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Mr. William Hague (Richmond, Yorks) (Con): In listening to the debate, I feel that I am now taking part in the affairs of a very distinguished but small dining club that meets every six months or so to discuss European affairs comprised of people who are Ministers for Europe, who have been Ministers for Europe or who aspire to be Ministers for Europe, among whom I certainly do not count myself. It is a very distinguished group, in which my right hon. and learned Friend the Member for Devizes (Mr. Ancram) asks pertinent questions and the right hon. and learned Member for North-East Fife (Sir Menzies Campbell) gives a tour d'horizon of world affairs, which he did very well, rightly pointing to reasons for optimism in the affairs of eastern Europe, particularly Romania and Ukraine.

It is evidently the Foreign Secretary's job in that club is to assure us that there is no need for concern, that it is fairly much business as usual and that the European
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Council is coming up, at which the matters for discussion are enlargement of the EU, the treaty that is on the table and perhaps the defence of the British rebate—all from the point of view of a Government who are more pro-European than the public as a whole. That could have been said more or less of any European Council during the past 10 years, under the last Government as well as under the current Government.

One might easily get the impression if one had just nipped into the debate that nothing had really changed much in recent years. My concern is that that is not the true background to European affairs. Immense forces are at work in the world far beyond the boundaries of Europe, and in 10 or 20 years' time European Affairs debates in the House will be set against a much darker background than today. The loss of public confidence in the EU's institutions in this country is becoming greater with each month that goes by, and that will have a dramatic outcome in the months and years ahead.

Of course, all that might, to some extent, come to a crunch in the coming referendum on the European constitution, which evidently will be held whoever wins the general election, although the Government seem most anxious, despite the fact that they think it is vital to the future of Europe, to ensure that the constitution and the preparations for its ratification are not debated in the House this side of the general election. Those who advocate a yes vote in the referendum will find their job dramatically harder than those who advocated one in 1975.

The right hon. and learned Member for North-East Fife looked forward a few moments ago to being there with my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) and perhaps the Foreign Secretary, and they will paint themselves as the moderate and informed opinion of the nation, against the rather extremist forces that might try to persuade people to vote no. That was the successful approach of the pro-EU side—pro-EEC, as it then was—in 1975, but hon. Members of all points of view recognise that that will be much harder in the coming referendum.

It will be a much harder referendum for the yes side to win for several reasons. First, those who are old enough to remember the 1975 referendum feel that they were misled at that time because they were not told of the political as well as the economic consequences that would follow from a yes vote. Secondly, those who are not old enough to remember 1975 have grown up in an entirely different world, in which they have benefited from many aspects of the EU.

The framework for co-operation that it has created, the reinforcement of the rule of law and the encouragement of democracy in certain countries and making war unthinkable between most of the countries of Europe are all real achievements, on account of which I am not in favour of a withdrawal from the EU. I believe that we must strive to make our membership of the EU a success, but the idea of ever-closer political integration of countries' institutions and the EU now seems out of date. Ever-closer political integration is an idea whose obsolescence has already come for a younger generation, who are entirely different from the young people of the 1970s and have a different outlook on world affairs. Part of the reason is also economic. We need not belabour the point today about the differences in gross domestic product and employment growth—
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they have been mentioned already—between this country and many of the eurozone countries in recent years.

So the debate has moved on, and a sure sign that it has moved on is the variation in the statements of the irrepressible Minister for Europe, who is grimacing because he does not want his remarks to be dragged out again. He is the Member of Parliament for my original home town—Rotherham—and he is such an endearing figure and his remarks are so wonderfully indiscreet at regular intervals and so marvellously inconvenient to his colleagues that we really hope that if the Home Secretary does not survive his current career crisis the Minister for Europe can be put into the Cabinet so that we have a source for what is going on there.

The Minister for Europe's remarks are incredibly useful and incredibly revealing. He has declared that the euro is "economically irrelevant." Indeed, he now says that it is "a fetish"—a brave thing to say in the current circumstances. That is the same Minister who only last June at a breakfast meeting of the London chamber of commerce declared that if we joined the euro

and that it would produce

That is now irrelevant, apparently. Whatever one might say about those assertions, they are debateable, but to say that an increase in our national wealth of 9 per cent. is irrelevant is quite remarkable. He now says that he tried to persuade Ministers to

It was incredibly far-sighted of him to try to dissuade them from talking about a policy to which he was so wholeheartedly committed—a foresight rarely granted to any hon. Member.

What is actually going on? The Minister for Europe has not really changed his views; they are well established and well known in private and in public and in the House. What has changed is that that topic—the euro—has become unsaleable to the people of this country, and it has become unjustifiable on the basis of economics. One has only to look at how the eurozone struggles with inflation, which is gathering in some of the eurozone countries, whereas there is economic stagnation in others—the first threat of stagflation, which we last saw in the 1970s—to see how gravely the economic case has been weakened, and he knows that there is no longer any substantial body of opinion in British industry, finance or commerce in favour of joining the euro.

My right hon. and learned Friend the Member for Devizes referred to the roadshow that was going to be launched by the hon. Member for Leicester, East (Keith Vaz), which Members of all parties would join to rouse millions of people in this country into a frenzy of enthusiasm for joining the euro. We have not seen much of that roadshow in recent years.

Keith Vaz: I am glad that the right hon. Gentleman has corrected the record because the right hon. and learned Member for Devizes (Mr. Ancram) said that there was no roadshow. The right hon. Gentleman will
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remember that we did have a roadshow. He had a roadshow, too—was he not on the back of a lorry trying to save the pound?

Mr. Hague: The hon. Gentleman did have a roadshow, but it went on a pretty short road and did not get round most of the country. Mine reached more parts of the country than his, albeit with no greater effect, I readily concede. The assessments of both the Prime Minister and I of the chances of Britain joining the euro at the time of the last election were wrong. I thought that there was a serious possibility that Britain would join the euro in this Parliament if the Labour party was re-elected, and I think that the Prime Minister did, too. Our assessments were both wrong, but that was why I talked about it during the last election and he did not. The opportunity—if one can refer to it as such—has now gone by, and I do not think that it will recur.

The public's sentiment about European institutions and what has happened regarding the case for the euro are signs that greater forces are at work that will affect European affairs in the years to come. It is always instructive to talk to Chinese leaders. I have been in favour of listening to them ever since they turned up at the bicentenary of the French revolution. When one was asked whether the French revolution had been a good thing in the history of the world, he said, "It is too early to tell." Chinese leaders are always good at putting things in perspective. I had the pleasure of meeting them when I was Leader of the Opposition, and when I talked to Jiang Zemin about education in England, he said, "Ah, there are more people studying English in China than there are English people in England", which put things in perspective.

It is now commonplace to observe what is happening in the Chinese and Indian economies and the importance of the economic change that that is bringing to the world. However, it is less commonplace to understand the speed and scale with which that is happening. Eurozone managers want 2 per cent. economic growth a year, but China has 9 per cent. growth a year. As many forecasters say, there is every prospect that in 20 years, both the Chinese and Indian economies will be larger than the European economy.

Recent signs in the eurozone economy are not encouraging. The demographics of European countries are terrible. Again, that fact has become more widely understood, but the speed and scale of the change on the cards is less widely understood. Later this century, steep falls in the populations of Germany, Italy, Hungary and several other countries are in prospect. On top of the unfunded pensions and expensive welfare systems that many countries face, we do not know what such population trends will do to societies. We know that they will create more difficulties with pension funds and that businesses should sell zimmer frames rather than baby-care products, but we do not know what they will do to a society's optimism and ability to innovate. We do not know whether they will make a society more conservative and more or less prone to save.

The long-term outlook is uncertain because of demographic and economic trends. The European Commission has forecast that within what we hope are our lifetimes—a few decades—the extent to which the
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European economy will make up the world economy will go down from 20 per cent. to 10 per cent., while that of the United States will continue to advance from 23 per cent. to 26 cent.

Such figures are just statistics, but behind the statistics, as ever, there will be millions of human stories. The talent, capital and dynamic forces in the world will head east and west rather than spending time in the European Union. Many people in Europe will miss out on the activity, progress and pioneering in the world and they will not like it. The United States will look elsewhere for its economic and political allies—to countries such as Brazil, South Africa and Australia. There will be immense political, economic and social strains on the European Union and its citizens, with perhaps the greatest loss of influence, relative prosperity and future potential experienced by any group of countries in peacetime in the modern world.

It is no exaggeration to say that that situation faces European countries over the next 20 years. One would think that it might be on the agenda of a European Council on top of the many routine matters that must be discussed because it is the main thing happening in the world. However, perhaps it is creeping on to the agenda. The report from Mr. Wim Kok has already been mentioned in the debate and it gives a similar message. It says:

He and his colleagues say:

Those are strong words, but not excessively strong, given the evidence.

What is the collective response of European Governments? It is largely paralysis. There is a monumental failure of leadership. Those Governments often fail to recognise the problems or to explain them to their people. The structure of the European Union—as it is now, and as it would be if the proposed constitution were ever ratified—does not make it sufficiently cohesive to respond to such a threat, and does not give its member states the freedom to respond to that on their own, so we have the worst of every world.

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