This chapter explores how ‘globalisation’ became a common frame of reference about the ‘modern world’ and the rise and fall of both nationalist and pan-European socialist responses. It is widely recognised that the ‘discourse of globalisation’ was a lynchpin of New Labour’s ‘modernisation’, and some scholars also argue that it drove the party’s capitulation to ‘Thatcherism’. However, this chapter reconstructs an overlooked source of the idea of globalisation in Labour: the Alternative Economic Strategy (AES), which underpinned the 1983 manifesto. It traces how, from the 1970s, Labour policymakers diagnosed a powerful new force – ‘multinational’ production and finance – which placed novel constraints on the socialist state. Over the 1980s, these policymakers went from attempting to reassert the British state’s sovereignty to trying to transcend it through European integration. The AES collapsed after the 1983 electoral catastrophe, while Eurosocialism failed to decisively shape Labour. Yet, these ideas show that the spreading idea of ‘globalisation’ as an unavoidable feature of modernity had many parents in Labour and originated from the party’s left as well as its right.

The EU member states engage in budgeting through a set of supranational fiscal procedures outlined in EU treaties and supporting legislation. The EU itself is a suprnational government with its own budget and budgetary institutions, procedures, and programs. It enforces these macrobudgetary rules that significantly constrain the policy decisions of the individual member states.

‘The Germans had terrible experiences with inflation in the twentieth century’, recalled Mario Draghi, the president of the European Central Bank (ECB) in March 2012. He was speaking to two journalists from the tabloid newspaper Bild at the ECB’s headquarters, who had just given him a Pickelhaube. ‘It does away with value and makes forecasting impossible. More still – inflation can downright destroy the society of a country.’1 To be dead set against inflation, to be for a strong currency, and to be independent of politics – these were ‘German virtues’. And they were virtues, Draghi said, that every European central banker should strive towards.2