Thursday, August 5, 2010

Another Day, Another Euro

There has been some ill-informed nonsense written about the Euro since Greece was bailed out with the help of Eurozone members.

Some economists, who should know better, claimed that the crisis would spread to other vulnerable euro countries like Italy and Spain; that these countries would have no choice but to leave the single currency and that even Germany might walk away and start printing Deutschmarks again.

However, the Euro is much stronger than that - and is designed to withstand such shocks. It can, of course, be improved by enforcing strict deficit rules and by creating, which it now is, an emergency bail-out fund. What does not need to happen is any so-called economic governance. National budgets should not be subject to ECOFIN approval and tax policy should remain a useful competitive tool not be remotely part of any european fiscal union. The European Central Bank however does need to be more political in interest rate decisions and take into account more inflationary pressures in a Euro member state that is struggling. But thats as far as it goes.

I resisted joining in the clamour for quick fix solutions and rather stood back and watch the debate burn itself out. The Greek crisis has been dealt with and the Euro moves on

I read with interest some opinion polls which shows that two thirds of voters noe believe the EU is more relevant than ever following the financial crisis. thsi is remarkable considering no-one particularly liked being asked to bail out the Greek system as though it were some kind of perverse award for their fecklessness.

It was unfortunate that UK Deputy PM used the excuse of the Greek financial crisis as the reason why he changed his mind on the urgency of austere deficit cuts. Regardless, none of this of course excuses the fact that he campaigned to win Lib Dem votes without telling his voters that he had changed his mind.

What is also strange is that the Conservatives did not join on the bandwagon and launch a tirade against the Euro just when it was at its weakest. Perhaps this can be explained by the realisation that a weakened EU was not in the UK's interests. david Cameron himself said so during a visit to Paris shortly after becoming Premier.

Observers are mystified as to just how muted Cameron, Hague and Osborne have been on Europe - especially when there is a real chance to put the boot in.

The junior coalition partners can be credited for keeping the eurosceptic wing of the Conservatives reined in but how long can this last? At a Progress meeting in the House of Commons, chaired by the new MP for Wolverhampton, Emma Reynolds, Labour Party members came together to find ways of putting a wedge in the coalition on the issue of Europe. While every-one agreed that Europe is not a priority for voters, it is the coalition's achille's heel. Although there is no sign yet of a coalition split Labour is watching closely for any sign of fracture.


The Coalition Government's approach to the EU and its key partners has been surprising but commendable. But dont be fooled. It does not mark any shift of the Conservatives policies on Europe. It is pure RealPolitik. There was genuine fear that the weakened Euro would drag the UK back into a recession. But here we are - out of the storm. Another Day - another Euro. The single currency carries on.

9 comments:

  1. The effects of Greece in the panorama of European Policy were predictable since the 2005 events - Eurostat has long flagged Greece accountancy as inaccurate. What appeased on this occasion was the multitude of effects that were as effective as light in their media agenda presence - Budget co operation, Eurostat powers re-enforced, a media relations strategy for the ECB (what a May press conference), the certainty of Germany's support for the Union. If a peek into the psyche of PM and Deputy PM was possible, I am almost sure the comfort of patriotism and commitment so characteristic of the UK in late 2008 was perceived in EU's reaction to these events - perhaps silence...

    ReplyDelete
  2. 哥倫布:「勇於追求新的地平線就是冒險家。」加油!!............................................................

    ReplyDelete
  3. 在莫非定律中有項笨蛋定律:「一個組織中的笨蛋,恆大於等於三分之二。」. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    ReplyDelete