Margaret Thatcher was right about the Euro, but for all the wrong reasons.

One of more quaint claims of both Thatcher's flattering and critical obituaries is that "Thatcher was right about Europe".

It is true that Margaret Thatcher had an unremittingly negative attitude toward any European integration that went beyond free trade and competitive markets.

Today, many historians look to Thatcher's infamous 'Bruges speech' as laying down the basis of her opposition to  European integration and monetary confederation. In it, Thatcher said:

My first guiding principle is this: willing and active cooperation between independent sovereign states is the best way to build a successful European Community.
To try to suppress nationhood and concentrate power at the centre of a European conglomerate would be highly damaging and would jeopardise the objectives we seek to achieve.

...it is ironic that just when those countries such as the Soviet Union, which have tried to run everything from the centre, are learning that success depends on dispersing power and decisions away from the centre, there are some in the Community who seem to want to move in the opposite direction.
We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level with a European super-state exercising a new dominance from Brussels.
Certainly we want to see Europe more united and with a greater sense of common purpose.
But it must be in a way which preserves the different traditions, parliamentary powers and sense of national pride in one's own country; for these have been the source of Europe's vitality through the centuries. 

As you can observe from this speech, Thatcher's opposition to European integration and currency union was one based on nationalism above European unionism. Admittedly, as an Irishman, I make that obsercation with some mischievous delight, but it is an important feature of Thatcher's vision for the EEC, and her opposition to EMU.

Nobody has suggested that Thatcher's opposition to EMU was based on the economic factors which have toppled various Eurozone economies and at times seemed to threaten the future of the currency itself.

That is to say, it was Thatchr's sentimental attachment to the Pound Sterling (as opposed to any insightful economic worries about switching off the devaluation mechanism) which informed Thatcher's opinions on Britain and EMU.

Her diatribes on Germany struck a xenophobic chord, frequently invoking the two world wars and her criticisms of the German character. But nowhere did she express any economic concerns in relation to the convergence of sovereign interest rate spreads and the lack of any robust mechanism to challenge irresponsible Government borrowing within the bloc.

If anything, Thatcher's sentiments as expressed at Bruges and elsewhere would have wholeheartedly been in favour of preserving national responsibility for banking, economic and fiscal policy. 

Nobody would have been as opposed to the idea of Eurozone bailouts and risk sharing tools like Eurobonds as Thatcher herself. 

It is this mindset of sovereign individualism, championed by Thatcher at Bruges, that has been at the heart of the Eurozone's ongoing sovereign and banking crisis. 

Indeed, today, it is Thatcher's beloved policies of supply side reforms, austerity, and controlling inflation which inform institutional responses to the Eurozone crisis.

Lets not kid ourselves on Thatcher's European legacy. She may have kept Britain out of the Eurozone, but she did so for some half baked, shoddy reasons that had nothing to do with sound economic policy.