Mervyn King in the NY Review of Books:
Two questions that should have been at the forefront were largely absent from the campaign. First, what will the EU look like in the future? Second, what is the place of Britain in Europe? It is helpful to distinguish three distinct entities: Europe, the EU, and the eurozone.
No referendum can alter the fact that Britain is and will continue to be in Europe. Not even politicians can change geography, even if they rewrite history. Cheap travel has meant that opportunities formerly available only to the privileged few who embarked on the Grand Tour are now open to all of us—young and old, left and right. We experience the pleasure and privilege of discovering the many countries of Europe and revel in their differences, their cultures and cuisines, their languages and landscapes. We are lucky indeed to live in Europe where so much variety can be experienced within such short travel times. So the referendum was not about whether Britain is in Europe. It is and always will be, and we take pride in that fact.
The same cannot be said of the eurozone. The monetary union is now facing serious problems. As I explain in my book The End of Alchemy, the failure of some member countries to maintain competitiveness during the first decade or so of its existence means that the eurozone is now confronted with the choice of pursuing one, or some combination, of four ways forward. First, continue with high unemployment in the periphery countries in the south until wages and prices have fallen by enough to restore the loss in competitiveness. Second, create a period of high inflation in Germany and other surplus countries, while restraining wages and prices in the periphery. Third, accept the need indefinitely for explicit transfers from the north to the south to finance the trade deficits that would emerge if those latter countries returned to full employment. Fourth, break up the eurozone.