It's 1939 again. Britain stands alone against the forces of Europe, marshalled by Germany. Except this time both Germany and Britain are right. Ish.
Germany are right to refuse the idea of "Eurobonds" and Britain are right to stand against the move to federalism.
Eurobonds make no sense without at the very least fiscal federalism first. Why would any country agree to underwrite issuance by another country without control over that country's spending and borrowing? A moments thought reveals that to be self evident. Without that what is to stop governments going on reckless spending sprees off the back of northern European fiscal prudence?
And Britain is right to veto the idea of being tied into the same fiscal system as the Eurozone members. Britain's biggest asset right now is sovereign control over its own currency, budget and economy. Giving that up without getting something in return makes no sense.
There is a lot of talk about a "two speed Europe" now that Britain has exercised its veto.
I think that is right, but not in the way Europeans are portraying it. The beneficiaries are the Plucky Brits. A flexible labour market, a flexible economy, continuing membership of the European Union with its attendant free trade zone, strong ties to the slowly recovering US economy, a government that got on top of its debt problems early, a very low refinancing need due to the long average maturity of UK government debt, and lastly control over its own currency mean the UK is likely to recover sooner and faster than a Eurozone which is only now facing up to its problems, and then reluctantly.
No comments:
Post a Comment