John Bufton says it’s high time there was a referendum on Europe
In 1973 when Britain joined the European Economic Community the slogan was “common market or bust”. How ironic that sounds today. The crisis rocking the Eurozone is now so severe that the IMF has publicly stated that only an internationally coordinated bail out could prevent the globe being rocked by depression.
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In or out of the Eurozone? Tomorrow Welsh Labour’s MEP Derek Vaughan calls for a cross-party alliance to make the EU case. On Wednesday we hear from Plaid’s MEP Jill Evans, and on Thursday Conservative MEP Kay Swinburne. |
It is beyond embarrassment for the member states of the Euro area which regard the single currency as a cornerstone of their project. It has now reached a level where not only other member states may be sucked into the quagmire of fiscal misery, but the entire interconnected Gordian knot of global financiers.
It is unsurprising that the media is choked with opinion on David Cameron’s decision to veto the EU tax and budget pact. Its architects claim it is the only way forward in rescuing the Euro and guaranteeing the stability of every member state.
But what is essential to remember is that the proposals put on the table during that summit would do little to actually solve the crisis. The burning question of where the Eurozone would find at least a trillion Euros to prevent the currency union disappearing down a financial sink hole still remains unanswered.
We’ve had criticisms that Britain is now isolated and without power. Responses across the continent have done little to disguise the bitterness and vitriol many member states feel towards what they perceive as reckless, self serving betrayal. We have deeply frustrated France and Germany by blocking the legally viable option of unanimity to allow the changes to be enforced. A move by Brussels to sabotage our veto would involve changing laws in order not to break them and as such would be incredibly dangerous.
There have been rancorous demands for retribution, from stripping our rebate (which would leave the UK as the single highest contributor to Europe) to sabotaging any free trade agreement Britain may attempt to forge were she to exit the Union. Yet much less than losing influence, in many respects we hold it. Any attempt by Brussels to scrap the rebate would spark fury in the UK, potentially triggering our withdrawal, and threats made in anger to embargo trade would equally hurt the remaining member states and would do little to help the EU’s reputation on the international stage.
Even though it may have ruffled feathers in Europe, we are legally entitled to protect national interests and must be allowed to do so. To undermine our say would call the entire democracy of the EU into question.
Under this latest pact EU financial supervisors could govern the City in London. It is a coveted prize, to seize control of the place where 75 per cent of Europe’s private investment is dealt, potentially imposing taxes to siphon off much needed capital. But technocratic control would see banks quit London for Zurich, the effects of which would have a devastating impact on us. London’s financial services industry accounted for a £35 billion trade surplus in 2010, and contributed £54 billion in taxes as well as representing 2 million jobs.
The most repeated criticism is that the UK has lost its seat at the negotiating table, and thus decisions that affect us will no longer being taken in consultation with us. Some commentators suggest the Eurozone can enforce the policies anyway, rendering the veto entirely in vain. Yet the European Court of Justice states that changes to EU institutions must be subject to assent by all member states influenced.
A general consensus is that Britain wants one foot in the EU and one foot out. However we are not alone. There has always been a two-speed Europe, simply by the fact that 17 member states are in the common currency and 10 are not.
In Finland, Sweden, Hungary and the Czech Republic there is also widespread resentment of the demand that tax and budgets are controlled by Brussels, and quiet support of the UK stance. Even the French newspaper Le Monde confessed that the “Brits are not part of this euro crisis. And they have no responsibility for the failure of its institutions to resolve it.” Perhaps if we are isolated, it is for the best. After all, it is better to be on the docks waving goodbye to the Titanic.
German MEP Alexander Graf Lambsdorff suggests the EU “refounds itself without Great Britain”, suggesting “Switzerland is a model towards which Britain can turn”. Thereby it could trade freely with the bloc and cooperate bilaterally on important issues without being a member state subject to European law. As a result of autonomous cooperation, Switzerland is able to trade in a much freer environment. She has the highest wealth per adult in the world, was voted last year as being the most competitive country on the planet, and was listed as having the second highest quality of life globally.
Whatever comes to pass, the next few months are critical. Even without the UK veto, this pact could never solve the crisis. Whilst it may signify a willingness to prevent it happening again, it is rather like closing the stable door after the horse has bolted.
There will likely be more summits acting as stepping stones to complete political federation allowing all debt to be subsumed within one massive economy. In essence, this would be amalgamating the Eurozone into a single country rather like the USA. There is growing consensus that this is the only solution if the single currency is to be saved. However, such a bold decision will likely be made in increments to prevent public backlash.
UKIP MEPs have been arguing for years that a single currency without full fiscal union simply cannot work. We have been labelled doom mongers, political Luddites and even extremists for holding the view that, as it is today, the EU is much more than a common market of ten European countries. Instead, it is too powerful, too reckless and incongruous with both public opinion and political sense.nIt is high time people felt free to come out of the shadows and speak out against Europe. It’s high time we had a Referendum.
Because the EU is such an emotional subject for many people, heated opinions are common and analysis is rare. Factoids get bandied about and are seldom challenged. One, believed it seems by both the German Chancellor and UKIP, is that ‘a single currency without full fiscal union simply cannot work’. Fiscal union is neither necessary nor sufficient for a currency union. The Euro is in the process of failure and would still fail even if there were a fiscal union. The problem is that a monetary union requires a convergence in processes of price and wage formation in different countries and this has not happened, resulting in big losses in relative competitiveness in countries like Italy. Moreover where a common interest rate results in asset bubbles in some countries – as happened in Spain and Ireland – other policy instruments are required to stop bubbles getting out of hand. They were never found and introduced. Government deficits are the result of the crisis not its cause (except perhaps in Greece) so focusing on fiscal pacts is a displacement activity that will solve nothing.
This whole episode is like watching a friend suffering from a heart attack while insult is added to injury by a bunch of quack doctors who had predicted death from bubonic plague gloating about how right they were and how we must now take ourselves off to avoid infection.
Bufton is a sad little-Englander out of touch with the reality that the EU is the only real source of governmental stuctural investment available to Wales at present.
Cameron’s “veto” which was no such thing was no more than serving the interests of those he represents – the 1% of the population.
Gerald Holtham’s analysis is on the button.
Bufton also misses the point that the banking sector (the Investment banking centre in the City) has cost the tax-payer 8 times as much as it has generated over the last 10 years, and is still far less than half the size of the much neglected manufacturing industry, which depends on Europe for its trade.
The proposed banking reforms from this government are so weak that it will not be long before another bailout is required, and many of us would much prefer that was a burden on Zurich, rather than us. Investment banking adds nothing to the economy – they conjure ‘new’ money from accounting discrepancies, it is illusory, and when it is called in, it disappears, and we have another crash.