They were warned. In the late 1990s, eminent economists queued up to explain the flaws in the euro project. Chief among them was Nobel Prize winner Milton Friedman, who in 1999 – the year the euro was born – predicted that “sooner or later, when the global economy hits a real bump, Europe’s internal contradictions will tear it apart”.

But the fatal conceit of EU policymakers triumphed. The euro was a key plank of their long-term programme to centralise power at supranational level. Given this agenda, it is unsurprising that the EU’s response to the current crisis has been to further emasculate member states. Following the bailouts, the fiscal policies of Greece and Ireland are severely constrained. In the longer term, a similar approach may be rolled out across the Union.

The Stability and Growth Pact was supposed to prevent governments getting into too much debt. Budget deficits were to be under 3 per cent of GDP, while national debts were supposed to be under 60 per cent of GDP. But the pact proved impossible to enforce. Several countries – including Germany – broke the agreement, with no sanctions. Others only satisfied the criteria through creative accounting.

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Richard Wellings was educated at Oxford and the London School of Economics, completing a PhD on transport and environmental policy at the latter in 2004. He joined the Institute in 2006 as Deputy Editorial Director. Richard is the author, co-author or editor of several papers, books and reports, including Towards Better Transport (Policy Exchange, 2008), A Beginner’s Guide to Liberty (Adam Smith Institute, 2009), High Speed 2: The Next Government Project Disaster? (IEA , 2011) and Which Road Ahead - Government or Market? (IEA, 2012). He is a Senior Fellow of the Cobden Centre and the Economic Policy Centre.