Is the euro about to collapse?

Cameron urged to ‘prepare ground’ for euro collapse

Cameron urged to ‘prepare ground’ for euro collapse

By Alex Stevenson

Contingency plans for the collapse of the euro should be talked about more openly to "soften the blow" to the British public, a leading eurosceptic has said.

Conservative John Baron, the MP for Basildon and Billericay, wrote in a comment piece for that David Cameron needed to "publicly recognise" the possibility that the currency may not be rescued.

"Possible remedies should be more openly discussed," he argued. "This would do the country a great service. It would help prepare the ground and perhaps soften the blow if it comes. Publicly recognising reality would be both right and popular."

The prime minister has enjoyed unusual acclaim from his party's eurosceptic backbenchers after refusing to commit Britain to fiscal integration measures now being pursued by all other EU member states.

But today's article from Mr Baron represents one of the first eurosceptic moves after the Brussels summit to place further pressure on the PM.

He argued that measures to bolster the eurozone's credibility, including cuts to spending and making the European Central Bank the lender of last resort, are not long-term solutions.

"The only true long-term remedy is for these economies to become more competitive, to generate growth and therefore better pay their way in the world. But there is little sign of this happening," Mr Baron added.

He is calling for the prime minister to initiate a renegotiation of Britain's relationship with the European Union based on free trade, competitiveness and growth rather than political union and "deadweight regulation".

Mr Cameron will find it hard to reconcile the demands of eurosceptics who are now seeking the demise of the euro with his public support for the currency.

Yesterday Britain refused to participate in a move by EU countries to bolster their anti-crisis reserves, unlike four non-euro countries which contributed to the 150 billion euro IMF package.

Mr Baron argued that saving the euro could make the recession worse, as it forces countries to adopt severe austerity packages instead of considering the alternative of revaluing their currency.

"If the euro were to fragment, consumers would still want their German cars and their French wine, not to mention Greek holidays – which of course would be cheaper come devaluation," he wrote.

"So why is it that the eurocrats are… ignoring the markets and ploughing on regardless of economic reality?

"It can only be that the euro is not an end in itself, but a means to an end – that being political union. The euro is a vital step towards this objective. Some eurozone leaders have even stated as much.

"In such a make-believe world, economic reality is marginalised and the eurocrats plough on, regardless of the harm that is being done."