From an unexpected source comes a report that the unspeakable is being whispered – the euro currency project could fail.
The source is Stella Dawson, chief ECB correspondent for Reuters, unusual because the agency usually confines itself to hard news and avoids long, speculative pieces.
But, writes Dawson, in economic research reports and newspaper columns, European Central Bank watchers have begun to speculate on the fate of Economic and Monetary Union (EMU) should French voters reject the EU constitution.
"The euro at risk" was the headline of a Deutsche Bank report to its clients on Monday. "Its life expectancy may soon be regarded as finite," Financial Times columnist Wolfgang Munchau wrote the same day.
"The EU could disintegrate toward a free-trade zone," said WestLB Financial Markets on Tuesday. "Such developments would spell disaster for EMU and the ECB."
Dawson cites Eric Chaney, European economist at Morgan Stanley, saying that the "no" vote "could lead to break up of EMU". "It is a real risk," agrees Paul de Grauwe, international economics professor at Leuven University in Belgium and adviser to European Commission President Jose Manuel Barroso.
Chaney and Deutsche Bank's chief European economist Thomas Mayer believe that merely the threat of postponing EU political integration would encourage investors to move capital out of the euro zone and to sell the euro. Long-term risk premia on sovereign debt, especially for heavily-indebted euro zone countries, would rise, they said.
The possibility of France leaving the EU and EMU breaking up is very low, Chaney says. But even a slight rise in a distant threat could have important consequences for financial markets. "If the second biggest player in the EU were to take its chips out, the rationale for monetary union disintegrates. The euro would react quite quickly," he said.
For the European Central Bank, a falling currency and questions about EMU viability when money supply and credit growth is already very strong would worsen inflationary risks. The ECB would have to respond by raising interest rates to safeguard the euro, said Mayer.
Failure to do so "would almost certainly set the stage for a soft-currency, high-inflation EMU, which might break apart some time in the future," he said.
However, Daniel Gros, director of the Centre for Economic Policy in Brussels, paints a different picture. "A 'no; vote creates a political crisis, which serves as a call to arms to save EMU," he argues.
Anatole Kaletsky of The Times today seems to agree with him.
Framing his argument, he suggests that, while the British election could conceivably change our government for the rest of the decade or, more likely, force Blair into retirement a few years ahead of plan, the French referendum could transform the political and economic prospects for the whole of Europe, including Britain, for an entire generation.
He then cites Charles Gave, a prominent French economist, explaining why the French will vote 'no'. This referendum gives them the chance of a lifetime to vote simultaneously against the two politicians they have hated most for the past 30 years: Chirac and Giscard.
"To understand what the average Frenchman thinks of these two defunct septuagenarians claiming to speak for the nation, imagine how people in Britain would feel if they turned on the TV news and found Harold Wilson still arguing with Ted Heath," he writes, continuing:
On reflection, this is not just a joke. The French referendum has been grandly described as a choice between the past and the future. But the real choice is exactly opposite to the one articulated by campaigners on both sides. The alternatives offered to the people of France are not between the idealistic European multiculturalism of the 21st century and the xenophobic nationalism of the 19th. Rather they face a choice between two approaches: on one hand the liberal ideology of free markets and small governments that seems to be sweeping the world after its relaunch in Britain and America in the 1980s. The alternative is the 1970s belief that a centralised, protectionist and bureaucratically managed state could gradually be extended to the whole of Europe, preserving and enhancing the traditions of Gaullism in its glory days, when Chirac and Giscard were rising to power.Then comes the sales pitch: whatever the intention of some voters, the consequence of a 'no' vote may well be to accelerate both economic and political liberalisation in France and across Europe, Kaletsky thinks. It would be a wake-up call for the politicians and officials who have so mismanaged the European economy since the mid-1990s and faster growth could well be the consequence.
Furthermore, a 'no' vote would be such a shock to Europe's governing élites that the European Central Bank may well recognise that the only alternative to lower interest rates and a weaker euro will be the complete collapse of the single-currency project. National governments and the EU commission will abandon all efforts to patch up their deflationary growth and stability pact - and instead will cut taxes in a dash for growth.
Then the collapse of the constitution would dispel the pernicious illusion of French or European 'exceptionalism' which this journey inspired: the idea that France or Europe has a "model" of social development which somehow exempts it from the laws of capitalist economics that apply to the rest of the world.
Europe can make different choices on social services and welfare from America, but these choices can be supported only by a growing economy. The laws of the market — that people respond to incentives, that overvalued currencies destroy employment, that bureaucracy stifles enterprise — cannot be repealed by European idealism or political will.
In other words, a French 'no' will force the people of Europe and the governing élites to face the fact that their living standards, cultures and influence in the world can be preserved only by improving economic performance, not by integrating, harmonising, enlarging or writing constitutions.
Denied the illusions of 'exceptionalism' and 'ever-closer union', Kaletsky concludes, Europe may have to think seriously about economic reform.
Hell, I wish I could be such an optimist - and get paid for it. But this grouch thinks differently. If there was any chance of EU politicians facing up to reality, they would not have attempted to foist the constitution on us in the first place. Collectively, they have been living in their own 'bubble' for over fifty years, and a little thing like a rejection is not going to change it.
We have been here before. The last great attempt to foist a constitution on 'Europe', in the form of the European Political Community, failed in 1954, when the French parliament refused to ratify it. Did that stop the integrationalists then? Not in the least – three years later they were signing the Treaty of Rome.
Kaletsky may be good at economics, but he has little grasp of the mentality of the "colleagues" and their obsession with the "project". They really do have no "Plan B" and will try again for their constitution. But this time the laws of gravity may prevail. If they do, it is going to crash and burn, baby!