Europe

December 29, 2012

End of Year Euro Round-up

Bonne fetês et bonne chance Brussels!

So where do we stand at the end of the year? The Banking Union hangs in the balance. Mr. Cameron’s new and (for some) worrying alliance with Angela Merkel has meant the Commission still has questions to answer over the status of Greece, Portugal and Spain within a ‘mutual risk’ framework, before the big states will agree to expose their banking systems to more toxic debt.

All the while, a sickly Eurozone suffers the consequences of delay. The Franco-German pact of the Merkozy years has abruptly ended with Socialist Francois Hollande’s election. Left wing parties in Europe finally see light at the end of the tunnel, following a continental recession where voters ran for the cover of conservatism.

Eurocrats are under fire by headline seeking leaders, as plans to cut EU salaries top political press briefings in the hope an “assault on Brussels” will disguise the miserable failure of Cameron, Merkel, Hollande and the rest to address the real money draining problems of the Common Agricultural and Fisheries Policies.

And as Fitch ratings agency warns of a planned cut to Britain’s AAA borrowing status, the Tory led coalition frog marches the country towards an EU exit.

This, despite everything else, is the real story in the corridors of the institutions and on the streets of the European Quarter. Britain’s plunge into the abyss: will they, or won’t they?

A British exit would send shockwaves through the Union. But a creeping (now rapidly accelerating) euroscepticism has run rife through the ranks of Britain’s political class, making every EU summit that bit more difficult. There are now those amongst the other member states who would welcome the departure of the leader of the awkward squad.

It terrifies those who, like your correspondent, cannot conceive of Britain outside Europe. It terrifies me even more when I consider those who are most vocal in making a case for a British exit.

Tory backbenchers, relying on the questionable status of the Conservatives as the party of ‘business’, loudly proclaim how barmy Brussels bureaucrats are stifling the growth of British industry. Indeed the Chancellor, George Obsorne has found the single market a convenient scapegoat on which to blame the failure of his flawed austerity plan.

However, the Confederation of British Industry sings another tune. During its annual conference last month, the President of the CBI said, “If we are to avoid an exit vote in any referendum it is essential that the voice of British business is loud and clear in extolling the virtues of future engagement [in Europe] – not as a reluctant participant – but as the lynchpin of our wider global trade ambitions,”

“As countries of Europe bind together in pursuit of salvation, we in the UK must work harder to avoid the risks of isolation. Europe is the bedrock of our international trade.”

This clear and unambiguous declaration of where the CBI stands makes a mockery of the fear-mongering Tory argument; that the EU prevents Britain from developing trade with other countries – and consequently the UK economy suffers.

The fact is that the EU, at $17.5 trillion worth of GDP, is the largest economy in the world – ahead of the US by $2.5 trillion and China by $10 trillion. It is also the third most populous economy, at 500 million citizens.

But in the face of this overwhelming evidence some, such as the vituperative MEP Dan Hannan, claim that Britain would be better off out. He advocates a British relationship with Europe like that of Iceland or Switzerland, part of a European Economic Area but not part of the single market.

The fact is Britain tried this before accession to the Union in 1973. It didn’t work. That is because over half of our trade goes to other EU nations, and as part of the EEA, we had to abide by rules set in Brussels, but could not influence them.

The fact is also, that Iceland has now applied to join the EU, because it realizes it gains more from being part of the Union, than being outside.

The fantasy that Britain could negotiate the same desirable conditions of access that Switzerland enjoys also needs debunking. No country since that agreement has received even remotely favourable terms akin to Switzerland’s. The now EU regrets bestowing the conditions it did. Consequently, countries in a similar situation such as Norway, do not benefit in the way the Swiss do.

As the third largest economy within the EU, Britain has a strong negotiating position to craft EU law. It also has a plethora of opt-outs, more than any other member state, meaning it very much can pick and choose what laws it is part of. I can attest to this any time I take the Eurostar train, and have to pass through 3 border controls every journey.

So the Tory argument has no leg to stand on. As so often with Europe and the Conservatives, the arguments develop from ideology, not the other way around. There is a hate and a fear of Europe which is unexplainable, but all too present in Tory ranks. And British voters suffer the consequences of these illogical and irrational claims.

But there is no question now of avoiding a referendum over membership, which on current polls the NO camp looks sure to win.

Britain is better off in. But we wait with apprehension, for this choice will affect the fate of an economy, and a continent.

Bonne année.

 

L’UE



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