A WALLED city-within-a-city once stood on the site now occupied by London’s Cannon Street station. From the 15th to 17th centuries, its counting houses, guildhall and wharves echoed to a babble of Germanic languages. It connected London with a chain of other Hansa trading posts strung along the shores of the North and Baltic seas. These shared a common legal system and sheltered each other from tariffs and customs restrictions. For centuries the Hanseatic League’s cogs and hulks plied the inky waves, pregnant with cloth, timber and furs.

Even today, cultural similarities betray the old links: gabled merchants’ houses and pubs serving eel and herring are found on damp, blustery coasts from East Anglia to Estonia. The mercantile spirit lives on, too: Britain, Germany, the Netherlands, the Nordics and the Baltics share a taste for balanced books and free trade. Most underwent economic reforms before the euro-zone crisis and have low bond yields and triple-A credit ratings to show for it. Many sport prominent Eurosceptic parties such as the True Finns, Alternative for Germany and the UK Independence Party, which channel voters’ anger at being yoked to Europe’s languid, unreformed south.

The kinship is not lost on British politicians. In January David Cameron, the prime minister, gave a speech in London (near the site of the trading post, as it happens) in which he pledged to overhaul Britain’s EU membership and, if re-elected with a majority in 2015, put the result to an in-out referendum. He pleased northern allies by sketching a vision of a leaner, more competitive Europe in the interests of “the entrepreneur in the Netherlands, the worker in Germany, the family in Britain”. The EU should spend less and concentrate on trade-boosting measures, he argued.

This has spurred excited talk in Westminster of a northern alliance—a new Hanseatic League, as it were. The British government’s review of the balance of powers between Brussels and London has attracted widespread interest abroad, note diplomats. Separately, the Dutch held their own review, which concluded that Europe should integrate less and liberalise more; music to British ears. And a template for an alliance already exists: since 2011, Mr Cameron has convened an annual “Northern Future Forum” of Nordic and Baltic states.

Such designs are products of political necessity. The task before those British politicians, like Mr Cameron, who want to stay in the EU is to persuade Eurosceptic voters and MPs that the ongoing integration of the euro zone will not sideline Britain. So for the prime minister and his allies, a division of Europe into pro-British, free-trading northerners and statist southern farmers is more convenient than one of euro ins and outs.

Partly, this scheme is so much wishful thinking. It faces two problems. The unique virulence of Britain’s Euroscepticism worries its neighbours. A meeting in London earlier this year left German MPs aghast at the anti-EU views of their British counterparts. This is exacerbated by doubts, sown by Mr Cameron’s speech, over whether the country will even remain in the EU. It “would certainly be even more influential among the Northern Lights if it had all the lights on all the time,” says Alexander Stubb, Finland’s Europe minister, in a diplomatically gnomic nod to Britain’s patchy commitment to the union.

And although the Hanseatic states share trading traditions, their priorities differ. Unlike Britain, Germany, the Netherlands, Estonia and Finland use the euro, so are inextricably bound to Europe’s troubled south. Latvia will join on January 1st 2014 and Poland hopes to follow. And although the states around the North and Baltic seas share fiscally conservative instincts, the likes of Poland and Lithuania receive too many transfers to want to cut the EU’s budget. On foreign policy, Britain is much closer to nuclear-armed France than to its non-interventionist German and Nordic partners. On freedom of movement, too, Britain’s allies are divided. That will surely frustrate Mr Cameron’s bid—unveiled in a newspaper article on November 27th—to limit internal EU migrants’ access to benefits.

Yet the new alliance has its uses nonetheless. Though bound together economically, the euro-zone states are not yet a cohesive bloc. When they are at odds, Britain can take the initiative—as it has done on several recent occasions. Last year it initiated a northern campaign to give non-euro-zone states a say in the running of the EU banking union. As a result, votes in the European Banking Authority will require a double-majority of euro-zone and non-euro-zone states (a principle first touted by Open Europe, a London-based think-tank). Negotiations over the EU budget in February produced another such victory. Britain and Germany thwarted spendthrift French plans by forging a cost-trimming coalition, with the Swedes and the Dutch outriding by demanding an even deeper cut.

Burghers with relish

With northern allies at its side, Britain has also championed EU reforms to curb overfishing, leant on the European Commission to cool a protectionist dispute over Chinese solar panels and pushed for a transatlantic free-trade deal. Such occasions show that even if Britain’s clout is declining, it can still lead when circumstances permit. Its exit would strike a blow to a liberal, competitive Europe; not least as the north would lose its blocking minority in the EU institutions.

And perhaps it is a good thing that the northern partnership will never be as formal as Westminster’s politicians would like. A loose, flexible alliance, it can avoid pomp and power play, and concentrate instead on the pragmatic business of making Europe richer. Just like those stolid Hansa trading posts of yore.

Economist.com/blogs/charlemagne