• There's an interesting situation shaping up in the EU.
For months now, Angela Merkel has been coming under increasing pressure to mutualise debt in the eurozone. "Mutualise debt" sounds innocent and technical, but in plain terms it means Germany agreeing to underwrite everyone else. Not surprisingly, German voters don't relish that idea -- and on the face of it, the German Constitution doesn't allow it.
Yet it goes to the heart of the €uro problem. A single currency can't survive without a lender of last resort. In the end, that lender can only be Germany -- or the ECB backed by Germany.
Merkel is being beat up on not only by EU member states, but increasingly by President Obama (still hoping for re-election) and even by China. So she's looking for a compromise. She might manage some cautious moves in the direction of debt mutualisation, but in exchange she wants her fiscal pact enshrined in the EU Treaties.
It's wonderfully ironic. The Lisbon Treaty was supposed to be a settlement for all time, or at least for many years, yet there are immediate demands for new treaties. It's also difficult to understand Merkel's apparent confidence in Treaties. After all, the Maastricht Criteria were enshrined in the treaties, and much good it did them. In the EU, de facto beats de jure every time. It's easier to edge over your borrowing limits than to cut pensions.
Be that as it may, it looks as though a new Treaty is on the way, designed to include fiscal rules for the eurozone. This could be a huge opportunity for the UK, as we'd be asked to sign up. It is difficult to see how the Government could refuse a referendum on such a treaty. You can hear their excuses already "Well the fiscal rules only apply to euro members, so it doesn't affect us". But I don't think the people, the media or Westminster will let them get away with them.
This is our chance to renegotiate. We'll give them what they want, so long as they give us what we want. Ten years ago, I'd have been happy to settle for the reinstatement of the Maastricht opt-outs (especially on employment law) plus fisheries and some bits and pieces. That will no longer do.
The only renegotiated deal that I'd be prepared to recommend to voters, and to support, would be a pure free trade deal. Absolutely no political or regulatory involvement with Brussels. Period.
There are of course those who say that we'd be like Norway, paying billions for access to the Single Market, and still subject to EU rules over which we had no influence (as if we had a great deal of influence now). But that's nonsense. We should no more be obliged to obey their rules than we should oblige them to obey ours.
What would we pay for access to their Single Market? Simply to allow the rump-EU reciprocal access to our market. Even that would be generous, since they sell a great deal more to us than we sell to them.
So they could keep selling us BMWs from Munich, and we would keep selling them Toyotas from Derby and Jaguars from Browns Lane. Sounds like a fair deal to me.