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David Cameron’s 2013 Bloomberg speech, promising a referendum: “I want a relationship between Britain and the EU that keeps us in it” (©MATTHEW LLOYD/BLOOMBERG VIA GETTY IMAGES)

It is always a privilege to speak at the hallowed institution of Chatham House. The last time I did so was 27 years ago, during my final year as Chancellor of the Exchequer, when I chose to speak about Britain and the European Community, as it was then known.

This was before the advent of European monetary union, indeed before the publication of the Delors Report which was to set out the proposals for monetary union; but it was already clear what that report would conclude.

And I made clear my opposition to it — the first such speech by a British minister. If I may quote what I said then:

Economic and monetary union . . . is incompatible with independent sovereign states with control over their own fiscal and monetary policies . . .

Monetary decisions [would be] taken not by national governments and/or central banks, but by a European Central Bank. Nor would individual countries be able to retain responsibility for fiscal policy . . .

It is clear that Economic and monetary union implies nothing less than a European government — albeit a federal one — and political union: the United States of Europe.

And this has of course been endorsed most recently by the EU’s so-called Five Presidents’ Report on the completion of monetary union, which calls for the creation of a single eurozone finance ministry headed by a single eurozone finance minister by 2025.

It is also what all economic history tells us. There is not a single major monetary union in the world that is not also a fiscal union and a political union. The economic and political logic is incontrovertible. That is why European monetary union has so far proved one of the greatest economic and political disasters of our time.

But in a sense it was designed to fail. Jacques Delors, whom I knew well when, as French finance minister, he was my opposite number in the European Community’s Ecofin Council and elsewhere, was well aware that it could make sense only as a stepping stone to political union.

It was a colossal, and some would say grossly irresponsible, gamble. Not least because the lesson of history is that monetary union invariably follows, rather than precedes, political union. That was the case, to cite just three examples, with the United States’ monetary union, the German monetary union and the Italian monetary union.

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