensate them for their loss of competitiveness. The problem in Greece is that it could become competitive again by devaluing its currency, but it is not allowed to do so. As a result, the approach outlined by my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) does not address the problem.