Europe

Kiran Stacey

Reading accounts of the deal agreed between Nicolas Sarkozy and Angela Merkel last night to impose new rules on EU countries to guarantee fiscal discipline, you might think the two countries were uniting to save the Eurozone from its more profligate members.

But which two countries first broke the rule that deficits should not go above 3 per cent of GDP? It was France and Germany, back in 2003. What’s more, the two then united to make sure that they wouldn’t face sanctions for doing so – effectively destroying the rules (known as the “growth and stability pact”) altogether.

What’s more, they were supported in this action by the UK (otherwise known as the country that like to lecture others on fiscal discipline). Gordon Brown was chancellor at the time. Read more >>

Kiran Stacey

A British protester burns an EU flag

A British protester burns an EU flag

Two sources who would know have told members of our political team that the chances of having a referendum on EU membership this parliament are very low indeed.

One ruled it out altogether, the other said the “number one priority” of coalition policy on Europe was  not to have one.

David Cameron pretty much guaranteed that today when he said there would only be a referendum “if a new treaty passes powers from UK to Brussels” adding:

 

As Prime Minister, I do not think the issue will arise.

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Kiran Stacey

Ed Miliband’s interventions on Europe have a habit of serving only to bring David Cameron closer to his own backbenchers on the issue. On Monday, as Tory rebels lined up in their dozens to defy Cameron on an EU referendum, Miliband was the only one who managed to restore harmony on the Tory benches, uniting them in laughter when he said:

Apparently president Sarkozy – until recently his new best friend – had had enough of the posturing, lecturing and know-it-all ways. Let me say, Mr President, you spoke not just for France but for Britain as well.

At PMQs on Wednesday, a similar thing happened. Miliband had some good lines, including telling saying Cameron “was pleading with his backbenchers instead of leading for Britain in Europe”.

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Kiran Stacey

Cameron, Merkel and SarkozyDavid Cameron appears to be trying to dangle some red meat in front of his restive backbenchers by holding out the prospect of using any imminent EU treaty change to try and repatriate powers back from Brussels to London.

Speaking after meeting fellow European leaders over the weekend, the PM said:

This is the right time to sort out the eurozone’s problems, defend your national interest and look to the opportunities there may be in the future to repatriate powers back to Britain. Obviously the idea of some limited treaty change in the future might give us that opportunity.

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Even Europhile economists must have pricked up their ears at the offer of £250,000 to the person who comes up with the best plan for winding up the euro. Only the Nobel offers a more valuable bounty to the dismal scientists.

But whatever you think of the goal, is the Wolfson Economics Prize – offered by Lord Wolfson, the youthful, Eurosceptic, Conservative chief executive of Next, the UK retailer – the best way to achieve it? These days, bright business ideas often emerge through collaboration, rather than competition.

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Kiran Stacey

As Westminster waits for the publication of Sir Gus O’Donnell’s report into whether Liam Fox broke the ministerial code as a result of his friendship with Adam Werritty, Number 10 is drip-feeding new revelations into the public domain.

The latest is that Werritty met other defence ministers: specifically Gerald Howarth and Lord Astor. We don’t know when, where or how often though. Read more >>

Kiran Stacey

Hank Paulson had his bazooka plan, now David Cameron has gone one step further, calling for a “big bazooka” approach to tackling the eurozone crisis.

Cameron calls for five things:

  1. Recapitalisation of eurozone banks
  2. More money for the eurozone bailout fund
  3. Greece’s economic future to be clarified
  4. The IMF to pressurise countries to do more to tackle the crisis
  5. The deepening of the single market and improved eurozone governance

 Read more >>

Kiran Stacey

William HagueLast night the government lost a crucial amendment to their Europe bill in the Lords by a handful of votes.

Peers voted to introduce a “sunset clause” on the entire bill (actually, the entire bill apart from one technical point), which would limit it to only five years. Importantly, this means that the so-called “referendum lock” – whereby any transfer of sovereignty from London to Brussels could only be allowed after a Yes vote in a referendum – would have to be voted on again in five years’ time. Read more >>

Jo Johnson

How does the world look from Westminster? Foreign policy is woefully under-scrutinised in the UK, where governments can wage war and sign treaties without reference to parliament, and the limited attention it does receive could arguably be better directed.  Read more >>

Jo Johnson

As it’s prediction season, here goes… My crystal ball, for what it is worth, foretells political and economic union between France and Germany, perhaps within the next 12-24 months. Europe needs a gamechanger, one that creates an insurmountable firebreak against the speculators. Crises have historically been the motor of European integration and a full union, much like the panicky one Britain offered France in June 1940, might look tempting. It would provide for joint organs of defence, foreign, financial and economic policies, finally fulfilling the founding fathers’ dream of “ever closer union”. Read more >>

Here is a fine example of the dangers of politicians writing seemingly innocuous op-eds for newspapers.

Ahead of a trip to Dublin in 2006, George Osborne used an article in The Times to pay homage to the Irish boom. The opening paragraph about Ireland’s “shining example” to economic policymakers is a classic:

A generation ago, the very idea that a British politician would go to Ireland to see how to run an economy would have been laughable. The Irish Republic was seen as Britain’s poor and troubled country cousin, a rural backwater on the edge of Europe. Today things are different. Ireland stands as a shining example of the art of the possible in long-term economic policymaking, and that is why I am in Dublin: to listen and to learn.

The conclusion is almost as cringeworthy:

The new global economy poses real long-term challenges to Britain, but also real opportunities for us to prosper and succeed.  In Ireland they understand this.

They have freed their markets, developed the skills of their workforce, encouraged enterprise and innovation and created a dynamic economy. They have much to teach us, if only we are willing to learn.

To be fair to Osborne, many of his arguments are still valid even after the crash.

A well educated workforce, top notch R&D investment, and competitive tax rates to encourage investment are all as important now as they were during the boom years.

But there is not a word of caution about potential imbalanaces in the economy. No mention of the racy property market, reckless lending, or his views on the dangers to Ireland from having joined the Euro. Read more >>

The clash over next year’s EU budget has widely been viewed as a contest between the austere and the profligate. The end result, after a final round of negotiations collapsed in the wee hours of the night, is that the forces of austerity, led by UK prime minister David Cameron and his Dutch and Danish allies, prevailed over a spendthrift European parliament.

But there is another – often overlooked – element to the debate that animated the member states’ unexpectedly stubborn stance: a desire to punish a Parliament that has grown increasingly assertive – some say grasping – since the Lisbon treaty came into force in December. Read more >>