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Deputy editor’s blog: Better off out of it?

I WOULD not be surprised if Wednesday’s agreement by Europe’s top political brass on how to fix the knackered eurozone ends up a damp squib – so often have these agreements fizzled out in the past.

Yet there is a feeling of inevitability that the agreement to raise the European Financial Stability Fund to €1tn to support a 50% Greek haircut on the country’s sovereign debt will eventually lead to greater fiscal union to support the monetary union among eurozone members.

The motivation for the UK to throw in its lot with euro is now non-existent. But I do not agree that now is the time for the UK to begin looking inwards and start questioning whether we should even be a member of the EU, or even more fancifully “renegotiate” our position within the EU.

I believe that the UK’s best business interests are served by being in the EU, after all 50% of the country’s international trade is conducted with our noisy neighbours, and regulation will always continue to be heaped on companies with, or without edicts emanating from Brussels.

Days after facing a Conservative rebellion over a vote on whether to hold a referendum on the repatriation of powers from Brussels, David Cameron Cameron told a Commonwealth Heads of Government summit in Australia that the City of London was under ‘constant attack’ from Europe.

Protecting London as a pre-eminent financial centre is of vital importance to the government and the UK, but surely the best interests of UK business will be best served by being closely involved with the European game. If the UK were to step back from Europe, rather than being a player jostling on the same board as everyone else it would be left kicking at it whenever from the sidelines.

Some UK economists have predicted the break up of the euro and collapse of the eurozone for some time. We even covered it in Financial Director a year ago, but it is important to note that despite the eurozone’s plight the euro has been more stable than sterling and was on track for its best monthly performance against the pound since June.

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Philip Hammond
Philip Hammond