Was that it?

 

          The Euro fix is a proposal for a Treaty change to make Euro area countries borrow less. Apparently if they do not comply they will be fined. The fines, I assume, will be paid for out of extra loans advaced to these countries by the EU, or perhaps the IMF!

         Are they going to make Italy and Belgium get their debt to GDP ratio down to 60%, as required by the original scheme? How will they get Greece’s running deficit down to 3%? How do they get growth going in these countries without devaluation and lower tax rates?

          Meanwhile some seem disturbed by the thought the 17 might have a new Treaty together, excluding the UK. If only. If they did that none of the new crazy measures they imposed on themselves would apply to the UK.

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.

96 Comments

  1. Posted December 6, 2011 at 9:17 am | Permalink

    It’s not likely that the threat of fines being the ultimate sanction for breaking the rules and devaluing the Euro in the eyes of the markets will achieve anything. The Euro will eventually fail, at least where the majority of its members are concerned, not least because their membership has actually damaged their economies. Once that happens will be the time for a referendum in this country for reverting to something more like free trade membership rather than that of a political and economic union.

    • Disaffected
      Posted December 6, 2011 at 10:17 am | Permalink

      No, I do not think so. Cameron is rebuking Duncan-Smith for his outburst asking for a referendum. All is being done to connive a spin to prevent this from happening. It was made clear that he was not (officially) going to give powers to the EU- yeah right. How about the arrest warrant John spoke about, how about letting the EU viewing the UK budget before parliament sees it? Ireland had a23% VAT rise imposed on it by Germany yesterday- how does this help their growth? Retail will suffer. Tourism will die overnight. More jobs will be lost. Germany will be okay though, the EU is skewed to boostGermany’s economy. A bit like Greek debt. Germany is still happy to sell Greece submarines while Cameron gives tax-payers’ bail out money to Greece to pay for them while cutting the UK military. Their problem was reckless bankers not economic failure. Ireland should follow Iceland.

      Is Osborne going to put a full days work in the Treasury to help resolve the economic woes of the country? ALternatively is he going to get more SPADs like Clegg so he only has to do half a day? I thought Cameron said he was going to reduce the number of SPADs- possibly another chocolate tea pot guarantee.

      • Disaffected
        Posted December 6, 2011 at 10:34 am | Permalink

        It is also a bit like Cameron saying that people must reduce their personal debt when he introduces crippling university tuition fees- that some of us think we have already paid our taxes for- huge pension increases, NI rises, VAT rise, fuel costs so on and so forth.

        Instead of taxing and increasing government spending, he could take another course and reduce spending. Instead of increasing welfare by 5.2% next year he could decrease it so it pays to work. He could stop immigration, he could cut asylum seekers and asylum seekers being lost to the system. How do lost asylum seekers pay tax or NI??

        Eastern European migrants come from Marxists countries and they are used to working for very low pay. They have no welfare system. It is worth uprooting and moving to the UK to find work or alternatively where they are provided free housing, education, health without ever putting anything into the tax pot. Clegg and Cameron are happy to squeeze middle England until their pips squeak, just like Healy did before.

        • Bazman
          Posted December 6, 2011 at 6:43 pm | Permalink

          Making then so desperate they have to work in other words less weasel.

        • lifelogic
          Posted December 6, 2011 at 7:34 pm | Permalink

          Agreed at least we do not have 83%? income tax yet?

        • Steve L
          Posted December 6, 2011 at 9:27 pm | Permalink

          You really ought to try to understand how the tuition fees and student loans work. It’s the height of ignorance to simply carp about the principle without grasping the fact. Even Martin Lewis at Moneysavingexpert is strongly telling the fact that it’s all badly understood. Easy to moan about, eh?

    • Simon 123
      Posted December 6, 2011 at 11:23 am | Permalink

      The problem is not ‘if’ but ‘how’ the Euro will fail and how long European elites can continue to apply sticking plaster when the patient is suffering from a life-threatening illness. We must also pray that the Euro’s ultimate collapse will not include a banking crisis.

      I am never eager to praise the BBC but I commend the programme last Sunday night on BBC2 by Robert Peston on world debt (The Party’s Over). It was trenchant and informative and included comment about the EU. It had one wonderful moment where it replayed Tony Blair’s historic piece to camera where he declaimed that his party had abolished ‘Tory boom and bust’. I had no idea that boom and bust was a ‘Tory’ phenomenon because I remember 1979: perhaps ‘Tories’ are even responsible for the little local difficulties in the Eurozone. Peston’s series has two more episodes to run @7.00pm on Sunday.

      • lifelogic
        Posted December 6, 2011 at 7:41 pm | Permalink

        But Robert Preston has such an irritating, contrived voice and TV/radio delivery with its pointless pauses and emphasis that I do not think I could bear to watch it for long.

        • APL
          Posted December 7, 2011 at 10:12 am | Permalink

          lifelogic: “But Robert Preston has such an irritating, contrived voice and TV/radio delivery with its pointless pauses and emphasis”

          I thought I was the only one that found him intensely irritating.

  2. Brian Tomkinson
    Posted December 6, 2011 at 9:24 am | Permalink

    Another Groundhog Day and yet, initially, markets rally on the flimsiest morsal of news. If it weren’t so serious this would make a perfect political satire and there would be no need for a comedy script writer.

    • Mike Stallard
      Posted December 6, 2011 at 3:06 pm | Permalink

      Here is an idea of the script.
      Europe declines into anarchy.
      A rather mad looking person starts shouting the odds. He will be welcomed by the right, because he can restore order. But also he will be welcomed by his own side – the far left.
      He will come from somewhere like Croatia, Bulgaria or the Czech Republic because that way he will seem harmless to the political class and he will be an admirer of French and GErman culture.
      After a few years he will get the economy going, he will hide away all opposition where the sun doesn’t shine and he will be really popular.
      And he will have a few very charming habits like loving children, dogs and getting a little tiddly.
      The joke is that some people (minorities mentioned-ed) will not appreciate his charm.

      • Jose
        Posted December 6, 2011 at 6:13 pm | Permalink

        ‘He’ might already be amongst us, gazing at us from his lofty throne in Brussels, apparently he has plans for us all to learn and subsequently converse with each other in haiku.

        This will ‘amuse’ and ‘distract’ us from the heady days to come of our future unification….

  3. APL
    Posted December 6, 2011 at 9:28 am | Permalink

    JR: “The fines, I assume, will be paid for out of extra loans advaced to these countries by the EU, or perhaps the IMF!”

    This is the sort of Kafkaesque world we now live in thanks to the political classes willful disregard for moral hazard.

    And now it seems Cameron has completely caved to the dynamic duo, Merkel & Sarkozy. What a worm Cameron has turned out to be!

    • Disaffected
      Posted December 6, 2011 at 10:19 am | Permalink

      I pray that Oxbridge PPE courses will include key stage 2 Mathematics to give these fools a clue how to add and subtract.

      • APL
        Posted December 6, 2011 at 9:55 pm | Permalink

        Disaffected: “I pray that Oxbridge PPE courses ..”

        Surveying the wreckage of our economy, the disaster of our civil society, we might reasonably wonder if the Oxbridge PPE should be abolished and those holding it outlawed.

        • lifelogic
          Posted December 7, 2011 at 9:24 pm | Permalink

          I am sure plenty of Oxford PPE graduates do sometimes do something useful with their later careers but I have yet to come across any. But they do not seem ideal for politics – they seem to lack a sense of direction, think money grows on trees and needs to be wasted and tend to think big government, central control and John Maynard Keynes.

          I see Nick Clegg studied social anthropology at Cambridge which was, as I recall, always regarded as a course for people not likely obtain a place in other subjects. He does however seem be one of the more sensible of the Libdem MPs – not much competition I agree.

          Give me bean counters, engineers, mathematicians, physicists plus perhaps the odd historian, psychologist and I suppose, rather reluctantly, one very carefully chosen lawyer.

  4. JimF
    Posted December 6, 2011 at 9:36 am | Permalink

    If this actually worked it would stop another Brown episode in the UK. I think the argument against it is that there was already an agreement which was ignored, and will be again.

    • Disaffected
      Posted December 6, 2011 at 10:20 am | Permalink

      Clegg and Cameron make Brown look good. They do not have to follow his economic doomsday plans. They could have altered course any time over the last two years, but they chose not to.

    • Caterpillar
      Posted December 6, 2011 at 9:37 pm | Permalink

      I think fot the Uk that 60% and 3% limits (eventually) would be good, but that political parties’ objectives would have to be aligned. I am repeating myself, but I think that any party / politican that has been part of a Govt that enters a General Election above these thresholds should automatically have a percentage of their votes reduced.

      (For a 3% deficit limit I also wonder whether the public sector could be aligned? More than 3% deficit increase income tax rate for public sector workers, between 0 and 3% same income tax rate as the private sector, running a surplus reduce the income tax rate for public sector workers.)

  5. ian wragg
    Posted December 6, 2011 at 9:38 am | Permalink

    Because John, Sarky and Murky say so. It is after all Christmas soon and we all have to believe in Santa Claus.
    As with the previous stability pact, it will be largely ignored and as you say the fines will be paid from more borrowing.
    The Reichstag will have to deploy their troops to control the recalcitrant natives and the national parliaments will have to be disbanded in pursuit of the greater EU good.

  6. backofanenvelope
    Posted December 6, 2011 at 9:40 am | Permalink

    “If they did that none of the new crazy measures they imposed on themselves would apply to the UK.”

    The problem is that few people believe that this will be true. No doubt Mr Cameron could prevent this happening, but will he? Will Mr Clegg let him?

  7. Tedgo
    Posted December 6, 2011 at 10:00 am | Permalink

    Early reports in the Telegraph, regarding the Merkozy meeting, talk of introducing 85% qualified majority voting into the Lisbon treaty. Its not clear if this would apply only to Euro matters or to all Eu matters. If the latter were true that would end the veto and would surely be a significant shift of powers to Brussels. Cameron would then have to give us our referendum.

    • Disaffected
      Posted December 6, 2011 at 10:25 am | Permalink

      No chance. He has shown his hand against an EU referendum. Cameron warned us of the Lisbon Treaty failures including how treaties will be made in the UK’s name without consultation and that by 2014 the voting system would change so that the Uk would not be able to influence what was being done in our name. He has done absolutely nothing what he said he would do or intimated he would do. Clegg is waiting and hoping for the German takeover.

      The game is up. Cameron is a Europhile and is happy to give up the UKs sovereignty to the EU AKA Germany.

    • norman
      Posted December 6, 2011 at 11:50 am | Permalink

      ‘Cameron would then have to give us our referendum.’

      Surely no one still believes Cameron will stick to any promise he makes if he decides he doesn’t want to? He knows best and so if he has to lie to the little people in order to do what he decides is best for us he most assuredly will.

      • lifelogic
        Posted December 7, 2011 at 7:24 am | Permalink

        Indeed he has no credibility left.

  8. Disaffected
    Posted December 6, 2011 at 10:06 am | Permalink

    John, When I heard and read this yesterday I thought exactly the same. I also thought the same about Germany imposing a rise in VAT to 23%. How will this help ireland’s growth or get the public to spend? Tourism will take a hit- why would anyone spend additional costs in fuel, hotels, food, shopping etc? I thought Ireland’s problem was a banking problem not economic. I do note that those CEO’s and directors did not suffer any consequences fro making Ireland broke and become part of the pan European State. All the suffering to become independent from the UK and a couple reckless bankers brought Ireland to its knees and made it buckle under the rule of Germany without a drop of blood. I also note Cameron is working very hard to prevent the referendum- any MP in the Tory part preparing to act like a Tory any time soon?

    You only have to witness Clark’s soft criminal justice system to realise that alternative punishments do not work. When courts fine people who cannot afford to pay it makes a mockery of the punishment. Criminals rack up huge fines knowing they have no intention to pay because at the end the court will let them off or make them do a couple of days in prison. The couple of days is worth the huge amount they sole or committed in traffic offences. For example, the likelihood of being caught for no insurance is minimal, the amount given in a fine for no MOT is less than the MOT would cost. Clark makes crime pay just as Clegg makes welfare pay not to work. Come all ye immigrants to the land of the free public services.

    • Bazman
      Posted December 6, 2011 at 6:49 pm | Permalink

      Working does not pay enough, not welfare paying to much. How much do you think a single person on the dole is entitled to? Should a person take a drop in income for working for poverty wages when they have children. Your policy being too make the lives of the children worse. Companies making massive profits and paying minimum wage. Ram it and stay on welfare. Why should anyone give them more money?

      • RB
        Posted December 6, 2011 at 7:29 pm | Permalink

        Bazman its so good to see someone tell it as it really is.

        One of the major pronblems in our society is tax credits. Employers have seen that the government will top up salaries with borrowed money and they have taken the piss. Seriously, I live in Brighton, one of the most expensive places to live, but if you search any job board for Brighton jobs you will see that the average wage paid by almost all of the employers here is about 19-22k. A Pittance for a full time 40 hour week.

        When I was a kid, (Im 46 now), one salary was sufficient to buy a house, send your kids to Uni, and leave one parent looking after the family. Now both parents are stuck on a mouse wheel, desperately running full pelt to keep their heads above water. Someone has done this to us. How did this happen? Why are we all wage slaves now?

        It is an unassaialable fact that employers do not pay a living wage. That must be addressed.

        • lifelogic
          Posted December 7, 2011 at 9:35 pm | Permalink

          You are quite right with tax credits, as an employer, there is almost no point in giving higher salaries to staff with children as all the money is taken of their tax credits, loss of benefits or tax/NI. From being unemployed up to nearly £60K joint income there is very little difference in living standards/disposable income for people with children.

          Also little financial incentive employers can legally give to get people to work harder or do overtime.

          • Bazman
            Posted December 8, 2011 at 7:34 pm | Permalink

            You miss the point. Tax credits are in addition to wages. Not a subsidy for employers allowing them to pay lower wages.

  9. Peter van Leeuwen
    Posted December 6, 2011 at 10:44 am | Permalink

    Many small steps on a long road . . . but don’t lose the larger picture: The current crisis, with all its financial entanglement, is unintentionally leading to an unprecedented European experience of common destiny that will be difficult to reverse. Even the common downgrading by the itself downgraded S&P helps in that direction. It will be interesting to see how many non-euro countries will actually join this 17-plus treaty, on offer at the EU-summit later this week.
    Add to that the non cooperation by Britain in other areas: Der Spiegel yesterday wrote about almost a hundred foreign policy co-operations that were obstructed by the UK. The UK as a spanner in the works?
    With this trend, the UK might be much more isolated in a few years than it now expects.

    • Jose
      Posted December 6, 2011 at 6:17 pm | Permalink

      I would suggest that Der Spiegel can see no ill in any German proposal. So far, it has gloated over the oneupmanship of Merkel over Sarkozy and now, presumably with the knowledge of the German government, published an alleged list of ‘British obstructions’. And we all know those damn British just want to put a spanner in the EU works all of the time…..in spite of them being the second biggest contributors….

      • Peter van Leeuwen
        Posted December 6, 2011 at 9:05 pm | Permalink

        @Jose: to be fair, there was no list and the frustration is just with foreign policy, a sensitive area for the UK. I don’t experience Der Spiegel as uncritical with Germany, be it never as outspoken as British media. Obviously though, the best pointers of what will happen in the eurozone aren’t to be found in the media of non-euro countries, which don’t have the inside track for information. They should still be read, but be seen as the (sometimes valuable) comments by outsiders.

        • Jose
          Posted December 7, 2011 at 8:53 am | Permalink

          Peter, I read it almost every day with regard to Europe, I have to resort to the international version as my German isn’t good enough. But I must disagree with you, that particular article is a list just in sentence form. An example of just how sychofantic they can be towards Germany ‘Britain’s special status was one of the anomalies in the old EU. Germany and France made many concessions to the British, who were determined to preserve their independence. Again and again, exceptions were made when the battle lines hardened.’ They make it sound like Germany and France bent over to accommodate the UK. And as we all know that is simply not true.

          • Peter van Leeuwen
            Posted December 7, 2011 at 11:35 am | Permalink

            @Jose: We may have been looking at different articles. From the article I read: “the Secretary General of the European External Action Service, has complained privately that London has blocked a total of 96 EU statements”. I do think that a lot of exceptions have been made for the UK over the years, but that is the price that the EU members are willing to pay for having the UK on board. I think that the UK could have been smarter, actually by being less confrontational while focusing on its interests, but that is for another day.

    • David Price
      Posted December 6, 2011 at 8:19 pm | Permalink

      In this wonderous new EU experience just how much equal participation is there from the other EU countries? Or is this solely for the benefit of France and Germany?

      Is no-one allowed to object, about anything at all? If the UK which is the 2nd highest contributor isn’t permitted to object without threats what hope is there for Ireland, Spain or even Holland?

      • Peter van Leeuwen
        Posted December 7, 2011 at 11:44 am | Permalink

        @David Price: many small countries occasionally find themselves in the smallest possible minority (Ireland – 12.5 % company tax, Holland – Serbia, Spain – patent languages) but there is usually an attitude toward resolution. The media picture of just France-Germany is a caricature. There are loads of consultations and alliances are built all the time. Holland would e.g. claim that it brought the IMF as a referee into the eurozone debt crisis, allies with Germany on many aspects, and with the “small countries” on some other.

    • Tedgo
      Posted December 6, 2011 at 8:21 pm | Permalink

      Just read the article in Der Spiegel, glad to see Cameron does have some backbone. As the second biggest contributor to the EU we simply don’t believe in or want to pay for all the EU foreign office facilities and embassies. We signed up for a common market, not a costly bureaucratic nightmare run by unelected officials.

      If the rest of the EU wants to get in to bed together then its about time you chucked us out.

      • Peter van Leeuwen
        Posted December 7, 2011 at 11:48 am | Permalink

        How wrong can you be! As a country (and I hope democracy) you signed up for the Lisbon Treaty and as such for the EEAS, you even proposed your own appointee Mrs Ashton. Other countries may expect Britain to be good for its signature.

        Reply Some of us voted against Lisbon

        • Peter van Leeuwen
          Posted December 7, 2011 at 12:33 pm | Permalink

          Some Dutch MPs voted against Lisbon. After losing that vote they’re still bound by their parliament’s decision.

        • Tedgo
          Posted December 7, 2011 at 2:36 pm | Permalink

          Yes I was expressing my point of view that the EEAS is a costly and unnecessary duplication of what is already available in member states. Obviously the UK voted for the Lisbon Treaty and put forward Mrs Ashton with the vain hope she would take a more anglophile approach to the post.

          But where is democracy, Holland’s people voted the European Constitution down by 61% to 39%, quite a no vote. Yet did they get a second vote when the constitution was regurgitated as the Lisbon treaty, of course not, your government new better.

          • Peter van Leeuwen
            Posted December 7, 2011 at 6:42 pm | Permalink

            @Tedgo: why not read up about representative parliamentary democracy, about the whole process in the Nehterlands after this advising 2005 referendum, and you might just understand. Everything about the Lisbon Treaty has passed for 100% according to the rules of our parliamentary democracy. It’s as simple as that.

        • Alexis
          Posted December 8, 2011 at 12:58 am | Permalink

          As a country (and I hope democracy) you signed up for the Lisbon Treaty …

          No.

          As a country we did not sign up to the Lisbon treaty. As a country, many protested most strongly against it.

          Our unelected prime minister of the day signed up to the treaty despite fierce opposition.

          You may call that democracy if you wish. I know what I call it.

    • stred
      Posted December 6, 2011 at 9:32 pm | Permalink

      Hope so.

  10. Posted December 6, 2011 at 11:07 am | Permalink

    The idea of imposing fines on a country which breaks the rules is as crazy as the Labour idea of fining NHS Hospitals which failed to meet their targets – they then have less money to do what is required!
    But is the Eurozone now a Franco-German organisation? There are 15 other countries in this alone, has anyone asked, say, the Dutch or the Swedes what they think of the idea, or are they to be blackmailed the same as Greece and Italy and given a de-facto Eurocrat as Prime Minister?
    Unfortunately, Cameron seems to be going along with what is happening, one suspects that he and Clegg will agree to our adopting the same rules although we are not in the Eurozone on the basis that we might want to join one day, or perhaps because the Eurozone members would insist we could not have the trade advantages given by not having to obey their rules.
    I bet we are dragged in whether the public want it or not, and that there will be no referendum.

  11. Antisthenes
    Posted December 6, 2011 at 11:30 am | Permalink

    It would be quite easy for EU technocrats to compose a new treaty that would not implicitly say that new powers will be transferred from the UK to Brussels. So Cameron can get out of the lock imposed by parliament and refuse a referendum. However a new treaty no doubt will somewhere in the small print or disguised as something else have a catch all clause that will sometime in the future allow such power transfer. Using technocratic double speak and jargon and left wing spin actually exposing this double dealing is going to prove extremely difficult. So you and the other euro sceptic MPs should force Cameron before that point is reached to stand up for Britain’s interests by convincing the EU to change from being a socialist and technocratic structure to a capitalist and democratic one. If he does not succeed in that then you should force him to give the people the opportunity to decide whether they wish to remain in that type of union with that type of structure.

  12. zorro
    Posted December 6, 2011 at 11:38 am | Permalink

    Absolutely hilarious…..I couldn’t believe it when they mentioned the ‘tough’ 3% deficit limit with fines! Less stringent than at the outset….Can they think people are so stupid to give this credibility?

    Unless by fines, they mean the physical confiscation of economic assets by the EU….a sort of creeping neo colonialism?

    Zorro

  13. Winston Smith
    Posted December 6, 2011 at 12:15 pm | Permalink

    As Alistair Heath says this morning in City AM, these new restrictions are unenforceable, so little will change.

    It seems unlikely Cameron & co will offer any mandate to the electorate no matter what is decided in the EU and how it affects the UK. Will you just accept this, Mr Redwood? Do you have a tipping point?

    Do you know the current Party membership figure? It was +350k in 2005, 170k a year ago, what is it now? 100k?

    • Paul H
      Posted December 7, 2011 at 12:54 pm | Permalink

      If JR doesn’t have a tipping point somewhere then he doesn’t have principles – and I believe he does.

      The main problem is that his (understandable) loyalty to his party may mean the tipping point is so far along as to render it almost irrelevant. This would be consistent with his frequently expressed irritation with UKIP and apparent lack of understanding of the reasons both that it exists and that people might choose to vote for it in the face of the unlikelihood of its bagging even a single HoC seat (but then, once upon a time people would have said that about the Greens).

  14. Mactheknife
    Posted December 6, 2011 at 12:32 pm | Permalink

    Is there no end to Camerson’s back-sliding ? On the news last night he said in a speech that treaty change in itself is not an issue, only if the EU proposed taking more powers. He has stated in the past that if treaty change was necessary he would put it before the British people in a referendum. So here we have the Germans and French pushing for treaty change and yet more centralised powers to be used at their discretion of course, without any UK input (as M & S have stated) and Cameron is still shying away from a referendum. I sincerely hope that M & S back him into a corner and leave him no option but to ask the people of Britain.

  15. Posted December 6, 2011 at 12:49 pm | Permalink

    Bond holders are being given the run around. All of these ‘cheque is in the post’ announcements are wearing thin.

    I thought it was strange that the BBC was worried that the timing of S&P’s warning was ‘tactless’

    Perhaps it did not occur to the BBC that the warning held back on the unlikely off-chance that the German and French heads of state would find a solution.

    They did not and therefore the warning was issued. The timing was perfectly logical.

    In any case, a ratings agency that worries about tact would not be very good at its job.

    • Bazman
      Posted December 6, 2011 at 6:50 pm | Permalink

      Anyone else report this ‘conspiracy’ other than the BBC Ken? A simple question for a simple man.

      • Posted December 6, 2011 at 8:28 pm | Permalink

        I can’t help feeling guilty about the misbehaviour of the BBC as I have personally part-paid for it with my own cash.

        • Bazman
          Posted December 7, 2011 at 6:33 pm | Permalink

          You have with SKY too, but see no problem.

  16. Denis Cooper
    Posted December 6, 2011 at 1:02 pm | Permalink

    “… the 17 might have a new Treaty together, excluding the UK.”

    They wouldn’t get very far with a eurozone-only treaty which still had to be compatible with the EU treaties as they presently stand and without any legal right to make use of the EU institutions including the ECJ and the ECB.

    All 27 EU member states are bound by the EU treaties, which are held to be superior to any other treaty that an EU member state may make.

    Therefore if a group of EU member states wish to make some separate treaty it must be compatible with the EU treaties.

    Even if their treaty is compatible with the EU treaties in all other respects, they cannot presume to make unauthorised use of EU institutions which are the common property of all EU member states.

    The EU institutions, as listed in Article 13 TEU, include not only the ECJ and the Commission, but also the ECB.

    Merkel knows perfectly well that an attempt to Save the Euro through a eurozone-only treaty without any legal base in the EU treaties, a eurozone-only treaty which must still be compatible with the EU treaties that she wants to change precisely because they don’t let her do what she wants to do, and which would not give the eurozone states the legal right to make use of the existing EU central bank which controls all matters pertaining to the euro, would make no legal or practical sense at all.

    She’s bluffing over this, and if necessary Cameron should call her bluff.

    He only needs to ask her whether she’s proposing to lead all 17 eurozone states out of the EU, and if so when they’ll be giving their notices of that intention under Article 50 TEU.

    But he won’t, because for him it’s a very convenient fiction that if they don’t get what they want through EU treaty changes agreed by all 27 EU member states then the 17 eurozone states will just make their own treaty.

    I noticed the BBC propagating this fiction last night, which was not a surprise.

    • Denis Cooper
      Posted December 7, 2011 at 8:58 am | Permalink

      JR, please could you publish this?

  17. Denis Cooper
    Posted December 6, 2011 at 1:06 pm | Permalink

    Here is the first example of a eurozone-only treaty, the ESM treaty that was signed on July 11th:

    http://consilium.europa.eu/media/1216793/esm%20treaty%20en.pdf

    “TREATY ESTABLISHING THE EUROPEAN STABILITY MECHANISM (ESM)
    BETWEEN THE KINGDOM OF BELGIUM, THE FEDERAL REPUBLIC OF GERMANY, THE REPUBLIC OF ESTONIA, IRELAND, THE HELLENIC REPUBLIC, THE KINGDOM OF SPAIN, THE FRENCH REPUBLIC, THE ITALIAN REPUBLIC, THE REPUBLIC OF CYPRUS, THE GRAND DUCHY OF LUXEMBOURG, MALTA, THE KINGDOM OF THE NETHERLANDS, THE REPUBLIC OF AUSTRIA, THE PORTUGUESE REPUBLIC, THE REPUBLIC OF SLOVENIA, THE SLOVAK REPUBLIC, THE REPUBLIC OF FINLAND”

    If it had been legally and practically possible for the 17 eurozone states to simply go off and make that treaty among themselves without any reference to the 10 other EU member states, why was Merkel insistent that there must be an EU treaty change to provide a new legal base in the EU treaties to give them the licence to do it?

    Which EU treaty change to grant the eurozone states that new licence was agreed by EU leaders on March 25th, and is here:

    http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:091:0001:0002:EN:PDF

    “EUROPEAN COUNCIL DECISION of 25 March 2011 amending Article 136 of the Treaty on the Functioning of the European Union with regard to a stability mechanism for Member States whose currency is the euro (2011/199/EU) ”

    And which is then cited in the Preamble to the ESM treaty as its legal base in the EU treaties:

    “(2) On 25 March 2011, the European Council adopted Decision 2011/199/EU amending Article 136 of the Treaty on the Functioning of the European Union with regard to a stability mechanism for Member States whose currency is the euro adding the following paragraph to Article 136: “The Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionality”.”

    Unless she’s proposing to lead all 17 eurozone states out of the EU then that’s the only way that Merkel can proceed to get another eurozone-only treaty in place, by first getting permission to do that from all 27 EU member states, through an EU treaty change over which the UK would have a veto.

    She knows that, and so too does Cameron.

    • Chris
      Posted December 6, 2011 at 6:53 pm | Permalink

      I wish that the MPs were as well informed as you are, Denis. It is alarming that far too few eurosceptic MPs are really not up to speed on this whole issue, and not able/willing to put forward cogent and compelling arguments. (There are obviously notable exceptions). If they were they could have easily challenged Cameron on this repeatedly, and been able to make an impact through sheer numbers.

      Interesting that Standard and Poor are now suggesting that even the ESFS credit rating may be downgraded.

      Also with regard to IMF, I understand that Timothy Geithner’s meeting in Europe today may well lead to special IMF EU fund.

      • stred
        Posted December 6, 2011 at 9:40 pm | Permalink

        Presumably, the MPs on both sides read this and hope that they base teir decisions on the facts brought out.

      • APL
        Posted December 7, 2011 at 8:22 am | Permalink

        Chris: “I wish that the MPs were as well informed as you are, Denis. ”

        I don’t know what Mr Cooper does for a living, but I do know that at £64,000 per annum they damn well ought to be as well informed.

        • Denis Cooper
          Posted December 7, 2011 at 4:41 pm | Permalink

          To be fair, an MP has to deal with a wide range of matters and can’t be expected to have an in-depth knowledge of all of them.

          Therefore a lot of the time MPs have little alternative to relying for advice on those who can be assumed to have dug deep into all the specialised details on a particular issue and understand them.

          Unfortunately, that usually means their party leaders and whips.

          • APL
            Posted December 8, 2011 at 12:09 am | Permalink

            Denis Cooper: “To be fair, an MP has to deal with a wide range of matters and can’t be expected to have an in-depth knowledge of all of them.”

            I think you are being unreasonably fair.

            A damn good salary + expenses to devote yourself full time to the task you have nominated yourself for.

  18. lifelogic
    Posted December 6, 2011 at 1:18 pm | Permalink

    Leadership by rather dim EU donkeys is seems, as expected. Do they really think that will impress the lenders in the market?

  19. MajorFrustration
    Posted December 6, 2011 at 1:20 pm | Permalink

    These suggestions as to a new treaty are frankly rubbish. Given that it is only the UK that appears to abid by the EU rules can you imagine countries like Greece and Italy coming clean on their numbers – yeah right.
    Once more with feeling – lets take the hit, OK let the banks go and write off their sovereign debt losses. Its not going to be easy but unless the banks see that we are not their suckers nothing will ever change – bail out after bail out

  20. Richard
    Posted December 6, 2011 at 1:37 pm | Permalink

    In just a few words your excellent article reveals why the latest “plan to save the Euro” will be a failure like all the other plans.
    The fundamental problem which still needs addressing by the UK ,USA and Europe is overspending by Governments.
    Until this is done and is seen to be achieving actual reductions in the deficits then all the treaties and conferences and summits are just meaningless hot air.
    Sadly there is little progress being made to increase growth, reduce Government spending, or to increase tax revenues.
    Things like a 100% overspend on the Olympics opening ceremony, costing a further £40 millions and a 5% increase in benefits costing perhaps hundreds of millions extra are just two recent examples of a carefree attitude to borrowing and spending.
    Despite many fine speeches by Italian and Greek ministers I would bet that very little actual reduction in spending has been achieved.

  21. Martin K
    Posted December 6, 2011 at 1:44 pm | Permalink

    Bring back Thatch! She wouldn’t have pussy footed around. We would probably have been a fully independent trading nation years ago without shovelling the daily £Millions into the greatest socialist con on the planet.

    How much have we paid in over the years? What have got in return?

    You lot should be ashamed.

    • sjb
      Posted December 7, 2011 at 10:13 pm | Permalink

      Mrs Thatcher signed the Single European Act, which further integrated Britain into the EU.

      Incidentally, she did not put the matter to a referendum; Denmark & Ireland did.

  22. Sue Doughty
    Posted December 6, 2011 at 1:51 pm | Permalink

    You ask, “How do they get growth going in these countries without devaluation and lower tax rates?”
    By undoing all the penalties on employing people and letting us get back to work.

    • Posted December 6, 2011 at 8:32 pm | Permalink

      Absolutely. It is uncivilised for any society to price a large chunk of its fellow citizens out of work.

  23. If only...
    Posted December 6, 2011 at 2:33 pm | Permalink

    The Devil is in the QMV detail…

  24. A.Sedgwick
    Posted December 6, 2011 at 2:38 pm | Permalink

    Virtually since his elevation to LOTO I have thought that Cameron was a national disaster waiting to happen and increasingly I am not alone – read James Delingpole and comments in today’s DT “Maybe we’d be better off if David Cameron had gone to Harrow” . The time is coming when a leading Conservative MP has to challenge him if only for his/her own peace of mind in their dotage – I could have made a difference. David Davis set the precedent of calling a byelection on a single issue, time for one on the increasing train wreck that is the EU.

  25. uanime5
    Posted December 6, 2011 at 2:59 pm | Permalink

    I see no problem with the Eurozone members imposing conditions on themselves that should have been enforced when the Euro was first introduced. Whether Cameron will accept a treaty that he’s not a part of is another matter.

  26. BobE
    Posted December 6, 2011 at 3:01 pm | Permalink

    We all know that the only way a country like Greece can recover is to devalue. The only way to devalue is to control your own currency, that is why the Euro can’t succeed.
    Does nobody upstairs understand this!!

  27. Mike Stallard
    Posted December 6, 2011 at 3:01 pm | Permalink

    The huge danger is that we will be simply run over by Berlin and Paris.

    Can nobody see this?

  28. Martyn
    Posted December 6, 2011 at 3:17 pm | Permalink

    Yesterday the German leader was reported as saying that the EU must become a Federal state in order to save the Euro, adding that the new treaty needed to do so might have to exclude the current non-Euro nations. If a new treaty is confined to the Euro-using nations, our PM cannot take part in its construction and anything that he currently says about objecting to its content if thought harmful to the UK is meaningless. The PM will have lost his place at the top table and his ability to influence affairs, gone. He won’t like that, though I suspect that France and Germany will heave a sigh of relief.
    However, what we are being told does not include re-writing Lisbon and if that treaty remains in place the PM can claim that nothing is altered and that there is no need for a referendum. So far as I can see, having done nothing at all constructive thus far other than upsetting France and Germany, the PM is manoeuvring the UK into between a rock and a hard place with, on one hand all of the current interference in our affairs and lack of sovereignty and democratic accountability arising from the Lisbon treaty and on the other hand, I fear, getting additional fallout from the new treaty about which we could do nothing. I still have a horrible feeling that before the end of this parliament the Prime Minister and his supporters will force us into joining the Euro and signing up to the new Federal State of Europe. I really wish to be soon proven utterly wrong in thinking this.

    • zorro
      Posted December 6, 2011 at 8:00 pm | Permalink

      Yes, I have thought for a while that he would present this as a ‘fait accompli’ beyond our control. If you notice how he speaks, he always says that he will ‘what is in the national interest’ without explicitly stating what it is in his eyes other than vague ideas of Britain making certain decisions of its own.

      I think that he will present entry to the Euro as in the ‘national interest’ when he considers the moment right. I just do’t trust him, which is rather sad.

      zorro

  29. forthurst
    Posted December 6, 2011 at 3:29 pm | Permalink

    I’m still expecting the Most Indebted Nation to ride to the rescue; that red button in the private secret Fed marked ‘print’ is simply too tempting for it to resist. After all what is the solution to too much debt if it’s not even more debt?

  30. Alan Wheatley
    Posted December 6, 2011 at 3:33 pm | Permalink

    If I remember rightly, the ERM had the stability pact, which was intended to control borrowing. It seemed to me then a silly idea to fine a country for borrowing too much when, presumably, the reason they over-borrowed was because they were short of money. It did not make sense then, and as you say the same idea makes no sense now.

  31. Martyn
    Posted December 6, 2011 at 3:52 pm | Permalink

    In the DTel ‘Debt Crisis Live’ pages at 1502hrs I read that the French PM Francois Fillon has said it’s more likely that a new EU treaty would be signed by the eurozone’s 17 members than the EU’s 27.
    Fillon is reported to have spoken to French lawmakers, saying: Germany would like a treaty signed by 27, we think that will be difficult. We will try during the European Council on Friday and, if there’s no unanimity, we’ll do it with 17 with a timetable for March 2012.
    There we go…..

  32. Martin C
    Posted December 6, 2011 at 4:39 pm | Permalink

    But what are they going to do now, as in right straight-away now? The collapse and impoverishment of Eurozone members is happening as we speak. There are professional counterparties out there, who are buying Italian bonds at 7% yield right now, and if the ECB decides to save the Euro by printing money to buy Italian bonds then these speculators are going to make a killing, on the back of the people who are defrauded by QE which in this case will be German savers and pension funds.
    And the longer this action is delayed, the more Italian high-value bonds will have been sold so the greater the losses are. If they are going to do it, right now would be a good time. Yesterday would have been better. They cannot delay any more.

  33. Tad Davison
    Posted December 6, 2011 at 4:40 pm | Permalink

    This is the type of thing I have been fighting against for the last two decades. The endless stream of meaningless, unworkable blather from the EU is astounding, but still it comes to perplex the minds of all rational people.

    We may deduce then, that those who press for more, are irrational. It certainly seems that way, when their arguments fail so spectacularly!

    The EU was said to be the best way to remove poverty, unemployment, and civil strife. Everything would be rosy and equitable, but in reality, the EU has had totally the opposite effect, as many of us confidently predicted. It was built on smoke from the many pipe-dreams of the liberals and socialists who are so detached from real life, it makes me wonder how the hell they ever got into positions of influence in the first place?

    I very much regret to say, that even the Conservative party has many of that ilk. With luck, they will one day be replaced by realists with plenty of life’s experiences. Maybe then, we will finally get good governance, but don’t expect it to come from the EU, that’s a discredited busted flush, but I bet they find some way of clinging to power.

    Tad Davison

    Cambridge

    • Disaffected
      Posted December 6, 2011 at 7:50 pm | Permalink

      The European Liberal Party want a lot more of EU. read the website, Clegg is a member together with Oilly Rehn. They want open borders and a pan European State. Fanatical political ideology.

      • sjb
        Posted December 7, 2011 at 10:33 pm | Permalink

        Why is it fanatical? California and Texas used to be independent countries before joining the Union … didn’t the land known as England once consist of many kingdoms?

    • RB
      Posted December 6, 2011 at 7:52 pm | Permalink

      Real life experience?

      I agree that I dont want a privileged silver spoon Oxbridge PPe graduate/SPAD/Pr man in charge of my country. But neither do I really want a multi millionaire entrepreneur who has made it in business. I want down to earth working men and women to run this country with decent common sense and an appreciation of what life is like for those who aren’t millionaires through inheritance or luck in business.

  34. Javelin
    Posted December 6, 2011 at 6:44 pm | Permalink

    A few things. How large will these fines be? I can only guess they will not be punitive.

    The new bonds are not Euro Bonds – so the Getmans won’t back them

    The new bond buyers will be getting their full value back on default – this is just like the Irish !! Whose 100 cents to the Euro was a moral disaster and a financial disaster that almost brought the UK to the brink. I hope we will NOT pay a penny more if/when a problem happens.

    These financial instruments are political fantasy and not economic reality. “we can borrow but nobody will take any risk!” A money tree – of only. The truth is if there are no obvious losers then you (the tax payer) are the loser. That is why money poured into high yield bonds today. Does the EU voter not realise they are the payers/lenders of last resort?

    Back to Cameron. Club 17 will now pass legislation for and on behalf of club 17. As vi instances chane they will pass legislation for themselves. Alot of legislation is passed because circumstances have changed. So we will be in a situation where legislation will not be changed to suit us but changed to suit club 17. The EU will become an increasing obstacle to legislation as time goes by instead of the imposed of legislation it is today.

    **** A referendum is needed because the relationship with Europe has changed. The UK originally voted for a relationship. If you get married and your wife leaves to live next door and share the kids then you have every right to a divorce. You may see her you may negotiate with her but the fact remains that whilst you have not taken any action she has and therefore you have a right to a divorce. ****

    • APL
      Posted December 7, 2011 at 10:29 am | Permalink

      Javelin: “A referendum is needed because the relationship with Europe has changed. ”

      1. The Treaties are already void through non performance. We just need a senior politician to make it public knowledge.

      2. It’s been obvious for ages, the attitude of the European Union to its founding documents is like that of Humpty Dumpty: “When I use a word,’ Humpty Dumpty said, in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’

      And by the way, the EU perched precariously on top of the wall, confident that should it fall, all the kings horses and all the kings men will put the poor Euro Zone back together again. We know how that turned out for poor Humpty Dumpty, will the EU be any different?

  35. BobE
    Posted December 6, 2011 at 6:45 pm | Permalink

    In 2004 Mr Cameron wrote a briefing paper for Michael Howard and this is part of what it contained:

    “Giving away power in the hope of influencing the EU has been tried for decades and the EU just gets more power over British life and uses it badly. We should be taking back power, not handing more over.”

    The next few days is very crucial to Mr Cameron.

  36. Tom William
    Posted December 6, 2011 at 6:49 pm | Permalink

    Share tip. Buy De la Rue. Who will print/is printing old currencies.

    Analogy. Roger Helmer comparing attempts to save the Euro to cancer surgeons trying to save the tumour.

    Reply: This site does not offer investmntn advice and does not endorse this – but I guess it’s making a political point!

    • stred
      Posted December 6, 2011 at 9:54 pm | Permalink

      Also, buy toilet paper.

  37. BobE
    Posted December 6, 2011 at 7:03 pm | Permalink

    I agree with John. Let the 17 in the Eurozone do as it likes. We stay out of it, offer no advice or and activity. Let them do as they wish and we stay out of it.

  38. Posted December 6, 2011 at 8:41 pm | Permalink

    I think there is some hope at last for Pro-Europeans. It seems to me that if the Merkel plans get off the ground the 17 will dwindle to just a few or just 1.

    Meanwhile the rest can hopefully have a looser relationship and regain some democracy and rid themselves of costly regulations.

    Europeans may be at the beginning of regaining Europe.

  39. Posted December 6, 2011 at 8:48 pm | Permalink

    Right at the beginning of the Vienna Convention on the laws of Treaties is this paragraph, “Having in mind the principles of international law embodied in the Charter of the United Nations, such as the principles of the equal rights and self-determination of peoples, of the sovereign equality and independence of all States, of non-interference in the domestic affairs of States, of the prohibition of the threat or use of force and of universal respect for, and observance of, human rights and fundamental freedoms for all,”

    Re the proposed new treaty or a Treaty within a Treaty or an Agreement, for the 17 members of the Euro Zone that allegedly would not make any difference to the remaining ten. All 27 Countries are tied/bound to ALL that is in the Treaty of Lisbon. The Vienna Convention on the Law of Treaties makes very clear about that, plus the two years since it was ‘lodged’ (for alerations etc) with the Convention has now passed. Had it not been thus, I would have thought Article 125 of the Lisbon Treaty, the so-called no-bail out clause, that also makes clear the EU shall not be liable for the debts of member state governments, would have also been changed, for “bail outs” have taken place in spite of them being contrary to the Treaty of Lisbon. Why did our government let this pass?

    The Treaty of Lisbon (sadly) applies to all 27 Countries. Any new Treaty (or agreement) for 17 of those Countries which intrudes upon or changes the Treaty of Lisbon, would I respectfully suggest, affect ALL 27 Countries. The proposed new Treaty does indeed allow the Euro 17 enormous powers, particularly so if it is in anyway likened to, or maybe IS the proposed ESM Treaty which allows the Euro 17 to have “Legal Personality” among other things. See ARTICLE 27 in the ESM, Legal status, privileges and immunities.

    The whole point in 27 once separate Countries ratifying such as the Treaty of Lisbon was to bind those 27 together to all that was agreed within that Treaty. Change anything in them and all 27 States surely, according to the Convention, would have to agree although it would be rather foolish of anyone outside the Euro-zone to allow the latter to have further legal personality. That obviously would result in giving those 17 States far more power for themselves to the detriment of the rest. To agree anything in Article 27, requires a referendum here in the UK. Any change of this particular magnitude to the Treaty of Lisbon, or even a New Treaty by those States that have agreed to the full contents of the Treaty of Lisbon, would require a referendum for what is proposed thus far, changes on a vast scale the Treaty of Lisbon which the Government of Great Britain has ratified.
    Without doubt, what is proposed does indeed require a referendum in our Country.
    It is time this Government took this Country out of the European Union. This is not just about one Prime Minister deciding that he/she wants to be in a Union and attend important gatherings, it is about this Country’s freedom to govern itself according to its Common Law Constitution that far too many have sacrificed their lives for, for our and the coming generation’s future. If the Government does not do that themselves or as a second choice DOES NOT ALLOW the people a referendum, or thirdly, refuses to listen to the people, I fear the people will INDEED take themselves out of the EU for they will begin to see there is no point in electing and paying for a British ~Government that can no longer govern it according to its own Longstanding Common Law Constitution.

    The people cannot contribute in any way even financially towards ‘deeper and more meaningful integration”, into the EU, or what some may call a Federal State of European Union or which was always intended according to Jean Monnet one great State of European Union. Our Common Law Constitution does not permit it. We, the people cannot even afford the many £billions in EU Contributions plus all the extra Millions being paid to the many EU Agencies, particularly as the money seems to be coming from the old and vulnerable ones in this Country. If ALL 27 Countries have paid billions in EU Contributions for all those years, plus all the “EXTRAS” is it any wonder they are ALL countries are running out of money?

  40. Frances Matta
    Posted December 6, 2011 at 8:56 pm | Permalink

    At last. John is angry.

    And it sounds good.

  41. Credulous and Naive
    Posted December 6, 2011 at 10:53 pm | Permalink

    After the EU dust has settled why don’t we join the Euro and use the rules to constrain and prevent any future UK Government of whatever persuasion from being profligate and devaluing OUR currency as a way of getting out of THEIR mistakes.
    What excuse is there for not having competent governance with balanced budgets so that our pounds/ Euros are stable in value for tens of years.
    Devaluation is the easy way out for people with no money to lose.
    How about:
    personal surcharges for financially incompetent ministers
    Tax on savings interest to be calculated AFTER allowance for any inflation on the capital. Well why not??????

  42. Bernard Otway
    Posted December 7, 2011 at 1:45 am | Permalink

    John events are overtaking your approach,it is not just us that are saying in very strong language [that you sometimes Ed.],but the likes of Max Hastings in today’s Mail 6th Dec
    using language PUBLISHED that you definitely would have [Ed.],not forgetting Conhome
    and Tim Montgomerie today as well,I stopped commenting on that site because they censored me [about a year ago] BUT now they are saying and allowing to be said what they censored
    then,I think a Damascene moment happened when they realised the TRUE nature of the Cabal at the centre of the conservative party,and of course those like me were right
    “TOLD YOU SO” I am not Gloating BUT ANGRY.As has been said above membership of the party has declined from 350,000 in 2005 to around 100,000 now A CLEAR INDIGHTMENT of what the cabal have done,a challenger WILL come soon from someone who looks to their place in history .I for one don’t care if you lot tear yourselves to pieces
    there are those of you who KNOW what has been going on,but were scared to do anything
    about the cabal,result only 307 seats which should have been 350,and a chance to really change the UK for another generation.Talk about shooting yourselves in the foot,it could be that you shot yourselves in the heart and are dying a slow death,which Mr Hitchens
    has written is necessary as well as many others.

  43. James Reade
    Posted December 7, 2011 at 8:23 am | Permalink

    This is hardly a new idea, John! It’s been around since the Stability and Growth Pact and the principle for eternity – you try and impose a credible threat such that people don’t do something undesirable. The problem of course is that the threat, as Germany and France proved in the last decade before the crisis, is not credible, and so countries engage in the undesirable behaviour, racking up more debts than they ought to.

    I find it funny though that you ask the question about how belligerent countries will get their deficits and debt down, the implication being this isn’t the best method (something I agree with). Presumably, you think austerity is?

    Recalling that company you were involved with back in the day, restructuring it. Would it have made a difference to how you went about the restructuring if you could have borrowed long term at rates below 1%?

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

  • John’s Books

  • Email Alerts

    You can sign up to receive John's blog posts by e-mail by entering your e-mail address in the box below.

    Enter your email address:

    Delivered by FeedBurner

    The e-mail service is powered by Google's FeedBurner service. Your information is not shared.

  • Map of Visitors

    Locations of visitors to this page