Portugal, bail outs and the Euro

 

                  The Portuguese government has fallen because it was unable to push through yet another austerity package. The  bond market demands ever higher interest rates to lend money to the ailing country. The economy remains mired in poor performance. Now all the talk is of another EU led bail out. There is no immediate demand from Portugal, as there is no effective government to negotiate a solution to their borrowing problems. Under EU rules a government needs to offer an effective austerity package and  it has also to apply to the IMF.

                    Bail outs mean the stronger EU countries lending more money to the weaker at lower rates than market rates, to try to tide them over to better times. There are hazards in this approach. If the stronger countries take on too much extra debt for the weaker countries, they start to undermine their own credit worthiness and drive up interest rates more generally . If the austerity programmes are linked to tight money and a relatively high exchange rate it is difficult to see how the captive weaker economies get to grow themselves out of trouble.

                            One of my main arguments against the Uk joining the Euro was just this. I did not see how such a diverging group of countries could have stable finance and good growth together.  I did not want the Uk to be dragged into accepting financial responsibility for other EU economies suffering in part from membership of a common currency. I said joining the Euro would be like sharing a bank account with the neighbours. German electors are now starting to understand just how true this is. They do not want to let others  borrow more on the common overdraft at a time when some countries cannot borrow easily on their own credit. Meanwhile the European Central Bank has to help them out, drawing on the common resource.

                          Those of us who helped win the argument to keep the Uk out do not now wish to see the UK dragged into helping finance the problems in a Eurozone which was never properly constructed at the outset and which allowed member states too much leeway to misbehave, threatening the common credit rating.

                  Yesterday Bill Cash in the Commons highlighted the important discussions at the EU  Summit on the future of the Euro and economic government. It gives the UK an opportunity to avoid being caught up in the new common rulesd and policies they will need and to avoid making further contributions to Euro bail outs.  I asked the Leader of the House for a full debate on the future of the Euro and the negotiations underway for a common economic government of Euroland. They need to create a Euro soveriegn and are doing so in a crab like way..

                  The Uk needs to be well out of it. All the time the Eurozone contains such divergent economies as Greece and Portugal, Germany and France, Ireland and Spain, it is going to require big scale bail outs and transfers around the zone. Uk taxpayers should not be contributing to this. We want the dividend from staying out of the Euro.

               Incidentally, by staying out of the Euro the Uk did the EU a great service. If we had been members during  the 2007-8 banking and government  debt crisis in the Uk it could have brought the whole structure down.  The Uk would have been large for even  the EU to bail. My worry in the late 1990s  was about a strong UK having to help weak countries undermined by the common currency.  Ten years later the worry was the other way round, given what the UK and EU regulators and government  had  done to the UK’s balance sheet. Today we do not want our deficit reduction programme made more difficult by demands for Euro payments. We are better off sorting our own problems out – at least we do not have to defend an unsustainable currency rate.

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60 Comments

  1. Sue
    Posted March 25, 2011 at 6:56 am | Permalink

    This can’t end well. They’re just making things worse with each bailout. The ego’s of a few dictatorial men are ruining the lives of millions of European Citizens in order to keep their hold on the power they have gained undemocratically. Those like Elmar Brok and Andrew Duff are even trying to bypass any chance of the democratic process by snidely changing the rules of the treaty. These people do not deserve to be where they are.

    We really need to be completely out of this mess and start to take charge of our own economy.

    If we did that, we might just come out of this recession intact.

  2. lifelogic
    Posted March 25, 2011 at 7:16 am | Permalink

    Entirely predictable and much predicted by the sensible wing of the Tory party. What is the true value of the UK’s loans to Ireland now and how much more interest do we now pay on UK debt due to this and the other pending bail outs Labour have committed the UK to?

    We need to be well out of it but the voting in relation to the Euro the other day show how few MP’s actually think this way.

    The BBC has played a pivotal role in this disaster. Peter Sissons has confirmed all I had suspected of the way the BBC operate. I assume Cameron want this to continue given his appointment of Lord (Chris) Patton.

    • lifelogic
      Posted March 25, 2011 at 7:33 am | Permalink
    • lifelogic
      Posted March 25, 2011 at 8:22 am | Permalink

      Also I see (from the James Delingpole blog) that even George Monbiot has now changed his views following the earth quake and is now in favour of nuclear.

      Perhaps he will soon even see reason on renewables and the great CO2 exaggeration too. Maybe even the BBC will follow eventually. Though I suspect they will just claim the credit for having solved the non problem
      with vast amounts of our wasted money.

  3. alan jutson
    Posted March 25, 2011 at 7:26 am | Permalink

    I only hope the majority of MPs see it like you do.

    But I will not hold my breath.

    My guess is the lobby fodder will do their bidding to their leaders, and it will cost us.

    Are we at risk of contributing to bailouts after Mr Darlings last visit and meeting in Europe (after the result of our general election, but before the coalition was formed) which has put us in this possible position.

  4. Boudicca
    Posted March 25, 2011 at 7:37 am | Permalink

    But thanks to Alistair Darling and Gordon Brown, we ARE paying to bail out Greece, Ireland and no-doubt Portugal in due course. Post General-Election, and having lost, they signed the UK up to contribute to the stability mechanism and Cameron has just gone along with that (as he has every other pro-EU policy which has spewed out of Brussels since May last year).

    We should have nothing to do with these bailouts. They are not OUR problem and when the UK is effectively bankrupt, we should not be borrowing money to lend to other bankrupt economies so they can stay trapped inside a single-currency zone which is a major cause of their financial situation.

    The Euro, as constructed, is never going to work but the stubborn fools in Brussels won’t take any notice all the time the UK contributes towards propping up their folly. We should withdraw our support and let the currency fail.

    • Alan
      Posted March 25, 2011 at 7:47 pm | Permalink

      If their currency fails, our banks fail. If our banks fail, our currency fails. “We are all in this together” (except for the bankers).

    • norman
      Posted March 26, 2011 at 12:44 am | Permalink

      I’m no fan of GB or AD (although I think AD didn’t do too badly considering who he was working under & the circumstances) but I read an article in, I believe, Standpoint which said that it would be politically unthinkable that Darling would have signed this without consulting Osborne and getting the green light from him to go ahead.

      He (the author) also tried to get released any correspondence between AD and GO about this matter but was denied with a weak excuse, not told there was none.

      It’s obvious that although Darlings signature is on the piece of paper, it is as much (if not more) the Modern Conservatives baby as it is their politic brethrens, New Labour.

  5. Javelin
    Posted March 25, 2011 at 7:38 am | Permalink

    Had a drink with an economist from a credit rating agency last night. When I mentioned your blog he said he read it to see your FOI requests on the progress of the deficit reduction – and read my comments saying I thought the civil service were trying to sabotage it. This aroused my curiosity and I asked him how could he know so much about the progress of the fiscal rebalancing if he had to read your blog? He said they had private briefings but these only ever discussed publically available figures and as far as he knew they didn’t put FOIs into the treasury. So he said really the credit ratings were behind or very close to events and they weren’t speculative. In otherwords they could downgrade the UK if they saw any evidence that the civil service were dragging their feet.

  6. Electro-Kevin
    Posted March 25, 2011 at 7:57 am | Permalink

    We are EU members so we will pay.

    • Electro-Kevin
      Posted March 25, 2011 at 9:12 am | Permalink

      Trying to influence from within isn’t working, is it. More and more people should be reaching the conclusion that the only way is out.

      (Same too with the Tory party I’m afraid)

  7. Collis Gretton
    Posted March 25, 2011 at 8:03 am | Permalink

    “Britain faces another Messina moment – its scorn for the single currency matched only by the palpable failure of its own, independent economic policymaking.” Philip Stephens FT.

  8. Stuart Fairney
    Posted March 25, 2011 at 8:10 am | Permalink

    We probably disagree on quite a few subjects, but on this one you were dead right and have the published book to prove it. Rarely has a politician been so totally and completely vindicated. I note the former supporters of Euro membership are silent.

    There are few prizes for being right in modern politics and fewer plaudits but you were, if you will forgive the pun, right on the money.

  9. lojolondon
    Posted March 25, 2011 at 8:29 am | Permalink

    The dominoes are lined up, I want to see them run. The collapse of the Euro will be a good thing for the peoples of Europe, whether they are contributors like the UK and Germany, or the benefciaries….. like France, Romania and Belgium.
    The gravy train needs to stop now, time for the European MP’s to find a proper job. Please, God, let it happen!

  10. Peter van Leeuwen
    Posted March 25, 2011 at 8:30 am | Permalink

    The UK may well require some compensation for remaining a loyal EU member, but I think that it might be easier to negotiate that in obscurity than by swinging handbags or a very public collision course. Now that the UK will not join the europact group (of 23 EU members), a comprehensive parliamentary debate and hopefully some consensus about Britain’s longer term future with the EU would be helpful. Over time an à la carte UK membership may then be achieved.

    • APL
      Posted March 25, 2011 at 7:53 pm | Permalink

      Peter van Leeuwen: “but I think that it might be easier to negotiate that in obscurity than by swinging handbags or a very public collision course.”

      No need to negotiate nor swing ‘handbags’, just abrogate the treaty that obliges us to pay heed to the ECHR, repeal the ’73 act and repudiate any so called obligations to the EU.

    • APL
      Posted March 27, 2011 at 9:17 am | Permalink

      Peter van Leeuwen: “The UK may well require some compensation for remaining a loyal EU member ”

      One more thing.

      We, the UK are no more loyal to the EU than the Greeks were to the Ottoman empire. We have been pressed unwilling into more and more onerous obligations.

  11. Alan
    Posted March 25, 2011 at 8:31 am | Permalink

    As I understand it the Eurozone’s problems arise from trying to avoid a country defaulting on its debts, and the reason they are anxious to do that is mainly because it would result in many of the banks that have loaned to these countries getting into difficulty. To some extent that applies to UK banks as well as to Eurozone banks. We know from recent experience that if the banks come to us and say they have run out of money then we, the taxpayers, have to pay them.

    The Eurozone would not not have got into this situation if the bankers (including UK bankers) had done their job properly and assessed the risks. It was foolish to lend on a large scale to Greece and Portugal at the same rates as to Germany. In an ideal world these countries would now default on their debts (that is what the Maastricht treaty implied should happen). The banks would suffer for their irresponsible lending.

    I think we need to be pragmatic about what we should do, not basing policy on a desire to help friends in need or on a desire to destroy the euro because we think it was a bad idea. The UK needs to get a clear idea of how much it will suffer from defaults. If our banks are stable enough to absorb the effect of default it would be better if we allowed it to happen and it would be poor policy to work hard and spend money to prevent it. If our banks are not stable enough we have no real alternative but to work with the Eurozone to try to prevent the defaults.

  12. Bob Dixon
    Posted March 25, 2011 at 8:35 am | Permalink

    Peter Osborne writes in the Telegraph today that Alistair Darling has committed the UK to be part of any bail out. Can this be avoided?

    • Boudicca
      Posted March 25, 2011 at 8:50 pm | Permalink

      It could have been – no Government can bind its successor – but the Coalition ie CamerClegg decided not to. We are going to pay up.

      How Cameron has the nerve to claim that the country is bankrupt and must cut spending with one breath, whilst announcing that we will provide billions to prop up the Euro (as well as the £48million+ a day we pay to belong to the EU) is beyond me.

  13. oldtimer
    Posted March 25, 2011 at 8:53 am | Permalink

    Your analysis and prescription is spot on – as usual.

    Unfortunately there appears to be a marked reluctance by the Coalition government to engage with yourself and others about this problem and the many other examples of Eurocreep that damage the UK. The Coalition`s inclination appears, by their actions and their inactions, to favour closer engagement in the EU project.

    Perhaps the time has come for the prepapration of a comprehensive Eurocreep charge sheet.

    • oldtimer
      Posted March 25, 2011 at 3:23 pm | Permalink

      Apologies! Myspelling of “preparation” went adrift above. It must have been the apoplexy.

  14. Mike Towl
    Posted March 25, 2011 at 8:54 am | Permalink

    Dear Mr R.
    You are spot on with this article! I am retired and have lived in Portugal for more than 10 years and love the place, I also despair of it. Whoever pays for a bail out will be wasting their money, (Par for the course you would say for the EU), they will be back again for more in a few years.
    Portugal has a public sector Len McCluskey would die for. Three people to every job, generate more paper than the Andrex factory, collect fees of €1.30 which take 30 minutes to administor and produce three peices of receipt documentation, administor an incalculable number of indechiperable rules and regulations for anything you may wish to do, especially starting a business. (Hence the biggest employment black market in the EU) No one declares, you can get most services VAT free if you pay cash: a police force even more useless and lazy than even the McCann case suggested (Goverment statistics say75% of all serving police officers never completed secondary school). Portugal is the entry point of Europe for Brazilian, Mozambiqans, Angolans, in fact from anywhere in the Portuguese speaking world. Entry to these people, the overwhelming number are economic migrants, is straight forward. They speak the languauge and disapear into the country, then of course, onward to anywhere they wish in Europe.
    So why you may ask do I live here. as a retiree I don’t have to deal with the daily nonsense a small part of which I have mentioned above. I have seen billions of Euros wheelbarrowed into Portugal over the years. With it they have built a public sector which rules the government (sound familiar?), built a few roads, Lisbon this year spent €600K on Xmas lights for the town hall, this week they have reduced the VAT on Golfing (Yes Golfing) from 23% to 6%, food went the other way! I could ramble on.
    But, and this is the crux, they have never used the cash to update their society. Police, Education, Transport, Welfare, Health (For the first time last year we got a family Doctor, a Cuban. He, and a few mates stuck it for 6 months and left. No Doctor again.), are all third world standard. Maybe a slight an exageration, possibly fourth.
    We say here, “Portugal is full of newly weds and nearly deads.” Why? Because young educated professionals don’t come here! They leave here. Portugal loses all it’s talent northwards. Throwing money at this won’t help unless the strictest condition applies. Change is essential!
    Speak to Dave Mr. R. Money thrown this way is going into a black hole. I have no objection to the UK aid budget but I don’t want to see it wasted as the last €XXXXBilion have been.
    Best Regards,
    Mike Towl
    Lagos, Portugal

  15. Geoff not Hoon
    Posted March 25, 2011 at 8:58 am | Permalink

    Mr. Redwood, you have said so rightly before that the euro is like sharing a bank account with neighbours. Isnt it in practice really much worse than that in that we would be letting our neighbour(s) run up further debt using our already extended credit card!!! Portugal has been a net recipient of Brussels money for some time and still it has got to the precipice and the PM has resigned. Its government cannot agree on further austerity measures so are we not simply putting off the obvious with or without the IMF sending in a hit squad?
    How can anyone disagree with your last paragraph?

  16. Blue Eyes
    Posted March 25, 2011 at 9:03 am | Permalink

    At around the time when the UK was seriously considering joining (1997-1999) an EU official was quoted as saying something along the lines of “we would love the UK to be part of the Euro and the project will never be truly complete without the UK, but at the same time it would be a bit like a sumo wrestler sitting at one end of a canoe”.

  17. TomTom
    Posted March 25, 2011 at 9:19 am | Permalink

    Die Weisen, the Economists who form a body of advisers in Germany have warned that Germany itself will soon feel the full scrutiny of the Markets. Since the 1970s it has lived way beyond its means and support for the Euro makes Germany’s dire budgetary position critical. Merkel is getting hammered in each of the six state elections held this year and is likely to be gone by end-2011 having done NOTHING to cut Germany’s deficits.

    The bale out of Portugal is just another exercise in saving Deutsche Bank et al from writing down their book to market and accepting that they are insolvent. Instead we go to the intermediate state of sovereign insolvency and bankruptcy through tax squeeze. In bRitain we see benefit claimants getting cost of living increases and wage earners not. In Germany at least benefits are coupled to NETT pay which is falling

  18. Martin
    Posted March 25, 2011 at 9:28 am | Permalink

    “at least we do not have to defend an unsustainable currency rate”

    So precisely what is the UK defending? We have high inflation which is messing up already bad government finances. Even Mr Osborne has had to try and placate motorists who are annoyed about petrol prices partly caused by a weak currency.

    http://www.telegraph.co.uk/finance/comment/jeremy-warner/8405399/Britains-200bn-time-bomb-of-debt-interest.html

    If Portugal etc. can be persuaded to sort out their finances it will be better for them in the future. As for the UK all we see is inflation wearing us down.

  19. Lindsay McDougall
    Posted March 25, 2011 at 9:38 am | Permalink

    Let us review the position of the five PIIGS within the Euro zone. Greece and Ireland have had their bail outs and austerity packages. They seem to be working but given the shrinkage of GDP in those countries the situation needs to be constantly monitored. Portugal’s bail out is likely to be along similar lines. All three countries will borrow from “strong” EU members at rates below what the bond markets would charge. This indicates that the lending nations are taking a risk.

    The three countries are fairly small. Spain and Italy are a different matter. There are signs that Spain is beginning to put its house in order before a bail out becomes necessary, which is a hopeful development. But Italy? Italy is a large country, a founder EU member, has debt in excess of 100% of GDP, and a Prime Minister whose mind seems to be engaged on other matters. We are not out of the woods yet.

  20. Denis Cooper
    Posted March 25, 2011 at 9:42 am | Permalink

    It was self-evidently contrary to our national interests for our government to sign us up to a “Save the Euro” campaign.

    I remember when Hague was more interested in “Save the Pound”.

    Under present treaty arrangements the two are incompatible in the long term, because THE EUROZONE CAN ONLY GROW.

    There should be a treaty mechanism for a country which has joined the euro to make an orderly withdrawal, but there isn’t.

    There should NOT be a treaty obligation on all EU countries to eventually join the euro, but apart from the UK and Denmark there is that legal obligation and it is automatically imposed on all new member states.

    Cameron had it in his power to insist on those two treaty changes to cut the eurozone down to size and limit the long term threat it would pose to our national interests, and to demand other concessions such as an end to the EU Parliament sitting in more than one place and permanent exemption from the WTD, as the quid pro quo for the treaty change wanted by Germany and France in particular.

    Instead he is prepared to give them whatever they want and demand nothing in return, a policy which can most charitably be described as one of appeasement.

    I ask how the 310 MPs who have already voted in favour of the proposed treaty amendment can conceivably vote against precisely the same treaty amendment when they are asked to pass the Bill for its final approval prior to formal ratification.

    Cameron can and no doubt will assure other EU leaders that he has explicit authorisation from the British Parliament to support the treaty amendment, without any attached conditions, and they could justifiably see it as bad faith if Parliament later changed its mind and refused to approve it on that basis.

    The Commons vote was deferred from the brief debate on March 16th, starting at Column 421 here:

    http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm110316/debtext/110316-0004.htm

    and held on Budget Day, Column 1063 here:

    http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm110323/debtext/110323-0004.htm

    when only 29 MPs, I’m glad to say including JR, were prepared to say “no”.

    The Lords had already approved the equivalent motion on Monday evening after a short debate and without a formal vote, starting at Column 527 here:

    http://www.publications.parliament.uk/pa/ld201011/ldhansrd/text/110321-0002.htm

  21. Ian
    Posted March 25, 2011 at 9:59 am | Permalink

    Greetings John,

    Unfortunately your colleagues in Continuity Blue Labour have an agenda regarding the EU & the Euro – & it is a real shame that agenda was not obvious before I & other Conservatives voted for rusty Dave at the last GE.

    As long as the pro EU cabal currently at the head of the party remain, I will not be voting Conservative again.

    Portugal will get £4 billion+ from British taxpayers for their fecklessness & outright deceipt – whether we like it or not, Dave will hand it over just as he handed over yet more billions of our money to the unelected “President” Van Rompuy.

    • APL
      Posted March 27, 2011 at 9:21 am | Permalink

      Ian: “Portugal will get £4 billion+ from British taxpayers for their fecklessness & outright deceipt – whether we like it or not ..”

      The ‘best’ of it is, we have to borrow the money to pay the Portuguese. We an already heavily indebted economy will go into greater debt to buy a temporary reprieve for an economy that cannot ever pay us back.

      • APL
        Posted March 31, 2011 at 1:24 pm | Permalink

        And Today 31 March 2011 we hear on the news that the Irish bailout will not be enough to save the Irish banks and they need more money.

  22. forthurst
    Posted March 25, 2011 at 10:02 am | Permalink

    The only possible reason that an MP would vote to join the Euro is that they wish this country to become Airstrip One wthin a superstate governed from Brussels. Even the dimmest must now understand that divergence is inevitable, therefore they are looking through the pain barrier to a Utopian future in which Germany and the Germans no longer exist, as we are ceasing to exist, as anyone living in London will have noticed, and in which a amorphous population toil for the benefit of the very few who are gifted with the sharpest elbows and will inherit the right to decide all our futures whilst riding roughshod over our puny aspirations. We will then be no better than those who have no history beyond a mythic antiquity and a recent past of malevolent deceit.

    • BobE
      Posted March 25, 2011 at 7:50 pm | Permalink

      The thousand year reich.!

  23. GJ Wyatt
    Posted March 25, 2011 at 10:03 am | Permalink

    While most attention has naturally been focussed on the weak Euro member states which need support from the Eurozone’s bailout fund, the political difficulties faced by the stronger supporting member states should not be overlooked. For example, Finland, hitherto the most ardently loyal to the ideals of Euroland, is facing elections on April 17th with a surge in popularity for a new strongly euroskeptic party which has already forced the governing coalition to trim its euro enthusiasm. So it will be difficult to persuade Finland to increase its contribution to the European Financial Stability Facility in today’s meeting. The Germans and the Dutch too have their own domestic political reasons to resist stumping up more for the EFSF.

  24. acorn
    Posted March 25, 2011 at 10:49 am | Permalink

    “David Cameron has already said that the UK might be required to contribute to a
    bail-out of Portugal, since part of the rescue fund (the €60bn EFSM) is activated
    by majority voting, meaning the UK has no veto over its participation.

    We estimate that the UK’s share in such a bail-out would range from €810 million to €3.7 billion in the event of a €60bn bail-out, and €945 million to €4.26 billion in the
    event of a €70bn rescue operation; with the higher end of the estimate being
    more likely.” [ This should allow Portugal to cover all bond repayments as well
    as any government deficits for three years.] (openeurope.org.uk)

    JR; as a banker, you will appreciate this trick. It’s like my spreadsheets when a recalc’ says “circular references unresolved”:-

    ” … when the ECB recently stopped buying bonds, Portuguese bond yields reached record highs. In addition, the banking sector is also growing heavily reliant on the ECB, through Frankfurt’s willingness to provide cheap credit. Portuguese banks have provided massive loans to the state and received government bonds as collateral. These bonds have then been used as collateral to gain cheap funding from the ECB. Essentially this boils down to the ECB – and therefore European taxpayers – bailing out Portugal via its banking sector …”

  25. Brigham
    Posted March 25, 2011 at 10:54 am | Permalink

    I have been watching a great deal of parliamentary TV lately. I see that the “nanny state” is alive and well with the present regime. No referendum on staying in crooked state of Europe. “We know best. We can alter it for the better from the inside.” What twaddle! Get us out!

  26. Freeborn John
    Posted March 25, 2011 at 11:17 am | Permalink

    The FT is today reporting that UK government has softened its opposition to Brussels’ plans for a pan-European corporate tax system. They quote UK government officials as saying “As with any EU proposal, we would consider one brought forward for a CCCTB on its merits” and “We will not agree to a proposal that might threaten or limit our ability to shape our own tax policy.” That sounds like the myriad past weasel words from British governments who later proclaim the Commision proposals are not a threat to our sovereignty when clearly they are part of the EU institutions’ unrelenting campaign of self-aggrandismeent.

    Why is the Conservative-led government going soft on EU plans for pan-European corporation tax?

    • sjb
      Posted March 25, 2011 at 9:42 pm | Permalink

      Perhaps the softer approach is because the UK recognises that a group of member states such as France and Germany could go off and form a single corporate tax zone. Dealing with one corporation tax system may be attractive for multi-national companies who, if operating in every member state, at present have to cope with 27 different tax authorities.

  27. Yarnesfromhorsham
    Posted March 25, 2011 at 11:18 am | Permalink

    Absolutely agree. But will the front bench listen to reason?

    • lifelogic
      Posted March 25, 2011 at 8:35 pm | Permalink

      Clearly not.

  28. Euan
    Posted March 25, 2011 at 11:26 am | Permalink

    Actually we’d be better off in every way if we weren’t in the EU at all. There is not one single alleged benefit of membership that couldn’t have been obtained by trade agreements and co operation.

    • lifelogic
      Posted March 26, 2011 at 7:38 am | Permalink

      I can’t think of any either and nor do the supporters ever come up with any beyond: the lies of “preventing wars” “trade” and “encouraging democracy in eastern block”.

      Shirley William repeated all these recently it a debate – it clearly an ingrained religious belief with her all the evidence is irrelevant. The path to hell is paved with good intentions.

      In fact it is extinguishing democracy in most places and becoming an undemocratic soviet style monster. Run for the benefit of the employees.

  29. norman
    Posted March 25, 2011 at 1:51 pm | Permalink

    It’s not all bad news for Germany. Weaker states keep the Euro competitive in the race to the bottom that we and the US are rushing headlong along, doing their export led economy no end of good. Pity it’s built on austerity measures for the poor saps in those countries who can’t devalue their currencies to a natural level.

    That we’re helping them with this by contributing to the bailout fund is a scandal but there is no appetite in any of the three large UK political parties to stand up to the ever burgeoning influence of the EU in our lives, as the Chancellor affirmed this week when he sheepishly admitted he was powerless to stop the neverending flood of new EU regulations nor would he try.

  30. Neil Craig
    Posted March 25, 2011 at 1:52 pm | Permalink

    When Warren Buffett says the euro’s collapse is on the cards http://wallstreetpit.com/68405-buffett-euros-collapse-is-not-unthinkable
    we should not allow ourselves to be on the hook for bailouts.

  31. rose
    Posted March 25, 2011 at 2:02 pm | Permalink

    “I said joining the Euro would be like sharing a bank account with the neighbours. German electors are now starting to understand just how true this is. They do not want to let others borrow more on the common overdraft at a time when some countries cannot borrow easily on their own credit. ”

    My analogy for the single currency has always been with a ramshackle caravan, humping along a lot of wonky economies and their inflation, loosely tied together and going at the pace of the slowest; when what people thought they were joining was a safe and fast modern train, driven by the Germans, and catered for by the French.

  32. Amber Astron Christo
    Posted March 25, 2011 at 2:05 pm | Permalink

    Who, from the backbenches, is going to really stand up for the people of this country and get rid of Cameron and his post democratic cronies? We can not afford to wait till the end of a 5yr. Parliament, even if there are promises of a people’s vote on Europe. We have had those promises before,(Cameron’s ‘cast iron’ guarantee); plus it looks like there will be a surge of EU propaganda if such a vote is given. Surely there are enough backbenchers, cross-Party even, who do not want to continue down the post democratic Europe highway. Why doesn’t someone ask questions in the House about which M.P.s have been trained in Common Purpose ? They surely don’t want us to know. I’ve tried F.O.I. requests and got passed from the House, to Cabinet Office, to Dept. , to Dept…got nowhere. The War and wasting money are part of the strategies used in C.P. to undermine the economy, distract us from our own country’s ills, show a united European ‘defence’ move etc…Cameron is continuing the project of Blair / Brown, and I believe the reason he is adament he needs 5 yrs. is because by then there will be no going back. Any ‘concessions’ he obtains are meaningless sops to pretend he is battling to change the unchangeable. Why don’t backbenches propose we refuse to do anything the EU wants us to i.e. REFUSE to bail out anyone in the Euro-zone; REFUSE to enforce European red tape, equalities law, waste management law, etc etc ? Please, is there ANYONE among you brave enough to really do something, or suggest what we outside of Parliament can ?
    In despair, Amber A.C.

    Reply: Why can’t you understand the arithmetic I have often described to you? I and others have voted against the bail outs, against a higher EU budget and against transfers of power, but the pro EU majority has always won easily. It’s the result of the last Election, which returned a pro EU Parliament to Westminster.

    • Boudicca
      Posted March 26, 2011 at 11:02 am | Permalink

      A ‘pro-EU majority’ is returned to Parliament because the Lib/Lab/CONspiracy refuse to discuss the issue of the EU during General Election campaigns. It is a subject which is never debated becasue the Party elites all favour British membership.

      During the last GE campaign, CONservative activitis were forbidden to raise the subjects of the EU and immigration’ on the doorstep.’ The so-called Leaders Debate on foreign relations barely mentioned the EU.

      This is why people MUST vote UKIP – in local elections and by-elections, as well as national and for the EU Parliament. If the UKIP vote grows (and we are now up to 8% in the polls, only 2% behind the LibDims) the issue cannot be ignored.

      And subscribe for The People’s Plege here. This cross-party campaign aims to warn MPs in marginal seats that their vote depends on committing to a Referendum on the EU.

      Reply: there was no ban on Conservatives discussing EU and immigration matters, and I certainly did throughout the election campaign.

  33. Derek Buxton
    Posted March 25, 2011 at 4:00 pm | Permalink

    But had we had such as problem, leaving aside the size problem, I very much doubt that the EU would come to our aid. At best they would demand that we change our currency to the Euro and that would be that. They have never shown any sign of noticing we are here and as long as we keep paying the “danegeld” and obeying orders that will be that.

  34. Brian Tomkinson
    Posted March 25, 2011 at 5:39 pm | Permalink

    JR: “The UK needs to be well out of it.”

    Agreed, but we never seem to be left out of it and never have a leader strong enough to say NO. Funny how we have no money until the EU wants some or some other international adventure beckons. Isn’t it about time that our political leaders thought about the wellbeing of their own people rather than putting them last behind everyone else? We may have a vote but it doesn’t seem to give us any more influence than those countries in the Middle East who are in revolt.

  35. zorro
    Posted March 25, 2011 at 6:06 pm | Permalink

    All perfectly sensible – unfortunately I don’t have confidence that Cameron will hold the line in the long run. He is becoming flaky on the bailouts and I think that there will be a domino effect. I think that his actions will be the same as if we were in the Euro (regarding bailouts) and he could be positioning us into a situation where we are manoeuvred into the Euro rather than willingly joining, but with the same result in the end.

    zorro

    • zorro
      Posted March 25, 2011 at 8:13 pm | Permalink

      Another example of giving in to Europe is over immigration – namely the marriage abuse issue. There will no longer be any bar on anyone (legal or not) marrying in the UK. The certificate of authorisation (proof of legal residence) to marry has been abolished. It was a reasonably effective safeguard (apart for CoE weddings) and certainly better than the non existent safeguard which will now be in place (well some more training/support for registrars). There was a programme on Panorama yesterday evening about this subject.

      Mr Green was on TV stating that there would be more effective enforcement….There may have been some more action recently but that will be dwarfed by an increase in suspect marriages – watch this space…..

      zorro

  36. BobE
    Posted March 25, 2011 at 7:36 pm | Permalink

    John, well said. I fully agree with you. Now all we need to do is to become fully independent of the EU and just remain a trading partner.
    BobE

  37. APL
    Posted March 25, 2011 at 7:44 pm | Permalink

    JR: “as there is no effective government to negotiate a solution to their borrowing problems.”

    They don’t have borrowing problems, they have SPENDING problems.

    So do we, but there aren’t many politicians over here who will call a spade a spade either!

  38. BobE
    Posted March 25, 2011 at 7:54 pm | Permalink

    Cameron and Clegg have to consider their long term futures. Both as young men they will need to be seen to be playing to support the top dogs. The EU will let them continue to feed at the trough of high office and so they will follow the money.
    We don’t actually matter.

  39. zorro
    Posted March 25, 2011 at 10:17 pm | Permalink

    Oh excellent – It’s good to see that we’re protecting the Libyan civilians and ‘peaceful democrats’ in Libya….A wonderful investment climate for our companies

    zorro

    http://www.telegraph.co.uk/news/worldnews/africaandindianocean/libya/8394647/Defeat-the-Libyan-regime.-And-then.html

    http://www.telegraph.co.uk/news/worldnews/africaandindianocean/libya/8407047/Libyan-rebel-commander-admits-his-fighters-have-al-Qaeda-links.html

  40. David Lodge
    Posted March 26, 2011 at 6:01 am | Permalink

    Well, not one dissenting voice as far as I can see Mr. Redwood. For my own part, I would be delighted to see this sham government ditched at the first opportunity and be replaced by someone, anyone, who would put England’s interests first. UKIP, it seems, and I speak as a lapsed Tory.

    • BobE
      Posted March 26, 2011 at 9:09 am | Permalink

      Ive voted UKIP for three years now. Lapsed tory.

  41. TimH
    Posted March 27, 2011 at 7:15 pm | Permalink

    I despair at the issues that most concern the people of England. We want a referendum on our continued membership of the EU, hopefully out. We don’t want any more immigration-fullstop. We don’t want to pay £8 billion in Foreign Aid rising to over £11 billion in this parliament. We want an end to the Common Agricultural Policy and the return of our fishing grounds to the UK and its 400,000 jobs and industrial infrastructure. Do our elected members listen? NO! My Tory MP whilst agreeing with my sentiments acknowledged that there was nothing he could do. So much for democracy, more of the same as Nulabour. I’m voting for UKIP until the Tories become………Tories again.

  42. dan
    Posted March 27, 2011 at 8:36 pm | Permalink

    Party or country, Mr Redwood…….which is it to be?

    Reply: I have spoken and voted against the bail outs and stronger EU economic governance.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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