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Kelvin Hopkins: I agree entirely with my hon. Friend. Does he agree that each member state needs to find its own way forward with the depreciation of its currency, if it has one, to an appropriate level? Some countries' currencies might need to depreciate, but not the whole eurozone. Countries should develop their own national currencies again at an appropriate value.

Mr. Mitchell: That is absolutely true. The key to German recovery would be extremely low, or even negative, interest rates and a much lower exchange rate, but that is exactly what it cannot have. Continuously trying to cut costs, labour, investment and public spending is no way to achieve competitiveness. Such measures take years to improve competitiveness, or do not work. We cannot achieve competitiveness by driving European standards down to those of countries in the
 
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far east and China, with which Europe competes. The value of the euro must come down substantially if an uncompetitive Europe is to become competitive, and although European interest rates are low, they must come down further.

It is important for that process to begin now. Given the scale of America's deficit, the dollar will fall because markets will bring it down. The funny money—the money flows—will thus transfer into the euro, which is what people desired in the first place when they said that they wanted another reserve currency that could look the dollar in the face. The euro would thus go up as the dollar came down because money would be flowing out of America and into Europe because people would fear a loss of investments.

That situation will be compounded if the European Central Bank continues on its present path because it is a banker's bank par excellence. It is a monetarist, high-exchange-rate bank that believes in building up surpluses, as the French always have. The obsession with an overvalued currency and surpluses is the legacy of Jacques Rueff, de Gaulle's adviser in the 1960s. The health of the European economy cannot be restored if that process goes on.

The bank is based on one target: inflation. It is not based on any other targets, such as full employment, the health of the economy and economic growth, which have successfully guided the Fed over the past few years. The ECB apparently has no concern for the exchange rate, which it regards as an unimportant residual. However, there will be no future for the European economy unless the exchange and interest rates come down. Until that happens the damage will continue, so reform, modernisation and all other agendas put forward will not be acceptable to electorates until demand is expanded and the currency comes down. The flight of jobs, investment and production to the far east will go on if the current situation continues.

Those who hold out Europe as a shining ideal are over-enthusiastic. They exaggerate Europe's prospects and their enthusiasm for it leads them to accept anything coming from Europe as a good thing, whether that is the rotten, monstrous and awful constitution, monetary union or the ERM. However, those people will have to face the fact that Europe is degenerating in an unstoppable way towards a relegated area and a zone characterised by high unemployment and defensive decline, which will offer no future for our people or theirs.

2.34 pm

Mr. William Cash (Stone) (Con): As I stood in the Place de la Bastille and the Place de la République a few days ago and heard the results as they came through, I was bound to reflect on the fact that there had been an historic change. The Chamber is not entirely full—on the other side of the House to say the least—for a debate that is a reflection on a new French revolution. There has been a massive change with the rejection of a concept and project that has developed since the second world war, and even before.

I was also bound to consider at that moment that our party could have made Europe a central issue during the election campaign. An opinion poll commissioned by the European Foundation immediately after the general
 
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election showed that 55 per cent. of people in this country, and 62 per cent. of 18 to 24-year-olds, thought that Europe should have been a central issue in the election campaign. That ICM poll surveyed people across the board from all parties. If we had treated Europe as a central issue, I think that we would have got close to winning the election, or even have had the opportunity to win it, given that we are in the wake of an historic vote in France.

We are debating the most fundamental question facing the people of this country, as we have said in many debates over the past 20 years. The fundamental question that was before the people of France and Holland was about who governs them. We heard much about the fact that the vote in France was a rejection of President Chirac, but the people were really rejecting the policies that President Chirac was following on the economic and political structure that he had agreed through his relationship with the European Union. The historic rejection was, in truth, as the hon. Member for Great Grimsby (Mr. Mitchell) said, a rejection of the high unemployment and low growth that were the inevitable consequence of following those policies. That is the true lesson, as I tried to indicate while the results were coming through.

The Maastricht treaty is history now, but there are elements of this debate that relate to questions raised at that time. It is not necessary for us to say who got there first or to bring up those of us who were part and parcel of the referendum campaigns. Many Conservative Members fought strongly against the Whip and the conventional wisdom of the time for a referendum because we believed that the matter was so fundamentally important that it could not be left to the party Whips. We said that the treaty would ultimately lead to a constitution, as indeed it did, and we wrote about that at the time. We took a stand, and the best that we can say about it now is that we were not entirely proved wrong.

The most important thing now is to look to the future and regard the historic change as an opportunity. It is an opportunity for not only the United Kingdom and this Parliament, but Europe as a whole. Our only problem is   that the language coming out of Europe from Mr. Juncker, Mr. de Villepin, President Chirac and Mr. Schröder is third rate. They do not seem to have been able to take on board the fact that the elite of Europe has been rejected. The arguments that they put forward, which accumulated over time, have been rejected by the people of Europe. There is no serious doubt that if there were an attempt to resurrect what has now been called the dead Euro-parrot by having a second vote in either France or Holland, there would be an even bigger vote against it. Can they not listen and realise what is going on? There is an absolute arrogant refusal to believe that what they constructed—the European project—is dead in the water. That is not to say that we have not got an important job to do in trying to find the elements of the way forward, but massive unemployment and low growth have led to the overwhelming rejection of the constitution.

The origins of the European Union—I hope that this is a constructive view—lie in the League of Nations. In the 1920s, on seeing the catastrophic holocaust of the first world war, Monsieur Briand, who worked with
 
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Jean Monnet, resolved that he would try to prevent anything like that from happening again. Nobody can dispute that that was an honourable motive.

Let us consider the second world war. My father was killed 61 years ago in Normandy. The plain fact is that those of us who suffered, if I can put it that way, from that sacrifice by those young boys have to accept that there was an understandable reason why, in the aftermath of the second world war, people like Sir Edward Heath and other distinguished members of Conservative Cabinets over 20 years, who themselves had been part and parcel of that war, thought that the idea of a European union was the way forward.

Kelvin Hopkins: I am listening with interest. Does the hon. Gentleman agree that the second world war grew out of the economic collapse of Germany, particularly in the 1920s, and the subsequent rise of Nazism? Had we got the economics rights in the interwar era, we may not have had that war.

Mr. Cash: That is possible, but the point that we reached in 1945, with Jean Monnet and the Schuman plan that followed in 1951, was an attempt to prevent such a war from happening again. People sought a stable solution to a chaotic and dreadful holocaust. The problem was that, however understandable it may have been, in reality they embarked on a process that was essentially undemocratic. They thought, almost in despair, of the democratic process. They remembered the Weimar Republic and what that led to in the shape of Nazism and Hitler. They thought that there was another way of dealing with the problem, but essentially their message and philosophy were wrong. That was where the problem lay, however understandable it may have been at the time.

Then there were discussions between de Gaulle and Adenauer. I read an interesting observation in de Gaulle's memoirs when he said that they spent a long time discussing the future of Europe and both agreed that neither would allow their respective countries to become merged in a stateless institution. That was an understanding between them.

We know de Gaulle's position: he was in favour was a Europe of nations. We also know that Churchill spoke about a kind of federal Europe, but he was not talking about the kind of Europe that is represented by the constitution rejected in France and the Netherlands. He spoke about our being associated but not absorbed. In other words, there was an appreciation by those people in the 1940s and 1950s of the dangers of going down that undemocratic technocratic route. They were not going to allow, so far as they could, the situation to develop along the lines of the technocrats, as expressed by Monnet and Schuman.

Furthermore, a remarkable book—Erich Fromm's "The Fear of Freedom"—got close to the heart of the problem faced by the current monolithic creature that was created in the aftermath of that period. An inability and a despair—a refusal—led people to think that they could not have freedom and that they must be constrained by the new institutional arrangement because it would make them more secure. In fact, the opposite was true.
 
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We heard reference to historical inevitability. The communists and fascists believed in that. I have even heard some members of my party talking about it. The reality is, however, that nothing has been clearer, in terms of the history of Europe over the past centuries, than the fact that the nation state has been the glory of Europe. Whether it is music and the great principalities that gave rise to Mozart, Beethoven, Bach, Handel and so forth, or whether it is the great painters of Venice, Florence or wherever, the competition that existed between those principalities and those states gave rise to the flowering of the renaissance and the subsequent development of the great glories of European culture. That is what has been lost as the stateless institutions have impinged on the culture of Europe as a whole.

Again, in the institutional sense, let us consider the attempts to create empires throughout Europe. The Roman empire foundered—of course it did—as, indeed, did the empires of Charlemagne and Charles V, and the attempts by Henry of Navarre in the early 17th century and those by Napoleon, Hitler and others. The fact is that attempts to bring together this vibrant diverse collection of nation states, which co-operate and work in association with one other in the modern day, can produce results that are beneficial, not only to this country, but to Europe as a whole.

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