Posts Tagged ‘Britain’
Hard Money or Soft Money?
Posted by: Peter Sain ley Berry in EU on March 16th, 2010
Back in 1979, when Mrs Margaret Thatcher was fighting her first general election campaign as Conservative leader, one of the slogans that became instrumental to her success was the simple one of ‘sound money.’
“You can’t spend what you don’t have!” she would announce in the shrill, matriarchal voice that she was later to abandon for deeper and more prime ministerial tones. She talked about living within your means, of balancing the budget and invoked the lot of her female electors in particular about the necessity of having something left over, however small, at the end of the week’s housekeeping.
In this she was retailing Mr Micawber’s recipe for happiness as illustrated by the nineteenth century novelist, Charles Dickens. Annual income twenty pounds; annual expenditure nineteen pounds, nineteen shillings and sixpence – result happiness. Annual income twenty pounds; annual expenditure twenty pounds, aught and six – result misery.
Maybe I should translate that into decimal for no-one in my experience not born or raised in Britain or Ireland before about 1960 understands the weird triple money of pounds, shillings and pence with which the older folk amongst us grew up. Twelve pence made up one shilling; and twenty shillings a pound. The shilling spread (two sixpences) between Mr Micawber’s happiness and Mr Micawber’s misery was thus equivalent to 5 of today’s pence. So in decimal terms it would be the difference between £19.95 and £20.05. You should multiply that by perhaps a thousand or so, to offset the devaluation of the currency.
And yet it is always so easy to borrow that extra shilling. Which is of course what most of us are tempted to do and which governments do all of the time because there are few votes in public expenditure cuts, but plenty in nice, new, government funded projects.
Only when backs are really to the wall – as Britain’s was in the late 1970s – will some of the turkeys vote for Christmas.
Yesterday, came news that the European Commission was about to remind the British government, already embroiled in preparation for an election at the beginning of May, just what Mr Micawber’s dictum was. Indeed, it will point out that Britain – at 13 per cent – now had the largest budget deficit of any country within the European Union and would Britain take immediate steps to rectify this, please.
Translating this deficit into Mr Micawber’s terms his £20 annual income would now be supporting expenditure, not of the odd extra sixpence, but of another 104 extra sixpences. Clearly that is something that cannot be entertained for very long without a very large quantity of misery indeed.
To be fair, the recession has savaged government revenues. Had these remained buoyant the deficit would have been far less. To be fair also other countries are in not dissimilar positions. Thanks to North Sea oil and massive sales of national assets total government debt in Britain also remains at a within respectable bounds and only 60 percent that of Italy.
Nevertheless Britain’s back is to the wall along with a number of other countries including of course Greece. The prospect of austerity budgets and tax rises stretch long into the future. The question is whether all these countries will, by themselves, be able to manage the job of balancing the books or whether some external force is likely to be needed to enforce discipline?
Britain’s – and I suspect that Britain is far from being alone here – attitude to external discipline is to resist it vigorously at first but then to welcome the fact that it now can blame all manner of political unpopularity on some notionally evil ‘third party.’
In the 1970’s this was the International Monetary Fund which gave the government cover to implement drastic cuts that it would not have had the courage to implement alone. The European Union is often cast in the same light and blamed for any politically unpopular measure the government decides to introduce whether it really has anything to do with Brussels or not. Globalisation and loss of international competitiveness are other bogeymen.
Today the British government’s response to the Commission’s promised rap over the knuckles about our embarrassingly large deficit is merely to repeat that they have plans to cut it in half over the next four years. The Commission thinks the government is deluded in this; that the forecasts are overly optimistic. But the British government can safely ignore the Commission – at least for the moment. “After all we aren’t in the eurozone,” they say, smugly.
But I do in fact wonder whether secretly the British, Greek, Irish, Portuguese, Spanish and whoever else’s governments might not welcome some imposed straight jacket that would relieve them of political responsibility for slashing public expenditure, losing jobs and raising taxes. For while there is certainly a debate to be had about how far and how fast to cut, what to protect and what to cull, the inescapable fact remains that major alterations to public budgets need urgently to be made.
Britain is indeed out of the eurozone and not likely to meet the criteria for joining it for many years to come even if it now wished to re-embark on that process. But it would surely be sensible to align the British economy with that of our neighbours and subject ourselves to similar financial disciplines.
Agreeing to be bound by the same economic rules and agreeing to take similar doses of economic medicine may seem like yet another loss of sovereignty. But it is the sort of silly sovereignty that allows you to keep digging when you know you are in a hole rather than accepting help to pull you out.
I predict that we shall see a general toughening of financial control within the European Union both inside and outside the eurozone. The putative European Monetary Fund – may or may not be needed to save Greece and perhaps others – and may or may not need treaty approval to set up. Certainly the collectivity of member states has pledged to rise to the occasion should Greece make a request for help. This seems an informal forerunner of more structured things to come.
How this will be managed constitutionally will be interesting. An economic supremo – a High Representative for economic policy perhaps – who would combine the financial work now divided between the Council, the Commission and the European Central Bank?
To the questions of Europe large or small, integrated or diffuse, has now been added the dimension of a Europe of hard money or soft money.
The picture shows the European Central bank Headquarters in Frankfurt
Currency or Politics?
Posted by: Peter Sain ley Berry in EU on February 16th, 2010
The financial turmoil arising from the Greek government’s indebtedness is likely to have a profound effect of the future constitutional development – and enlargement – of the European Union. So anyway it seems to me. All the improbable articles in the British press about the threatened collapse of the euro and the end of civilisation as we know it are, in a sense, correct. Apart, that is, from the euro collapsing.
The euro will not collapse; it is one of the world’s reserve currencies, underpinned by the world’s largest trading block. And if in recent months there has been some readjustment against the dollar that is principally the result of the dollar recovering some of its value lost in the aftermath of the collapse of Lehman Brothers and other Wall Street institutions.
Greece – and a number of other countries in the European Union – are, as we know, burdened with unsustainable budget deficits and high levels of public debt. Britain, though not in the eurozone, is among them. Whether Britain’s public finances would have been in better order had she not – in an act of hubris – turned her back on the Single Currency project in 1997 and 1998 – is a moot point.
What is certain is that the pound has in the last year or two lost some 20 per cent of its external value – something that impoverishes us all and whose lesson – (you can’t make yourself richer by devaluing) we thought had long been learned. Certainly Britain’s finances will not again meet the qualifying terms for joining the euro for many a long year to come.
Britain now faces massive cuts in public expenditure which should hold in check the inflation that this devaluation might have otherwise unleashed. So does Greece. The Greek government has pledged to reduce its deficit from 12.7 per cent of GDP to below 3 per cent in 2012. It plans to cut the deficit by 4 per cent this year alone which surely must qualify as one of the more memorable triumphs of hope over expectation.
Besides Britain, other countries – Spain, Italy, Portugal, Ireland – have deficits that are cause for concern. And while Britain is outside the eurozone, economic turbulence across the Channel has an impact elsewhere and especially upon already fragile Ireland beyond.
The European Union – in effect France and Germany – have pledged to save Greece should that need ever arise. By implication they have also pledged to save any other country in the eurozone in danger of defaulting on its sovereign debt. How is not specified.
I am sure both Nicolas Sarkozy and Angela Merkel are rather hoping that the need will not arise, or if it does that they will by then have moved on to other and better things leaving erstwhile colleagues to deal with the problem. Meanwhile Greece is being squeezed and pressed on every side to increase the severity of its austerity budget.
How have countries got themselves into this mess? It’s not just the recession. This has deprived governments of revenue and presented them with un-forecast bills for additional unemployment. But there is a real argument which says that this crisis in public expenditure was bound to happen anyway; that the recession did not cause the crisis, simply brought it forward.
British public expenditure, for example, has increased in the past ten years by £235 billion or 50 per cent – in real terms. And while we may have been profligate on the back of a booming economy, this sort of increase has been driven by the same factors that have driven all of Europe’s governments to spend more.
Our populations are getting older and therefore more demanding of care and medical attention. Medical treatment itself advances year by year, keeping us alive longer and at greater cost. This is a conundrum impossible to reverse. In every walk of life (except it seems personal responsibility and behaviour) legislators try each year, quite properly, to raise standards – in education, in social provision, in public services of every description.
Politicians like to subsidise and patronise and to otherwise spend on the arts, culture and sport of every kind. To remain competitive we invest in the latest technologies and infrastructure; we have international obligations as well as a moral imperative to bring social justice, peace, equality of opportunity, health and human rights to less happy lands across the world. As if this weren’t enough we face the threat of climate change and the need to invest in technologies to mitigate its consequences.
Each new investment, each new budget line, creates rights and obligations. It also has to be managed – so creating a vast and costly bureaucracy that feeds on itself and becomes a central pillar of the nation’s economy. Public expenditure is a seamless chain from which the removal of links thereby becomes increasingly difficult, while the insertion of new links is always easy, desirable and justifiable in the face of this tragedy or that statistic.
This is why cutting those deficits is going to be far harder than it looks and why therefore the European Union should be thinking rapidly about the unthinkable: that is bail-outs and management of failing economies. And that implies a new and hitherto uncontemplated constitutional relationship between the states of the European Union and its financial institutions that goes far further and deeper down the integrationist path than was ever envisaged in the Lisbon Treaty.
It will also change the basis on which countries may join the Union – for who wants to add to the burden of another state potentially failing on its obligations as it racks up debt to accommodate the ever burgeoning demands of the acquis communautaire – the body of regulations and standards and EU law that each new state has to abide by?
What we see at the moment is a battle for constitutional supremacy between, on the one hand, the politicians who together embody the 27 states of the Union and, on the other, its impersonal and abstract currency – the euro. The two forces live now in uneasy co-existence. I think in the future – for the reasons I have tried to explain – either the currency will drive European politics, or European politics will drive the currency. Strong euro versus a weak and collapsing euro. I predict that this battle will split countries and politics in Europe for a very long time to come.
Hallowe’en Reflections
Posted by: Peter Sain ley Berry in EU on November 3rd, 2009
Last Saturday – Hallowe’en – I was having dinner with some friends at the elegant house of my French neighbour. We started with slim slivers of chorizo sausage – she has always been extraordinarily fond of Spain, so much so that she learned Spanish at the age of 12 and wrote up all her school notes in it. At least it stopped others from copying her homework, she used to say.
The chorizo was followed by what she called ‘Bat Soup.’ And so may it have been, for the liquid was thick and black. The sort of thing one imagines Macbeth’s witches may have kept in their cauldrons. But this had been through a blender and so was richly smooth and tasty. I suspect it was made with lentils rather than bats, but anyway it was just the thing to keep out the dark and blowy autumnal weather through which the local children struggled with their pumpkin lanterns and pointed hats, trick-or-treating on the street outside.
After a suitable ‘pause’ we turned our attentions to some excellent organic chicken; but I won’t go on with the culinary delights of the French table. I mention the chicken and the lentils; they will do for a starter. They have an interest beyond the gastronomic as we shall see.
Not surprisingly, this being the Saturday after the ending of the European Council – which seems to have ended with even less substantial agreement than European Councils traditionally end with these days – our dinner-table talk turned quickly from ghosts and ghouls to the European Union and what my mother-in-law would have called its ‘doings.’ Specifically, we turned to who should not occupy the post that is – as I predicted it would be – now called ‘President of Europe,’ at least in the public imagination.
Richard Laming makes an interesting point in his excellent Federal Union blog (29 October) – contrasting the general lack of public interest – even at times among the political parties – in the (indirectly) elected President of the European Commission with the rather greater public interest in who might eventually take the Chair (the presidency) of the European Council.
This post is created by the (still unsigned) Lisbon Treaty and is in the gift of the 27 member state governments who, at the time of asking, continue to be rather at sea over what they want the person appointed actually to do. They would be more comfortable, I suspect, choosing someone to put on a plinth than having to make a difficult decision about a job that inevitably (if it is to be done usefully) will involve some measure of their being coerced.
This defining of the job, you might have thought, should really come before getting down to the business of assessing candidates. Phrases about carts and horses spring to mind. Do you, or do you not want someone to stop the traffic?
One of the informal (but nevertheless significant) conclusions of last week’s European Council is that Tony Blair is now out of the race. Barring a resurrection from the dead worthy of Hallowe’en itself I cannot see a revival of his chances. He does excite strong personal anathema (I was the only one to defend him last Saturday) though why any British person would rather have a non-Briton appointed to such a post, I find hard to fathom. Would France try to exclude one of its own, I wonder?
The popular press complains endlessly about how ‘Brussels’ forces us to eat straight cucumbers and bent bananas and do strange things with olive oil. Why then when the bookies odds-on favourite for the job is (or at least was) a Briton and a winner of three elections to boot we should turn against him quite so furiously is a mystery worthy of Agatha Christie. Still popular outcry is a form of faux-democracy, I suppose.
Real democracy (even in some indirect form) in connection with these Lisbon posts is of course ruled out. The member states would never countenance undermining the stature of their own elected heads. But in the absence of democracy, surely we owe it to the taxpayers of Europe to secure, on merit, the best available person for the job.
Blair may be out of the running but the discussion remains about – in the occupational psychologist’s phrase – ‘fitting the job to the man (or woman)’ - choosing someone and then seeing what they can do – rather than on ‘fitting the man to the job’ – that is deciding what skills the ‘President of Europe’ requires and then appointing the best candidate on merit – regardless of gender, party allegiance or anything else.
The tragedy of the present proposals is that they offer neither merit nor democracy – a formula that may have an all too predictable outcome.
Look at the recent European Council. Its conclusions are a forest of loose ends, particularly over climate change. In a field where Europe could once claim unity and leadership, we risk becoming a fractious – and leaderless – also-ran.
Moreover, given that we are little more than a month away from the potentially world-changing Copenhagen climate conference, the European Union needed to be able to demonstrate its coherence by reaching agreement both on its contributions to developing world assistance – the ‘burden’ - and on how that burden was to be shared internally. It failed.
But need it have failed? It is far from impossible to imagine that a charismatic and authoritative President of the Council could have brought events to a happier and more determined set of conclusions and carried the result through to Copenhagen. I continue to believe that Blair, for instance, could have secured a better result. But what is passed is passed. The important thing now is to recognise the actual job to be done: a big, heavyweight job if Europe is not to be eclipsed.
Any President will also need to be persuasive far beyond the Council. For instance new reports of the threat posed by intensive livestock production (one report suggests that, with its ancillary activities, livestock rearing now generates 51 per cent of greenhouse gas emissions) suggest we shall need persuading to end our growing dependency on corn-fed meat, switching to foodstuffs and rearing systems that place less of a load on the environment.
Like chicken and lentils, perhaps? And slice that chorizo extra fine, please.
Britain Takes Another Step Towards Disengagement
Posted by: Peter Sain ley Berry in EU on June 8th, 2009
From the UK there is one clear lesson from these European elections. It is that those who voted here moved decisively in the direction of parties that are either eurosceptic or euro-hostile and away from parties whose persuasion is europhile. We have moved another notch towards disengagement from the European Union.
Together the eurosceptic and euro-hostile parties polled almost 60 per cent of the British vote, according to figures given by the BBC*, whereas europhile parties could not even manage 40 per cent.
To be sure, the eurosceptic parties – of which the chief is the British Conservative party – do not advocate withdrawal from the EU. But they wish to see a fundamental reform in the direction of the Union that includes scrapping the Lisbon Treaty and dropping the federalist approach that broadly characterises the European Peoples Party Grouping of which they were, until recently, members. Their vision of a future EU is not one that is recognised in the European mainstream.
The vote for these eurosceptic parties increased by a margin of more than one in 10, compared to 2004 when they received 27.4 per cent, to stand at 30.8 per cent – just short of 1 in 3 of the British electorate.
The United Kingdom Independence Party advocates Britain’s withdrawal from the EU. They attracted most votes among the several parties from right and left who want to see Britain resiling completely from the European Union treaties. Together, these parties attracted 28.5 per cent of the vote an increase of almost a fifth compared to 2004 when they received 24 per cent.
By contrast the various europhile parties like Labour, the Liberal Democrats and the Greens lost about an eighth of their support, their vote falling to 38.8 per cent.
What we can say therefore is that electors who see some kind of future for Britain in the EU still massively outnumber those who want to see a British withdrawal. The relevant figures are 69.6 per cent to 28.5 per cent, virtually the same as the result of the 1975 referendum that confirmed Britain’s continuing membership of the then European Economic Community.
On the other hand the election has confirmed that sentiment seems to be moving steadily in a direction which will make it increasingly hard for Britain to play a full role in any future European integrationist project. The votes for the eurosceptic and euro-hostile parties together come to 59.3 per cent – a figure greater by far than in any other European member state, especially when translated into MEPs.
Indeed, should there be a general election in Britain before the Lisbon Treaty is finally ratified by all other member states – something that after the dismal showing for Britain’s ruling Labour Party cannot be excluded – then a new Conservative Government would hold a referendum on the Lisbon Treaty, which, on the basis of these election figures, would be lost by a margin of two to one.
While I can well envisage a change of Labour leader (if Gordon Brown wants to retain a shred of political dignity he should do the honourable thing and simply resign) I can’t see Labour calling a general election until the summer of 2010, the latest possible time. Lisbon will probably therefore be safe. However, in politics you can never predict what will happen.
Even so, with these elections, Britain has moved another step further from the centre stage of Europe and out towards the wings. Some will rejoice at this. I can’t help but see it as tragic that when there are so many pressures – including climate change, world poverty, global markets, terrorism – over which individual countries can do little, but which have the power to impact savagely on our lives, Britons are increasingly choosing to turn inwards and run after the train of influence rather than being abord and influencing its direction.
*The BBC figures exclude Northern Ireland which is not counting its votes until Monday.
Never Again!
Posted by: Peter Sain ley Berry in EU on June 2nd, 2009
A few seconds after 7am BST on Thursday 4th June, someone in Britain will slip the first ballot in the these current European elections into a battered black box. Let us hope that it is positively the last time that these elections will ever be conducted on such a shabby basis with national parties masquerading as European, with no clear debate about the future direction of Europe and with no opportunity whatsoever for voters to indicate their approval or disdain for those individuals who will loom large in the next five years on the European political stage. No wonder the powers that be fear a low turnout.
Let us hope that this is our darkest hour, the end of the long night of sham democracy, of people voting blindly for party lists, cobbled together in back rooms. Let us hope this is the end of candidates who stand claiming to build (or even to destroy) the European Union, yet whose parties are unable to collaborate, even to the extent, in most cases, of being able to advance alternative candidates for the post of European Commission President or indeed any other post.
Of course, this early rising Briton will be pre-empted by those who have already completed postal ballots. Nevertheless, he or she will be joining a relatively select band who make the effort to go to the polls. As European Parliament election follows European Parliament election, the numbers participating fall. In the last elections, in 2004, turnout stood a little over 45 per cent. This time there are fears that barely one in three of us will vote.
Conscious of this inexorable decline the authorities have been engaging in all sorts of tricks to encourage us to vote. We have seen bizarre stunts (Europe Can You Hear Me?); video booths in city centres, the use of MTV and new technologies like Flickr and Twitter.
We have seen entertaining films – I particularly enjoyed one from Germany showing a group of masked desperadoes who, having entered a bank guns waving, find a polling station in the foyer and are encouraged by a cool election official to remove their masks, show their ID and vote before continuing their nefarious activities. ‘There’s always time to vote’ – is the effective slogan.
The effectiveness of such measures remains to be seen. Though judging from the fact that less than a week before the quinquennial election of Europe’s democratic assembly the European Parliament’s twitter feed has only 269 registered followers from an electorate of 375 million, one might reasonably conclude that such gimmicks are launched more in hope than in expectation.
Of course there is always time to vote if by voting you are likely to change something. But the voter has to feel that his vote will count. It is not enough for the institutions to say the elections are important: those involved have to show how they are important; why your vote, and my vote, actually matter. Otherwise, why bother, however much time you may have on your hands?
Equally it is not enough to observe that fewer still vote in mid-term elections in the United States: this isn’t the United States and these aren’t mid-term elections.
We can vote for propositions and initiatives – for instance on climate change – or we can vote against them. We can vote for people – so and so as head of the Commission, or perhaps as Foreign Minister. But simply to argue that because climate change is important people should vote, when the parties themselves are incapable, on a pan- European basis, of putting together a coherent manifesto and advancing a slate of candidates for the top jobs, is a sham.
What the institutions are doing with these gimmicks, what the parties themselves are doing, is to say, in effect, we are actually concerned only about raising turnout to a respectable level, so that present arrangements can be legitimised and thereby perpetuated.
In Britain, paradoxically, turnout may indeed increase though not for any reason connected with Europe. The whole country is in a political ferment following the publication of parliamentarians’ expense claims and the astonishing evidence that MPs have exploited – even been encouraged to exploit – a system of allowances, in some cases to the extent of fraud.
Political opinion here has become so agitated over this abuse that the mood is positively revolutionary. Each day more MPs are found metaphorically swinging from lamp posts or falling on their swords. The public is eager to punish their elected representatives in any way possible – even by voting in the European elections against them.
Of course, as the Brussels gravy train is perceived to carry even more largesse than the British one, pro-European sentiment is a likely victim. ‘Away with them all,’ is the cry.
Almost certainly the British result will be an anomaly. In their midsummer madness the British people will not elect the representatives that they might have chosen six months ago, or would choose six months hence for that matter. But anomalies are what you get if you ask voters to come to the polls without clear European choices or clear European candidates.
If the voters see through this, if this becomes the last Parliament elected without the public really having much idea of what they will be getting in terms of the direction of their institutions or the people running them, then I shall be pleased and I believe Europe will be the better for it.




