In the 1950s and 1960s, the average headline rate of unemployment in the six countries making up the Common Market was about 2.0%. In those same six countries today, it is 9.5%. Across the whole of the European Union, it is currently 10.7%. In Spain it is 21.3%. In the UK its is 7.6% - a quarter lower than the European Union average.

For those below the age of twenty-five the situation is far worse. In the EU as a whole, 21.0% of those under twenty-five are registered as unemployed. In Spain, the figure is an almost unbelievable 39.6%.

But this is not the whole picture. In Britain, the number of those registered as unemployed is now just over 2.0 million. The government’s own Labour Force Survey, however, published in the late summer of 1996, shows, that the total number of people who would like to work but who currently have no jobs is 4.7m. In addition, there are another 220,000 on training schemes. It is also estimated that about 480,000 of those counted as employed, but who are only working part time, would prefer a full time job.

THE TRUE RATE OF UNEMPLOYMENT IN BRITAIN IS THEREFORE NOT REALLY 2.0M OR 7.6%, WHICH IS THE HEADLINE FIGURE. IT IS THE FULL TIME EQUIVALENT OF ABOUT 5 MILLION PEOPLE, WHICH REPRESENTS ABOUT 16% OF THE POTENTIAL LABOUR FORCE

The published unemployment figures for each EU country are also based on varying counts of the registered unemployed. In addition each of them has a vast army of people who are not included in the generally quoted figures, which are only for those claiming benefits. Thus the true level of unemployment in the whole of the EU, if the British ratio of claimants to the total number wanting work is representative, must be around 20%, which is over 30m people.

Why has this disaster happened? The simplest explanation is the most convincing. There is not enough work to go round. The EU growth rate in the 1950s and 1960s used to be 4.7% per annum cumulatively. For the last 20 years it has averaged 1.7%. Meanwhile the productivity of those still in employment has risen much more rapidly than 1.7% per annum. The inevitable result is more people out of work.

What has to be done? We are often told that the solution lies in training and education, and increased investment in plant and machinery. Unfortunately, whatever their other merits, the main effect of a better qualified labour force and more industrial equipment is to raise the productivity of those still in work even faster. Unless the economy then grows yet more quickly, new jobs will not be created. Unemployment will not go down. On the contrary it will rise even higher.

The only true solution lies in a massive reflation to increase the demand for everything which the EU can produce in competition with the rest of the world. This means increased public spending, lower taxes, lower interest rates and a more relaxed monetary policy. For unless the EU economies can be made to grow faster, to soak up the higher output that higher productivity makes possible, there can be no cure to unemployment.

The problem is that the drive for European Monetary Union is going to produce the opposite conditions to those needed. The Maastricht criteria are all about deflation, not expanding the EU economies. They require government borrowing targets of only 3% of current GDP, and maximum total public debt of 60%, which are well below current levels in all EU countries apart from Luxembourg. Now there is pressure from the so-called Stability Pact for yet more draconian penalties against expansionary policies. The inevitable result will be to cut the already low EU growth rate even further as we move towards the end of the century. The certain outcome will be millions more EU citizens reaching the new millennium on the dole.

Mass unemployment is unacceptable at any time. Allowing it to occur when the number of people of retirement age is increasing everywhere is the economics of the madhouse. The ratio between those in employment and those out of a job, and thus dependent on those who are working, will rise inexorably if there are not enough jobs to go round. The unavoidable result will then be a big and unpopular increase in taxation, combined with over-strained public finances, which can only be avoided if unemployment is kept down.

The determination to achieve EMU among the political élites in Europe has everything to do with politics and nothing to do with rational economic policies. This extremely dangerous scenario explains why there are such compelling reasons why Britain should not join the European Monetary Union.

We are often told that Britain has to agree to further integration into the European Union economy because "globalisation" makes any alternative policy impossible. What is the evidence for this proposition?

In 1913, the ratio between Britain’s exports of goods and services and its gross domestic product was 31%. In 1928 it was 26%. In 1970 it was 25%. In 1995 it was 33%. In fact, the British economy was almost as "globalised" at the beginning of this century as it is now.

And what of multinationals? Of course the size of large international companies has increased over the last hundred years, but world output has grown even faster. Industrialisation over vast areas of the world has spawned many new multinationals, thus increasing and not reducing competition.

If exclusion from a major trading block entailed relegation to the slow growth league, how do we explain the phenomenal success of economies large and small - Japan and Singapore to quote just two examples - which are not members of any significant trading block? The average growth rate of Japan and Singapore over the last two decades has been three or four times that of the European Union.

There is no more evidence now than there ever was that the increasing integration of world trade requires any country to be part of a trading block. Provided it pursues sensible and effective economic policies, any country can thrive independently. And "integration" into the EU will certainly not save Britain from the inevitable consequences of more deflation, which are slow growth, no cure to unemployment, government cash crises, and underfunded public services.

Is the Maastricht Treaty renegotiable? A favourite argument advanced by those in favour of closer integration of the British economy with those of the other EU members is that a Labour government might be able to change the terms of the Maastricht Treaty, to make it more acceptable.

Of course, reducing unemployment ought to be given priority over achieving purely financial targets. No-one can really believe that the single currency will work if there is no real convergence on economic issues such as growth, investment and jobs. The problem is that the Maastricht Treaty barely mentions any of these objectives, and they are wholly subordinated to the achievement of monetary goals, primarily on inflation.

Changing the Maastricht Treaty is massively difficult. It requires a degree of unanimity among member states which is almost impossibly difficult to attain. The Swedes found this out when they tried to insert a Treaty commitment to restoring full employment.

Would a Labour government do any better than the Tories in getting the Treaty changed? The unlikelihood of this happening is underlined by the political colour of the governments which agreed the Treaty in December 1991. Half of them were left of centre. In 1991, there were governments describing themselves as Socialist in power in France, Spain, Portugal and Greece, and left leaning coalitions in Italy, Belgium and Luxembourg. And Jacques Delors, the high priest of the Maastricht Treaty, had himself been Minister of Finance in a French Socialist government. Today, France, Spain and Portugal have right of centre governments, as well as Germany and Britain. Only Greece has moved to the left.

The reality is that the Maastricht Treaty is not going to be modified to any significant degree before decisions on at least the first tier membership of European Monetary Union have to be taken. It is "take it or leave it" with the existing Treaty.

 

The Labour Euro-Safeguards Campaign warmly welcomes the Labour Party’s recent commitment to hold a referendum before a final decision is taken on European Monetary Union and the single currency.

We need to make sure, however, that the question to be put to the electorate is a fair one, and that those for and against EMU have an equal opportunity to put their case to the electorate. We then have little doubt what the result will be.

There is still a danger that there will be completely one sided campaign, with massive resources deployed on the "pro" side, and a desperate shortage of funding for the "antis", as happened in 1975. We must not allow this to happen. The referendum needs to take place with the merits of the case in the foreground, not the size of unequal budgets.