The “debate” about the EU and Euro remains higgled by misunderstandings  that serious people peddle out. Let’s just deal with a few of them.
1. If the UK makes a stand or declines to support the Merkel plan, we could lose the 10% of our National Income based on exports to the EU.
Response: Whatever happens at summits, Germany will still want to sell us cars and France will still want to sell us wine. The UK will still be selling products and services in the EU, under existing EU rules and WTO controls. That does not change, whatever we do or say  on the architecture of the EU and Euro.
2. The Merkel plan for greater fiscal controls will save the Euro.
Response:
The Merkel scheme does not suddenly  shrink the Greek deficit, or miraculously refinance the large Italian debt. Printing money could buy them a bit of time, but is not conditional on changes to rules and Treaties. Nothing in the Merkel plan solves the twin probems of too much debt and too little competitiveness in the problem countries.
3. If the UK does not agree with the Merkel Plan, we lose our influence in the EU!
Response: If we capitulate to the Merkel Plan it shows we already have no influence in the EU.The UK has imposed on it vast swathes of legislation and regulation we would not choose for ourselves. We do not have the influence to change or repeal this. That is why we need to negotiate a new relationship with the EU, that does allow us to make more of our own decisions about how we are governed.
4. The UK must do nothing to damage the Euro. Break up would be a disaster.
Response: Orderly but rapid break up would be the least cost option. It would liberate the countries allowed out, and permit them to adjust their competitiveness by a devaluation which would be swift and easier to sell than large wage cuts. There is no foundation to the proposition that the EU would lose 10-50% of its output if they changed currencies. To my knowledge 87 countries have left currency unions since 1945. In most cases they have prospered more after exit. The successful break up of the 16 member rouble bloc could be the model.
December 9, 2011
I tried. I listened to CMD twice, intently on the radio. I do not understand a word he said. Waffle.
It really is time the box was opened. Are we in this EU project or out? It grows less democratic as the months drift by. I am greatly at ill ease as the saga unfolds.
Peace in our time?
December 9, 2011
davidb: “I do not understand a word he said.”
What Cameron is doing, is trying it on!
Mr Redwood, at the next Prime ministers question, would you kindly ask Mr Cameron, if there actually was a treaty. We know the answer is no but I’d like to know if his delusions are of a permanent or temporary nature.
Reply: Yes, there is a draft Treaty which is what everyone was talking about. There was a Presidential paper and other items for consideration. The 23/26 are pressing on with discussions of the legal form of incorporating this. That is why some of us have been talking and acting for many days to try to prevent the UK being sucked into it. Sometimes there is no conspiracy!
December 9, 2011
Indeed as you say:
Nothing in the Merkel plan solves the twin probems of too much debt and too little competitiveness in the problem countries.
Orderly but rapid break up would be the least cost option.
Alas I have no confidence in Cameron, Merkel or Sarcozy they all seem to want to keep driving over the cliff. Just as Major did with his ERM, costing the country and me a fortune and preventing a Tory election victory for a full four elections (so far).
Soon to be five with Cameron’s current stance.
December 9, 2011
Michael Gove, the Education Secretary is quite right to order an investigation into the selling of exam information by exam board exposed by the telegraph. It also needs to cover the absurd grade inflation where the system has gone from giving 10% of entrants a grade 30+ years ago to giving 50% grade A in some instances now.
I see no sign of the students being more intelligent than 30 years ago. Surely the solution is just to show where they came in the examination relative to the other entrants. Grade 1 for they top 5% and grade 20 for the bottom 5%.
Take the incentive to make the exams ever easier and fiddle the system out of the exam boards hands. It is as daft as allowing MP and often (in effect) company directors to set their own pay levels. You are just asking for grade inflation as they all compete for fee paying entrants – by making the exams easier all the time.
Looking at some Maths and Physics questions recently which are easy to compare. I was horrified by the quality of the questions (some even with mistakes or ambiguities in the questions) and the simplistic level. Also there is large degree of pathetic & childish political/green indoctrination across the syllabuses too which should go.
Gove should sort it out I hope he will.
December 9, 2011
Given that there are now 2 A grades (A at 80% and A* and 90%) maybe this is why students are getting more A grades. Students are also taking more GCSEs and A-levels in a wider variety of subjects so this may explain why the number of A is increasing.
Mensa has found evidence that people are getting more intelligent, which is why they keep having to make their IQ tests even harder.
Limiting A grades to the top 5% just makes it easier to hide failing standards. At present you need 80% to get an A grade but under your system you could get an A with 60% as long as everyone who took the test was equally inept. It would also mean that the value of the A grade would fluctuate from year to year.
Can you provide any examples of ‘pathetic & childish political/green indoctrination’ in education? I hope you’re not objecting to scientists teaching the scientifically verified climate change and evolution, or economists teaching that a truly free market results in monopolies and cartels.
December 10, 2011
Anthropogenic Climate Change is a theory; it is not validated. Indeed, the models used to predict it have been shown not to be capable; Dr Hansen’s predictions from the late 80s & 90s have been seen to be wrong. The UN estimate of 50 million refugees due to cliamte change by 2010 (made in 2000, if I recall correctly) has also not come about. That is why the subject is controversial.
As the world continues with the present cooling cycle this theory is going to be the grave of the progressive green movement.
December 10, 2011
In answer to uanime5:
As an example last year GCSE grade A* Biology Girls 21.7% Boys 17.5% of entrants at grade A Girls 29.4% Boy 27.9% so perhaps 48% nearly half getting A or A*
For Classical subject it is over 60% getting A or A*
Chemistry about 50% getting A or A* from official statistics.
I do not have the questions to hand but many science questions were about “renewable energy” which is clearly not even a scientific concept in any real sense it is a religious/political construction.
Other maths/physics questions lacked precision, some even asked what the candidate thought the answer was (how do they mark that one – how can they know what the candidate thought?)
I certainly object to the more absurd projections for the climate in hundred of years time and the certainly they claim and many absurd exaggerations of the AGW political agenda. Have they not heard of chaos theory.
On economics clearly some regulation of a free market is needed at the very least to stop theft and murder/appropriation. But the general syllabus/agenda is usually to justify an ever bigger state, green wash and PV bling and as much state intervention as possible. Reduced public spending is “taking money out of the economy” BBC type of talk.
I very much doubt if people are getting cleverer over the last 20 years of so. They do perhaps get more practise at IQ type tests, reading and have better study aids sometimes now.
As an employer all you need to know is where they come in relation to the average in different skills the % marking is far more use. The ability of student year to year is a far more stable marker than the marking and setting of exams is.
December 9, 2011
About ten years ago I took (and passed) A level law.
5 days study with a cramming book is all it needed.
December 9, 2011
Clearly following Cameron actions today the UK is totally isolated. We are surely now far better off out – what do we gain beyond the free trade and co-operation we can have anyway (the seat at at table is clearly pointless no one is listening)?
December 9, 2011
We also wouldn’t have to pay billions in net contributions…
zorro
December 9, 2011
David Cameron today “Membership of the European Union remains in Britain’s national interest”.
Could perhaps he tell us some serious reasons why he thinks this? None of the EUphiles ever does, beyond the usual red herrings of “a seat at the table” and “50% of our trade”
We should get out or just have free trade and use the freedom to compete without our hands tied for a change. Without expensive green energy, absurd employment laws, recycling laws, CAP, fishing, huge fees and all the rest of the absurd handicaps.
December 9, 2011
We can’t have free trade with the EU without obeying their laws. Both Norway and Switzerland have to obey EU laws, even though they have no control over these laws.
Reply: You have to comply with US and Chinese laws to trade with them and have no influence over those laws. That is why we belong to the WTO, which acts as world policemen of states’ laws in the interests of free trade.
December 10, 2011
Exactly you just have to comply relevant laws to trade – but do not have to have gender equality insurance laws, absurd employment laws, fake green laws, no border controls, the absurd VAT tax system, daft fishing, Euro and agriculture rules and the huge bills too.
December 9, 2011
The paucity of understanding was evident on QT last night…. The Labour MP, Tristan (I’ve forgotten his name but he was a Mandelson favourite) was trotting out the usual stuff, seat at the table blah blah….influence etc
But they never quote the sources for their figures. It’s all along the lines that if we don’t go along with EU, we’ll be living in caves and eating berries. All fundamentally dishonest, as trade trends show our growing market is global not Europe.
I suppose if Sarkozy keeps on losing it, there is a chance that Cameron could act in the national interest, but maybe I’m still dreaming…..expect more threats of non cooperation on border issues and our presence in France, to try and bring us into line. They will threaten us with not stopping immigrants/asylum seekers.
Zorro
December 9, 2011
Don’t be fooled by the pretence of a fallout with the UK.
It’s just a bit of Big Daddy/ Giant Haystacks type knockabout to convince the electorate that Cast Jelly is putting up a fight.
In all seriousness do you really think that Cleggy would let Dave cut the EU loose from the UK? Not a chance.
December 9, 2011
Assuming that George Osborne talks to the Parliamentary Party has he given any update on how long is left to save the Euro?
Like so many of his predictions / forecasts (astrologers appear to have a higher success rate!) the ‘six weeks’ seems to have been wide of the mark.
Funny how the political class are happy to play brinkmanship with the British public, who they putatively serve, to serve their interests but never for ours.
December 9, 2011
What you have said is pure common sense.
What scared me was the vice president of something or other from the EU on Newsnight who obviously believed that the Euro, Federalism (Strange how that word has now become common currency after thirty years!), and agreeing with Brussels were the answers.
Kirsty Wal’s squalid little attempts to turn Dan Hannan into a Tory Rebel weren’t that impressive either. Or her shouting at the end of every sentence.
If Parliament were discussing our future, then we could turn on the box and watch the arguments unfold. As it is, everything is done in secret little meetings which are triumphantly announced as if they were privileges. “Mr Cameron met Mrs Merkel yesterday for a 45 minute discussion.”
Look, I am a DEMOCRAT. I don’t like all this smoke filled room business – even without the carcinogens.
December 9, 2011
Kirsty Walk I think you might mean? Her questions always come from the left wing, pro EU, feminist, slight chip on the shoulder, direction. Each question is asked in such a manner as one often needs to correct the daft assumptions/errors in the question before you can even start to answer it.
Usual reducing government spending and lowering taxes is “taking money out of the economy” nonsense, pro EU and the renewable energy religion, more taxes on the super rich and similar. BBC think to the core I suspect.
The super rich now, ironically, seem to be many of the BBC employees with their huge pensions and “independent” production companies.
December 9, 2011
Labour’s Donald Dewar and Jack McConnell are family friends of Kirsty Wark. Dewar handed her a quango job on the committee to select the best design for the Scottish Parliament Building(!)
December 10, 2011
Wark, I think you’ll find…
December 10, 2011
Sorry just wishful thinking perhaps.
December 9, 2011
I guess you may mean Richard Corbett, who was a euromaniac Labour MEP but lost his seat in 2009 and is now an adviser and/or spokesman for Rumpy-Pumpy.
http://en.wikipedia.org/wiki/Richard_Corbett
That’s the way it goes: voting them out doesn’t necessarily get rid of them.
December 9, 2011
When some of your own people charge that you’re just a Chamberlain going to meet Hitler, it’s no surprise that you want to prove differently. Cameron had to exact a price for his cooperation. According to the Dutch prime-minister, usually rather smitten with the Brits, it was a simple question of overcharging by the UK. Maybe this will be the beginning of this redefining the UK relationship with the EU and maybe it will lead to a situation in which the UK will feel more comfortable. Trade will always remain possible. I don’t get the idea that the continent is losing any sleep over it.
December 9, 2011
There is a basic (attempted) injustice at work here. 17 countries set up the Euro, despite being warned it would be a disaster. We stayed out. Now it is a disaster – and Merkozy want to tax (and effectively destroy) the UK financial industry to pay for the bail outs. They can get lost.
I am curious – why is it that when the Germans & French assert their own national interests it is ok, but when we do so we are bad Europeans? The French have been screwing money out of the Germans through the CAP and other frauds for decades and have almost never been a net contributor to the coffers. We on the other hand have always been net contributors and in return for entry lost our fishing rights, inter alia.
Essentially we just want to trade with you on an equitable basis. If you lot want to stay in the catastrophe that is the Euro, good luck to you – you’re going to need it – but don’t expect to destroy our financial sector through this ill-though out Tobin tax. If you’re all ok with being a satrapy of Greater Germany, good luck to you. I suspect your ancestors had different views. It certainly isn’t for us, whatever the Quislings at the Guardian and the BBC might think.
December 9, 2011
@Sebastian Weetabix: the Dutch prime-ninister (a friend for Cameron) had a rather different comment: the waivers that Cameron demanded for Britain could have meant that financial institutions in Amsterdam would relocate to the City of London. Even as a friend he couldn’t go along with that.
Still, Cameron is courageous: In 1955, Mr Bretherton walked away from 6 countries, Cameron is walking away from probably 26 countries.
This also shows that the European spirit on the continent is alive and healthy.
December 9, 2011
Actually Peter it shows that the European spirit continues to ignore all the signs, refuses to live in the real world and is STILL attempting to have a protectionist market. Trouble is technology has changed the game and I’m afraid the EU and the Euro are doomed. Greece will default Italy has a 65% and growing chance of default, the Irish will vote no in their treaty change referendum and you will still be on here with your metophorical finger in the dyke telling us we’re all wrong.
December 10, 2011
@libertarian: Actually, I’m not telling you’re wrong, but I would point out that for your “small is the new way” you would need protectionism (against Tesco and other multinationals, because that idea is a bit ahead of its time.
December 9, 2011
If that’s the case, let the peoples of Europe express that European spirit directly through referendums.
But of course those “at the table” last night are too scared to risk that.
December 10, 2011
@Denis Cooper: Why not concentrate on a referendum in the UK. There aren’t enough demagogues over here to call for continental referendums. (you no doubt do remember this quote, last used by Margaret Thatcher)
December 9, 2011
The French and Germans should lead by example and have their Tobin tax in Paris and Berlin….
zorro
December 9, 2011
Is there a point in there somewhere?
December 9, 2011
If they continue to introduce a Europe-wide Tobin tax, there won’t be a financial industry to speak of in the Netherlands anyway. For us it is 10% of our GDP; introduce that tax and it will all just go away. And it won’t go to Frankfurt or Paris. It will go to NY, Hong Kong, Singapore & Shanghai.
December 10, 2011
If they introduce a Tobin tax in the Euro area, then they can relocate to the UK. In no way should the UK have one. My suggestion was tongue in cheek. It just shows the absurdity of what they were expecting us to give up on behalf of the City of London.
zorro
December 9, 2011
Given that all the problems were caused by the financial industry, which is why we had to bail the banks out, it’s only fair that the financial industry should have to pay for the damage they caused.
December 10, 2011
The financial industry won’t pay for a Tobin tax. You will; so will other savers and pensioners. In the end we will all pay because the industry will go away.
The financial crisis wasn’t just caused by reckless lenders – it was also down to stupid borrowing. But most of all the problem has been caused by stupid box ticking regulation and the refusal of governments to allow banks to fail. That is how you ‘punish’ the rich bankers – if they fail, you let them go under. Not this stupid tax.
December 9, 2011
Thank you. If only you had been on Question Time last night…
December 9, 2011
This article encapsulates everything I have thought for some time now. Germany and France simply want to control Europe at every level …law, taxation etc. This would have been a disaster for democracy as we know it. This summit was more about Germany and France wanting British cash via our financial services sector to bail out their mess, I saw this summit as a defining moment for David Cameron and Britain and so far I applaud him.
December 9, 2011
John
Commonsense and logic from you again.
John, why is it that a successful Country like Germany wants to belong to a financial club with all of these hangers on, surely it cannot be just for the reason that if Germany resorted to its own D Mark again, it would eventually become too strong, and thus its goods and services would eventually become non competitive.
I would have thought a strong currancy would have been good news for any Country.
December 9, 2011
A strong currency is bad news for a country that has a lot of exports because it makes their products more expensive.
December 11, 2011
Uamine5
So the solution is what, keep devaluing and making the population (who save) ever poorer.
December 9, 2011
Germany’s raison d’etre is to control Europe….
zorro
December 11, 2011
Zorro
Your thoughts are my thoughts, I just wondered how many others had similar views.
December 9, 2011
My feeling is that Germany does NOT want to stay in this club and is forcing the Euro to crash by doing..er ..nothing but holding pointless summits.
Germany wants the UK, U.S. and China (etc) and private investors to pay. This can only happen if the Euro crashes.
I feel that she does not want to be left holding the debt baby all on her own and wants to spread the pain far more widely.
December 9, 2011
What does higgled mean?
Otherwise agree to this post.
One of the problems we have here is that ministers are spouting such ludicrous lies about the public sector in particular which are seriously undermining their credibility.
Having said that it was good to see that there has started to be some movement which indicates that negotiators are starting to actually listen rather to drive all their energy into managing the spin which creates the impression they are listening.
Movement on being aware of the very obvious consequences of demanding sudden significant increases to lowest paid is an important step forward. Another needs to be the realisation that those with young children (i.e. those who are families having to cope on one income because the second parent cannot work as their pay does not cover their childcare costs) also need specific extra support to be able to cope with significant increases in their pension contributions without having to drop out of their schemes.
There is also a general sense of the unfairness that the whole gamut of changes will apply to someone who is 54.7 but not to someone who is 54.8.
December 9, 2011
hmm – I suspect discussion about pensions is not top of the agenda today.
December 9, 2011
Public sector workers pensions aren’t on the agenda at all at any time. Your selfish self absorbed interest in trying to propogate really poor nonsense about YOUR pension is pointless. You weren’t anywhere to be seen when Gordon Brown stole our pensions in 97, you weren’t anywhere to be seen when he removed the 10p tax band, so banging on now that YOU have to take a hit is utterly silly, no one cares or is interested. By the way just why did you give up a very well paid public sector job?
December 11, 2011
Once again libertarian,
I am not affected by the pension reforms. I work in the private sector.
I lost my public sector jobs in the cutbacks, when it was more sensible for me to leave thank others because my pay didn’t actually cover my petrol and childcare for one child anyway, as you well know. Heaven only knows why you think I had a well paid job after all our discussions!
This new line about how people in the public sector should have gone on strike when Gordon Brown changed the rules on private sector pensions is a very odd one. Do you properly understand that to do so would have been illegal?
Many in the public sector would have supported the private sector in legal ways had you protested. Just as many in the private sector (like me) are expressing their support for those in the public sector now.
Indeed I agree that banging on about me taking a hit would be utterly silly. I’m not taking a hit. I’m standing up to support those who can’t afford to pay the sudden increases in demands and to ensure that very obvious detrimental consequences of aspects of these reforms which are currently being overlooked are properly addressed.
December 9, 2011
Higgle is the archaic version of haggle. A Higgler was another name for a pedlar.
December 9, 2011
So where does higgledy piggledy come from? I thought from PIGS.
December 11, 2011
So how can something be ‘haggled’ or ‘pedlared’ by misunderstanding?
Never mind – in the grand scheme of things I get the gist.
Did anyone else see Miranda Hart proclaim there was no-one in Cockermouth on Facebook on ‘Have I Got News for You?’ (etc etc) Not only did we have no Facebook we had no internet or phone for 48 hours!!! (etc etc)
December 9, 2011
john,enemies of the lib dems might feel inclined to use your article against them.Imagine if a member of the public was to do this.
December 9, 2011
I am/was a Lib-Dem. I agree with John now I know more of the facts.
December 9, 2011
Let us hope we can get some of the basic facts through to Huhne, Hughes and absurd Liberal chief whip Davis too.
Congratulation to Nick Clegg for being sensible so far.
December 9, 2011
Let’s start with what we agree on.
(1).
(2) – yes it won’t reduce Greek debt, but it goes a long way to ensuring that, in the absence of individual nations being willing to swallow real wage cuts, adjustment can happen when countries have different levels of competitiveness so in that respect yes, it is helpful for the continued existence of the eurozone. But without the UK…
(3) Not sure I agree but not what I want to write about.
(4) – you’re wrong here, or at least fast and loose, which is close to fibbing, John. First, a devaluation/depreciation is not a panacea. Iceland haven’t exactly grown since theirs, have they? Nor, for that matter, has the UK. Why is that? Competitive devaluations are just a race to the bottom because imports cost more, and more likely than not in a globalised world, we import inputs to the production process meaning our imports also go up in price to counteract the impact of the devaluation.
Then, your really, really shoddy “empirical” work. You name the countries that have left currency unions, and band them all together despite widely ranging different circumstances, and say “they all prospered’. After how long? By how much? More than in the union? Because academic research does exist (specifically by Andrew Rose) suggesting substantial impacts of currency unions on trade, which would suggest that even if there is prospering in or out (which of course they will be), the prospering may well be larger inside a union. Now I’m not saying Rose’s work is the final word, just saying that evidence does exist to suggest that, once you control for many, many factors that help explain patterns unrelated to union membership, the effect of them is positive. So it really isn’t to you to try to lecture to eurozone members on what is best for them from your prejudiced standpoint. That is fibbing, for me.
December 9, 2011
James Reade:L “Iceland havenât exactly grown since theirs, have they?”
Iceland also defaulted on the unrealistic obligations their banks had taken on, rightly so, by the way.
So they devalued and defaulted.
Now everyone else is trying, by various arm twisting maneuvers to get them to cough up the dough. But sensibly Iceland sees no reason to put itself in the same position as Ireland.
Net net, Iceland is in a pretty good position. Low debt, government spending forced back to a sensible relationship to its income and retaining control of its own economy.
December 10, 2011
(4) â youâre wrong here, or at least fast and loose, which is close to fibbing, John. First, a devaluation/depreciation is not a panacea. Iceland havenât exactly grown since theirs, have they? Nor, for that matter, has the UK. Why is that? Competitive devaluations are just a race to the bottom because imports cost more, and more likely than not in a globalised world, we import inputs to the production process meaning our imports also go up in price to counteract the impact of the devaluation.
This is nonsense what you have written. The majority of the costs to companies and the govt are the cost of labour/wages. That’s why the first thing companies do when in difficulty, is reduce the size of the work force. Agree their are other factors important in the economy. What about the affect on the UK’s narrowing current account balance?
December 9, 2011
Thank God we are shot of the EU dictatorship.
But alas ,it won’t make a but of difference to our economic fortunes, because the people here that opposed the eu want to debase our currency to economic success. They want fractional reserve banking in london not frankfurt, and they want to hitch our wagon to the biggest debtor country in the history of the world, the USA.
It will fail.
December 9, 2011
Gary
As you’ve been repeatedly told Fractional Reserve Banking has been in operation for over 500 years and is completely separate from the real issue which is fiat ( i.e. politically controlled ) currencies
December 9, 2011
“Fractional Reserve Banking has been in operation for over 500 years”
Yes, but … The quantity of the fraction of Government created money has reduced from 20% (1962) down to less than 3% today. Since around 1694, the quantity of Government money was about 15 -20%. This reduction by 17% has reduced our elected officials control over the economy and handed it over to Private Financial Institutions.
Fiat currency is irrlevant, it’s who controls the quantity of Fiat currency that’s important. It certainly isn’t the Government. They’ve got their foot on the accelerator and the economy is still spluttering to a halt.
Both Labour and the Conservatives are to blame for this as they allowed the deregulation of the Financial Sector. They also got blinded by claims that the Financial Sector is the biggest money earner in the Country – it isn’t. When you factor in subsidies due to the license to create a Nation’s currency and the repeated bail outs and low interest loans from the Bank of England, the amount that the Financial Sector gives to the Treasury is around ÂŁ23 billion where as Manufacturing is over ÂŁ60 billion.
Fractional Reserve Banking promotes fraud and rampant speculation – diverting activity away from productive enterprises. It has destabilised the World economy and influences many of our top Politicians so as a discussion on Government created money is only discussed by a few Politicians who actually understand the monetary system. It is a system that demands growth inorder to service past debts that will never be paid off. Government Debts that need not have existed if the Government would wake up and create the Nation’s curreny and prevent private counterfeiting of our money.
If you wish your children and grandchildren to be buried under a mountain of debt while Private Banks laugh their arses off , while paying themselves bonuses funded by your taxes, then ignore this comment.
December 10, 2011
Then we have the so called ‘financial weapons of mass destruction’.
Huge sidebets between parties which are good only if the counterparty is good for his side.
Then we have leverage and hypothecation ,rehypothecation which appears to have left a few people out of pocket.
I would not be surprised if governments and banks were found to be closely holding each other in a devils embrace.
December 10, 2011
Do you have any actual facts or evidence or do you make everything up to suit your pejuidices ?
This post is drivel, you clearly have never started, own or run a business
December 16, 2011
http://www.bankofengland.co.uk/publications/quarterlybulletin/threecenturiesofdata.xls
As you can see this is Bank of England data.
If you select “Money, Interest and Prices” you will see columns for M0 (Notes & Coins) and M3/M4.
Insert an extra column and divide M0 by M3/M4 multiplied by 100 (to get the percentage of Government Created money) . Copy and Paste this column into all cells between 1870 and 2009 to get the full dataset. You will then be able to insert a Chart using your new column of data. You will notice a collapse in Government created money from about 1962.
You will notice that from 1870 to 1970 there was a stable 15-20% Government created money. The last figure – 2009; shows 3.6%. Based on this BoE Data, we have to borrow the other 96.4%.
Summary: Instead of having 20% Government Money in the Economy (debt free), we now only have 3.6% meaning the debt burden on both the Government and Private Sector is greater as aproportion of total money supply. This accelerates the need to borrow more to pay for existing debts which increases inflation and increases the costs and pressures on Businesses as they have to fight even harder for business as the money supply (in real terms) is perpetually tight.
I would argue that if the Government is serious about reducing our debt, it could help now by increasing the proportion of Government created money and use this money (created debt free to the tax payer) instead of increasing it’s debts through Treasury Bond Issues. The fact that they are not shows that they are trying to pull the wool over our eyes and maintain a status quo of ever increasing debt.
I don’t agree with your premise that Fiat Currencies are Politically controlled when only 3% of the money supply is created by the Government, the other 97% is created by Private Banks. It is common knowledge that the lobbying power of the City of London is second to none. When receiving money from Banking Interests it should not be hard to imagine that a Politician’s attitude to Banking may be influenced towards those Banking Interests. A Bank CEO is a Businessman, is it likely that he will allocate Bank funds towards a Politicians election campaign and expect nothing in return?
December 9, 2011
Wonderful news from Brussels.
We should now shake off the shackles of the EU and return to being a proud trading nation like Australia or Canada.
We must avoid going down the EEA or EFTA route, those organisations are simply vehicles used by the EU to extend its control and bureaucracy.
Yes to free trade without the cost and bureaucracy of the EU.
December 9, 2011
Totally agree – if the Euro does NOT break up it will cost us at least 10% of our GDP as the Euro stuggles to recover for 10 years. I put a figure of 20% GDP loss if the Euro does not break up.
If the Euro breaks up then the PIIGS can recover quicker (on average countries recover 5 years after a default).
The break up of the Euro is good for Europe and good for the UK.
December 9, 2011
I put a figure of 20% GDP loss if the Euro does not break up.
Which is why, in my view, Germany is forcing the break up of the Euro
December 9, 2011
All good points – BUT you could go further. Free Trade regulations between Trading Blocks should be permitted only with a BALANCED value of trade.
Politicians – in recent times – have not maintained strong policies to create a level playing field (GDP and Cost Base) within the European Union.
To achieve this – stronger demands should have been made to the developing economies whose market competitiveness depends upon low production cost bases.
The distortion to global production that has taken place due to ineffectual policies prepared by poor thinking civil servants in collusion with their political masters has decimated the economies of North America & Europe.
December 9, 2011
> To my knowledge 87 countries have left currency unions
> since 1945. In most cases they have prospered more after exit.
That’s really interesting – would you expand on that please?
December 9, 2011
The treaty of Rome, facilitated, what the originators had always designed in their febrile imaginations; Spinelli, Monnet and Schuman, would dispense with democracy and it has come to pass.
Accountability, has long ceased to exist or even to have meaning in the commission of Brussels, we are ruled ingloriously by diktat and by faceless bureaucrats. Through which, the sense of an uncomfortable and inimical distrust of Britain and of the British people cannot be disguised – though our Political leaders in Britain have long tried to pretend and camouflage it from the British electorate.
We will always trade and must attempt and make every effort to have mutually beneficial and good working relationships with our continental cousins. However, they should not seek to meddle and dictate national policy in this nation [Britain] of ours, be it economic, political or social.
We must forge and seek our own destiny and ensure that the; security, wellbeing and safety of British citizens, is always of paramount and a fundamental prerequisite for this country’s national Parliament.
Yes, to trade, NO, to alien dominance.
The electorate would provide you with the mandate Mr. Cameron, if you posit the right question. Make your choice, destiny calls [unwelcomed by the imposter] but only those who have true conviction and real courage are able to carve their names into the [British Oak] ‘tree’ of history.
December 9, 2011
With the UK now marginalised and its interests clearly under threat as the bulk of the EU move towards federalism we can now prepare for an exit from the EU. Cameron’s only option now is a referendum to give himself a mandate from the British people which he has so far resisted and which he may not secure.
Perhaps this is a little optimistic an analysis, but why not? At this stage of play Cameron has no mandate from anybody and he really cannot continue with such a situation that threatens to weaken him in the coming months.
Almost certainly a run on the pound can be expected and a weak PM will not help settle the markets.
Goodbye Mr Cameron, you might be remembered with a little more affection than the last incumbent to hold your office.
December 9, 2011
You could add another myth to the list – that the UK’s stance is anti-Europe and is selfishly putting its own interests above those of its neighbours. While most of the EU governments will be supporting the Merkel plan (willingly or not), it does not happen to be in the interests of their people. So if you cosider the interest of the EU to be that of its people, the UK seems to be the only ‘pro-European’ national government among them.
December 9, 2011
Surely saving the Euro is in the interests of the people that use the Euro or are planning to join it.
December 9, 2011
John. You are right in many ways but on the final point, countries leaving the monetary union will also default. This means that their euro lenders, and they themselves will have a tough time of it. It may still be the better option, but could the Greek debt bring down France? Could the other debtors bring down Germany?
December 9, 2011
Don’t forget the UK, which has a lot of Euro debt as well.
December 9, 2011
No doubt France and Germany will blame the UK if, or rather when the Euro breaks up. It is therefore worth mentioning that every poll conducted in Germany this year has produced a majority in favour of the restoration of the Deutschmark. The latest poll was in early October and a lot of treasure has flowed under the bridge since then. That means that even if the markets don’t call time on it soon, Merkel’s instinct for political survival will do so instead.
December 9, 2011
I believe a referendum is now more likely to happen before the next election. Europhiles are already trotting out the usual scaremongering arguments e.g.:
3 million jobs depend on us being in the EU
50% of our trade is with the EU
It will mean the the loss of thousands of jobs
EU regulation has given more protection to workers which would go if we pulled out.
Rebuttal 1 goes some way to scuppering some of these but it is to be hoped that the Eurosceptics are well organised and ready to present their overwhelming arguments in the face of what will be a massive scaremongering campaign well funded by the EU.
Eurosceptics have impressive people such as Nigel Farage, Daniel Hannon and yourself to make the case but I fear you will all be painted as merely right wing nutcases. Generally the Left play the man rather than the ball since they are almost always on the wrong side of the argument and generally don’t have the quality people to match you in rational debate of the issues.
I think David Cameron, realising his stand has overwhelming backing of the British people is likely to now come firmly down on Eurosceptic side along with William Hague. He can no longer sit on the fence trying to please everyone not least his Lib-Dem partners. Up until yesterday it has made him look weak now he looks strong and determined to fight for Britain. This could also be a deciding factor in winning the next election. One thing that made Margaret Thatcher great was the the strong feeling she fought with all her might for her country and we have not seen anything like that for many a year. Thirteen years of Labour doffing its cap to their EU masters on behalf of Britain is in sharp contrast to Mr Cameron’s stand yesterday.
December 9, 2011
A referendum on what? Whether we want to approve or reject the new EU treaty (Cameron has already done the latter)? Whether we should remain in the EU, renegotiate, or leave (which has already been defeated)?
December 9, 2011
and there was I thinking that “higgling” had stopped some years ago, it’s nice to know that not everything has disapeared into history. My garage and workshop can now be “higgledy piggly” again without shame.
Apart from that, the very obvious truths that we have accepted now for some years that certain people refuse to see, but before we all rush out to welcome home the conquering hero lets wait for the bill. There will be a bill, there always is.
December 9, 2011
Mr Cameron has rescued some respect and the city and the UK economy with his veto. France has further exposed it’s dislike of all things Anglo-Saxon and stubbornly refuses to accept France type economic policies are the cause of this current crisis and instead clings to the now worn out mantra that it is all the banks fault. Sarkozy fiddles while downgrades fall on French banks, the euro-zone and the EU like confetti. Merkel has stitched together a package to save the euro that does not do that and will only be useful if the euro is saved. Merkel needs to go to Specsavers because then she would notice that she has locked the stable door but the horse has already bolted.
December 9, 2011
Mr Redwood,
As always lucidty and commonsense from you, as opposed to waffle, fudge and the spurious ‘straw man’ arguments from the proponents of ‘ever greater union.’
My concern is with the electorate as to whether they will take sufficient interest to vote next time for people who truly represent their views, either pro EU or anti?
The comments on here “Cametron has failed us I will never vote Conservative again” are misguided. My strategy would be for the 111 patriots from that fateful day of the 3-line whip to be given a ‘free pass’ and other would be MP’s for the remaining constituencies interrogated for their views on this issue irrespective of party.
If UKIP truly want out they should not target any constituency being fought by a ‘eurosceptic’ whichever party they are aligned to.
This is not a side issue, it is fundamental to the future of this country and its’ people.
I can only wish strength to your arm and your like minded colleagues Mr. Redwood, and thank you for your efforts.
December 9, 2011
Gordon
My MP was one of the 111.
I know UKIP’s stance on this, they have said they won’t stand a candidate in a constituency where an MP voted against the government.
However, I can’t vote for my MP, because a vote for him will be a vote for Cameron.
Cameron appears to be on the side of the UK, but somehow I think there is no need for jubilation just yet, I’ll wait and read the fine print.
Mr Redwood, a very good posting as usual.
December 9, 2011
[…] a break-up of the euro (one Tory MP yesterday called for the disorderly break-up of the euro, while John Redwood, a darling of the right and former cabinet minister, today urges an orderly break-up of the […]
December 9, 2011
Thanks for talking sense, as always!!
December 9, 2011
Here’s another Myth that needs to be exploded.
In 1996 all the EZ PIIGS bond yields were up around 3-7% (where they are now). In order for the Euro to work they needed to converge. To achieve this the ECB changed their auctioning method from fixed-rate full allotment basis to a variable rate tender format and lowered their interest rates. This led to bond yields falling and convergence to be achieved. A side effect of this was to create a credit boom in the PIIGS for both capital and Government bonds.
Between 2000-2007 this rolled along nicely for the EZ – in Greece bdet was hidden by using huge swaps, housing bubbles built up and Government debt built up. Every thing was rosy. The French managed to fund themselves through the money markets and Germany received cheap imports.
Once the US sub prime credit crisis blew up this ‘outed’ the problems in the Eurozone. Initially the ‘open’ EZ meant capital flowed quickly out of PIIGS (eg housing) projects due to no FX adjustments. In the EZ it became apparent banks were under capitalized and Governments too deep in debt. Both Government and bank credit risks rose. Banks reduced their lending and demanded higher yields from Governments. The ECB stepped in to introduce their bad Government bonds for cash policy. This kept the demand for Government bonds up – simply to swap at the ECB. However their was a shortage of good bonds (collateral) for the banks ratios – which pushed the price of good bonds down (and Bunds into negative yields). Nothing was done to deal with underlying problems of debt.
Recently the ECB has now swapped back to the fixed-rate full allotment to fix the collateral problems, but this has pushed the government bond yields back up to the pre Euro levels. In France banks loan payments (through the ECBs inter national ‘target’ system) have rocketed because they tend to fund their banks using the money markets.
So what I am saying is that the EZ is flawed at all levels which means that the ECB is constantly juggling interest rates and bond auctions and other apsects to stop one crisis turning into a catastrophy. But the truth is there will ALWAYS be a crisis in one country – asset bubbles, Government deficits, collateral problems, reverse capital flows, liquidity problems. The EZ will never be settled until it breaks up.
December 9, 2011
Had this been Blair or Brown they would have capitulated by now, so credit to Cameron for sticking to his guns and “just because you are in a minority doesn’t make you wrong”.
History will probably judge this moment as a turning point. To me its all quite simple, if neither side will give way with the tobin tax thing, give the UK people an in out referendum on the EU then get out in an ordlerly fashion making sure the UK retains its free trade links even if that means continuing to pay them Billions for the priveledge.
I’m too young to remember but Heath sold this as a free trading entity, thats all we need, we don’t need unelected burecrats telling the UK what to do – we have more than enough of our own politicians to do that.
As you rightly say JR, the EU sells the UK a lot more than vice a versa, they will want to jeapordise this.
And all this nonsense from political jounralists and liebour politicians about “being on the outside” – what a load of C**P!
I bet the German people wish they were on the outside as well – not sure if their taxpayers have the capacity to pay the bills of the Greeks, Italians and Spanish for the next 20 years if they had an estimate of the possible future consequences of being in the Euro was put to them.
December 9, 2011
Representative democracy is driven by lies; representative democracy attracts those with foetid ideologies and an aversion to the truth. Such amoral people see nothing wrong in accepting gift-wrapped projects supplied by lobbyists who seek to extort taxpayers’ money and soldiers’ lives.
If it were not for our politicians, we would be living in a boring but prosperous country like Switzerland. Of course Switzerland has politicians who in the majority would join the EU, would encourage vibrancy and the construction of ecclesiastical edifices whose purpose is to antagonise and alienate the native population; that is why the Swiss are determined to use and keep their referenda to decide matters which are too important to be left to politicians.
Telling lies in order to persuade us to acquiesce in policies contrary to the best interests of ourselves and our country is simply par for the course when it comes to the EU.
December 9, 2011
I think i tend to agree.
The Swiss model does have the advantage of helping to keep em in check and helping them to individually and as a group to stay on the straight and narrow and faithfully represent, via powers of recall.
Guess what they are not in the EU.
December 9, 2011
correction “they will NOT want to jeapordize this”
December 9, 2011
Hail David. He fought the good fight to defend endowment mortgages, ppi loan deals, Equitable Life, equity release deals, credit default swaps, dark pools, insider trading, block trading, 125% mortages, ninja mortgages, QEs – all debts to be washed away, and savers to be crucified by, 5% inflation.
Poor old Blighty. Our business is spivery, sorry, financial services, shortly to be observed exiting off a cliff too as the eurozone collapses.
December 9, 2011
I agree with your responses. I believe that Cameron was right to use his veto. No doubt he was under considerable pressure from other EU leaders not to do so. He deserves credit for standing his ground.
It remains to be seen how much progress the remainder make with agreeing the Merkel/Sarkozy proposals and whether or not they attempt to use EU institutions to enforce their agreement – which on precedent requires the agreement of all 27 including the UK. The potential for future UK vs the Rest ructions remains extremely high on this issue. If a mutually satisfactory basis for continued UK membership of the EU cannot be secured, then the UK should make for the exit.
December 9, 2011
“That is why we need to negotiate a new relationship with the EU, that does allow us to make more of our own decisions about how we are governed”. Shouldn’t ALL the decisions as to how we are governed be made in the UK??
December 9, 2011
I agree with David Cameron’s decision to veto the new EU Treaty and keep at least some governing powers over ourselves. but who’s interests was he really fighting for. The City of London or the UK? They are not necessarily the same as the City of London is worried about paying taxes on financial transactions to European Countries.
“Asked about an agreement last night to further increase contributions to the IMF, Mr Hague said: “We are always involved in increasing the resources of the IMF if necessary but the IMF deals with the entire world economy, not just the problems of the eurozone.””
– http://menmedia.co.uk/manchestereveningnews/news/politics/s/1467517_britain-isolated-in-europe-as-david-cameron-vetoes-eu-treaty-change
Does this mean that the UK has been pressurised into increasing our contributions to the IMF? Is there now a covert drain of funds from the UK into bailing out Countries such as Greece, Italy, Portugal, Ireland and Spain while making it appear that David Cameron has been tough with Europe?
Did David Cameron protect the City of London interests above that of the UK tax payers or did he protect the the UK Tax payers against the EU bailouts?
Does more contributions to the IMF mean further austerity measures and a further loss of tax payers revenues to the EU?
December 9, 2011
The point is that bluntly, Sarkozy wanted to take ~ÂŁ50bn p.a. of our taxes and spend them on bailing out PIIGS. If we keep the money we can spend it ourselves, and leave the French to sort out their own MES (the acronym in French for the European Stability Mechanism). Oui, MES amis?
December 9, 2011
Yes it is a good question regarding Camerons motives, the City and the UK interest?
Lets reconsider DC if the FTT manages to fly at a Global level?
Still lets take it as a small step forward.
December 9, 2011
It is a disgrace that the facts outlined above have not been allowed to be given airtime on our national broadcaster. Instead, there are myths being peddle for political reasons.
The BBC has long since stopped being impartial, and this is not helped by the fact that it receives funding from the EU – which should not be allowed.
December 9, 2011
It doesn’t receive funding from me – I’m glad to say.
The British people need to wake up to the fact that they are being brainwashed with billions of pounds worth of their own money by the BBC and Europeans are being brainwashed by the EU with billions of pounds worth of our money.
The TV licence is not necessary in these days of digitised media.
The costs of collection ÂŁ126,200,000 of the total licence fee revenue of ÂŁ3,600,000,000 in FY10. ÂŁ8,400,000 is spent on postage alone (no doubt mostly for threatening letters to intimidate the poor and disadvantaged).
December 9, 2011
That just spells it out as it is and I admire you for your honesty JR.
The EU was built on sand, without democratic approval. and it’s going to fail. This country should be looking elsewhere for trade?
December 9, 2011
What exactly does David Cameron mean by:
“Britains Interests” ?
“What was in Britain’s interests, said Mr Cameron, was to win guarantees that in return for backing a 27-nation treaty change to bring in a new “fiscal compact”, the UK’s voice in crucial policy issues on the single market and the financial services sector – vital for the City of London – would not be diminished.”
December 10, 2011
The financial services sector employs 4 million people in the UK, do you not think that preserving that industry from destruction might not be in the national interest?
December 16, 2011
The Financial Services sector pays approximately ÂŁ21 billion.
Chart 1: PAYE and Corporation Tax receipts from the banking sector
(ÂŁ billions)
http://www.hmrc.gov.uk/stats/banking/intro.pdf
When factoring in Government guarantees – paid for with taxpayers money and the privileges attached to issuing (creating) Bank Deposits by Private Banks through money lending and the loss of revenue to the Government from seigniorage, the subsidy is around ÂŁ100 billion.
The financial services sector receives far more than it provides and diverts employment from productive industry. It also inflates House Prices for short term profits and has created the unstable and fraudulant financial environment that we are all being asked to pay for through austerity measures. These Austerity measures are necessary but will further deepen the recession as it will reduce lending and reduce the money supply. The Government will be forced at some point; to create money directly and use this to fund public works, instead of issuing Treasury Bonds, as the interest charges will start to increase on Government Debt.
We need Banks to act as intermidiaries between lenders and borrowers, what we do not need is Casino style gambling with Foreign Debt using Credit Default Swaps and Collaterised Debt Obligations, which provide short term gains for Banks and long term pain for tax payers. The Financial Services sector is only apparently successful because it extracts tax payers money to shore up risky bets made by Banks. It is affectively Nationalised, and it is only weak, ignorant Politicians who allow this to continue. But they are not only to blame as the vast majority of the population still believe that their savings are used directly to lend to someone else, when in fact, only a small proportion of a loan exists as real money (perhaps only 5%). How can we expect to have access to our money in a savings account (or Bank Account) and have it lent out earning interest at the same time? The ability for Private Banks (Publicly subsidised) to expand and contract the money supply is at the heart of our financial troubles. Until this is addressed, all other issues – with regard to EU dominance; are purely superficial. Our economy is already dominated by International Interests – The International Banks in the City of London. We do not want the EU nor International Financial Firms controlling our money supply, or telling us what we should or should not do with our resources.
December 9, 2011
I look forward to watching Cameron ban the EU17+6 from using the buildings owned and used for the exclusive use of the whole EU etc for their meetings. Who is banned from the table? They are.
December 9, 2011
John, keep repeating it daily. Send a copy to the BBC and Guardian as they seem to think the world is going to stop if the Euro fails.
Lets hope this isn’t Roons “peace in our time moment”.
December 9, 2011
And further, the members of the EU that use the euro can stop using it simply by issuing their own coins and notes, making amendments to the titles at the top of account sheets, and using it as a currency with initial parity with the euro – one to one with all other national currencies that used to use the euro until that exchange rate changes.
December 9, 2011
“For Labour, shadow foreign secretary Douglas Alexander said Mr Cameron’s “isolation” in Europe was “a sign of weakness not of strength”.”
Not quite sure what this Labour MP is proposing – by implication we must “go along” to “get along” even it it means doing what Brussels tells us to do, even if it means less Sovereignty, less Democracy and more centralised power. I suppose this is called Socialism – the transfer of wealth from one place another.
I support David Cameron’s rebellious tendencies but still question whether his main motive was protection of the City of London interests rather than the UK as a whole. It is not in the UK’s interests to have a covert funnelling of funds from the UK tax payer into the IMF, which is then sent to failed economies. We are already a near failed economy ourseleves without accelerating the process. We cannot afford IMF contributions.
If we can, why are the Surrey Police seeking private funding for certain services. – http://www.yourlocalguardian.co.uk/news/crime/9306360.Cash_strapped_police_move_closer_to_privatising_services/
“Cash-strapped Surrey Police took the first step towards privatising some of its services this week. ”
???
We can afford the IMF but we cannot afford the Police (in one of the wealthiest counties in the UK) ????
December 9, 2011
Conrad Jones: “why are the Surrey Police seeking private funding for certain services.”
Could we persuade the ACPO to get itself off the public teat too while they are at it. It is a private professional body which seems to finance itself by (charging some?-ed) the public with it’s membership, its fees and consultancy services etc.
A very (questionable-ed) organization.
Reply: Chief Officers do need some representation and ability to plan/discuss items of common interest.
December 10, 2011
@APL
Isn’t the Association of Chief Police Officers a rather different organisation to the Police Service itself ?
If you were in disagreement with a Private Institution that provided funds to key services in the Police, would it not be difficult for the Police to be unbiased?
Would there not be a tendency for the Police to favour the institution from which they derived funding? Funding which would be outside the democratic process.
We are heading towards the exact opposite of a true free market economy; Public Funding supporting the Private Financial Sector and Private Funding supporting a Public Police Service. Now that seems sinister to me.
December 9, 2011
Well done David Cameron and the rest of the conservatives for making a great stand against the eurozone train wreak. Mercozy have done nothing but kick the can down the road and create more smoke. Remember that Sarkozy will gone by May and in all probability the break up will have started by then.
December 9, 2011
An absolutely accurate analysis – what a pity that the BBC continue with their scare-mongering. I actually heard one presenter this morning Ask Rifkind if we not being `selfish’ in refusing to sign up! He was properly slapped down as Rifkind pointed out that it was about our national interest.
Cameron has made a start by vetoing the proposals but he must now go much, much further. I’m not holding my breath though because of the undue influence of Clegg and his motley band of eurofanatics! Come on Dave, you can do it!
December 9, 2011
Again, a sensible explanation. I’m delighted that Mr Cameron as stood by his principles and fought for this nation, I would have preferred him walk entirely away as they are becoming tiresome in their demands. Sarkozy is walking a tightwalk within in his own country and once elections are held he may disappear, so his disregard for the UK won’t really matter one jot. I still believe the euro will fall, but I do hope in an orderly fashion to allow countries to adapt. Greece as yet to face the full impact of the great sell off of it’s infustructure, which I understand as begun, with the Athens airport. My point is will they allow this to happen the people; or do they have no choice? Having and unelected man in charge may not let it happen as they wish. I think Mr Cameron did himself and this nation proud over the last two days, I just hope he continues to do so. However, the one thing I do not like is his advisors, one of Gordon Brown’s old advisors and a Liberal Democrat, the latter who is pro-european, therefore not really to be trusted. How is this allowed to happen? All things said and done, Mr Cameron did well.
December 9, 2011
My brother was working at the Palaces of Westminster when Maastricht was voted in. A certain Neil Kinnock poked his head around the corner and said jubilantly “Remember this day, lads. History has just been made !”
You bet it had. Every one of those security officers has since had his face rubbed in the dirt more or less continuously. The Kinnocks have done exceedingly well in Europe by the way.
Not one of the ‘improvements’ brought by Maastricht needed Maastricht to enable them. We could have done it all for ourselves. The negative changes were almost instantaneous and I was accosted by my first ‘squeegie gang’ within weeks.
The damage over the past two decades has been immense and was entirely self inflicted. I don’t blame Europe. I blame our own people.
Thank you for voting against it, Mr Redwood and thank you for making this vital stand. It is having a huge effect on the political landscape.
December 9, 2011
Based upon the present details being reported – and the Devil is always in the detail – I think Cameron made the right move, but there is much further to go…
December 9, 2011
Prime Minister’s reaction following EU talks in Brussels 09 December 2011
Prime Minister David Cameron has rejected a new European Union treaty saying that what was on offer was “not in Britain’s interests”.
Speaking after overnight talks in Brussels amongst leaders of EU countries the Prime Minister said:
“I said before coming to Brussels that if I couldnât get adequate safeguards for Britain in a new European treaty, then I wouldnât agree to it. What is on offer isnât in Britainâs interests, so I didnât agree to it.
Let me explain why this matters. Of course, we want the eurozone countries to come together and to solve their problems. But we should only allow that to happen inside the European Union treaties if there are proper protections for the single market and for other key British interests.
Without those safeguards, it is better not to have a treaty within a treaty, but to have those countries make their arrangements separately. That is what is now going to happen. Britainâs interests in the European Union â keeping markets open, free trade, selling our goods and services with rules over which we have a major say â all those things are protected. They donât change. But this new round of integration and special powers and surrenders of sovereignty for European countries and others that want to join the euro, they will be carried on outside the European Union treaty.
So we will not be presenting this new treaty, when itâs agreed, to our Parliament. It will not involve Britain. Of course, while there were always dangers with agreeing a treaty within a treaty, there are also risks with others going off and forming a separate treaty; and we should acknowledge that. So we will insist that the EU institutions â the court, the Commission â that they work for all 27 nations of the European Union.
Indeed, those institutions are established by the Treaty, and that Treaty is still protected. Let me make a final point â the decisions taken here tonight all flow from one thing: the fact that there is a single currency in Europe â the euro. Britain is out of it, and will remain out of it. Other countries are in it and are having to make radical changes, including giving up sovereignty, to try and make it work.
The difference between the âinsâ and the âoutsâ â those in the euro and those out of the euro â has inevitably created some tensions within the European Union. Now there are arrangements in the EU treaties to allow different countries to do different things, but these have always been accompanied by adequate safeguards within the treaties.
When we canât be given those safeguards in the treaty, it is better this is done by intergovernmental arrangements, outside the treaty and outside the institutions of the European Union. That is what will happen, and that is what is in Britainâs national interests.
Those countries that sign this treaty, and the agreements they have made tonight, for coordinating their budgets and making sure there is more surveillance of what they do and the fiscal integration that they need, we wish them well because we want the eurozone to sort out its problems, to achieve that stability and growth that all of Europe â Britain included â needs.
We wish them well in that regard and the agreements they have made tonight, some of those may indeed help them to do that. But they key question for Britain was: do you allow that to happen within the European Union treaties if you are not happy with the safeguards you are given? I wasnât prepared to agree that treaty, to take it to my Parliament in that way, and that is why I rejected signing this treaty today. The right thing for Britain. A tough decision, but the right one.”
December 9, 2011
UK 10 year bonds selling at just over 2% interest; only slightly more than German bonds. Greek bonds selling at just under 30% interest!!!!! Anyone think Merkozy has solved the Eurozone problem!!!!
PS French ten year bonds nearly 4% interest.
December 9, 2011
The 2% yield is set by the price paid by the Bank of England as it pursues its QE target to buy more gilts than the government needs to sell to finance the deficit. Don’t gloat about that.
December 9, 2011
I thought this summit was once again going to be the one that resolved the euro crisis.
It doesn’t seem to have addressed the immediate problems and the proposals to move towards the single european state dreamt of by euro enthusiasts are not a guarantee of anything.
Another fudge but hopefully the UK has begun the process of leaving the EU.
December 9, 2011
Brian Tomkinson: “this summit was once again going to be the one that resolved the euro crisis.”
It can’t be solved in the way they are trying to ‘solve’ the crisis. If fact they are not trying to solve the crisis, they are trying to disguise the crisis, that means it will get worse and reappear in 3 – 6 months even if they manage to slap a little more lipstick on these PIIGS
December 9, 2011
Speccie leader 7.11.2009 entitled “Trick or Treaty”.
Our net contribution to the EU in 2008 ÂŁ3.1 billion.
Mr Blair increased that to ÂŁ7.8 billion payable in 2010.
After DC agreed to the 2.2% increase in the EU’s budget recently, I lost the ability to visualize all those noughts.
We are still in the EU.
December 9, 2011
Indeed, and still bound by the Lisbon treaty. I shall not be surprised if a work-around solution emerges binding the EZ nations into a financial dictatorship which includes ‘a minor amendment of Lisbon’ that will be announced as not justifying a UK referendum. And then we really will be in trouble….
December 9, 2011
I suppose that if egomaniac Mr Sarkozy had been less of an anti UK nutcase than he is then he would not have so soured Mr Cameron who, when backed into a corner, displayed that good old fashioned bulldog spirit.
Maybe at last the use by France (CAP) and Germany (balance of trade) of the UK as a cashcow is now coming to an end.
The Labour party will continue to play the man rather than the ball but now Mr Cameron has finally gone up front he is playing a blinder.
December 9, 2011
So how does this protect the City? With the UK out of the way it is now all too easy for all sorts of awkward Euro-zone (for the City) taxes and rules to be passed against “offshore” dealings. Can the City really survive selling the odd insurance policy to run down ex-coal mining communities?
December 9, 2011
But Britain remains in the single market – freedom of services means services from one EU nation can be sold in another.
Britain remains in the EU and there remains freedom of movement. I’d have thought that financial services companies are now more likely to want to move to London to avoid the more intrusive taxation that this new treaty will create (but mercifully not in Britain).
December 9, 2011
The EZ needed the UK. They needed the UK financial sectors’ taxes. Now what do they have to fill the hole left by Government over spending?
The EZ must to press ahead with a Tobin tax in the EU to prove they didnt need our taxes – most EZ banks wil relocate to the UK.
The EZ trying to shift EZ clearing to within the EZ shows it is the EZ that is trying to isolate themselves. They are not addressing the difficult and necessary problems of Government over spending and uncompetitive economies. They will struggle as they quest for their golden money tree.
The EZ will become increasingly less prosperous. Our problem now is stopping EZ immigration as their economies start to slide.
Its going to be good for the UK but bad for the EZ.
December 9, 2011
How long before public opinion in the EZ really turns against their politicians ?
December 10, 2011
“The EZ must to press ahead with a Tobin tax in the EU to prove they didnt need our taxes â most EZ banks wil relocate to the UK.”
Firstly I am no banking expert, and you sound more knowledgable about this than I, but just a few thougths.
Personally I think we ought to be careful with EZ banks relocating to the UK. We do not want EZ Investmant banks or EZ Universal banks with large exposure within the EZ to be intermingling/trading with UK banks ie. increasing UK banking exposure to the euro directly or indirectly at this time. That would be my concern.
Does the UK have bank regulations that deal with this factor?.
I was also surprised that the bank tax levied by George Osbourne applies to banks outside the EEC. I would of thought the US banks were safer bets being backstopped by the Fed and the tax should be the other way around.
The BoE, in my view, should have ordered all UK banks to eliminate EZ sovereign debt holdings, assets, liabilties, going concerns etc whether direct or indirect to the continent. This should of been done when the word PIGS was first uttered in public. Discretely of course.
I personally think the EBA/dutch govt. stitched the UK govt when approving of the ABM Amro takeover by RBS. They knew it was a basket case, certainly people in ABM Amro did!. And I find it hard to beleive they wouldn’t have talked to the dutch government about this.
The Dutch court then blocked LeSalle bank from being divested off from ABM Amro as a pre requisite to the Barclays takeover. I wonder why? Then ABM directors resigned days later saying they preferred the barclays bid after RBS bought it!
A lack of UK prudential banking regulation and supervision of the books of UK banks has been an unmitaged disaster. Apparently their was sniggering by EU officials when Darling attended an EU finance meeting after a run on northern rock.
Anyway, looking forward to reading the RBS report.
PS, John, I remember you asking Brown at PMQ’s where all the money had gone in RBS mentioning their reduced balanced sheet. Has that money been added to the taxpayer as liabilities ?
Reply: No, the RBS balance sheet has shrunk on bhoth sides, liabilities and assets. The state, of course, is the proud owner of all the loans and dodgy assets as well as the good items.
December 9, 2011
I cannot see what has changed.
Itâs yet another âchequeâs in the postâ event designed to impress bond holders and financial markets (and not very well by accounts).
As far as the UK is concerned we must watch that nothing more is sent to the IMF. While the BBC waffles this issue is being ignored.
December 9, 2011
We really must guard against liars, wherever they come from.
I absolutely detest snivelling, duplicitous, political opportunists, and the Labour leader, Ed Miliband has shown himself to be one of the worst.
He criticises David Cameron for suposedly allowing himself to be sidelined and isolated on Europe, so we must consider what measures the Eurozone countries are actually trying to push through. Essentially it amounts to a package of austerity measures, with strict, central controls over budgets and spending, and it seems, not so much emphasis on growth.
On the domestic front, Miliband argues just the opposite, that the coalition government is ‘cutting too far, and too fast’.
Mr Miliband can’t advocate one thing in one place, and a totally opposite position in another. That exposes him as a con-man and an opportunist who is not fit to govern, but it also exposes the danger that comes with such people. They would have us subscribe to all manner of uncompetitive, restrictive, bureaucratic legislation, and it is they who really don’t get it!
Tad Davison
Cambridge
December 9, 2011
On point No. 1 why is Nick Clegg repeating the ‘3 million British Jobs depend on us being at the heart of Europe’ mantra to anyone pointing a tv camera in his direction .
December 9, 2011
Now there can no longer be any good reason for the government to introduce a Bill to approve the radical EU treaty change agreed by EU leaders on March 25th:
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 certainly no good reason for a patriotic MP to vote for any such Bill.
December 9, 2011
Slightly off topic, but I must put my hands up and say well done to the PM for finally showing some gumption and standing up to the Merkozy double act.
I hoped he would stand firm, but doubted that he would do so when the moment came, but he did exactly what he said he would. Politician in doing what he said he would shocker, as the Sun might say.
I believe the right wingers have just cause to be relieved and energised today. It’s not everyday that the EU one-way ratchet is stopped in its tracks.
The only way from here is out and out for good!
December 9, 2011
Euro-sceptics unite or die,
chastise all centrics when any lie,
Euro-centrics divide and rule,
scorn all sceptics like any fool.
Our attitude to Europe ?…
“Fog in the channel – continent isolated”!
December 9, 2011
Thank you very much Mr Redwood, because it is due to you and your like minded colleagues, all your speeches, your excellent daily articles on this site and all your relentless battlings in Westminster, that Mr Cameron has finally taken the decision he has.
Those of you in Parliament who have consistantly pushed and pressurised for reform of the EU are slowly turning the tide towards a more democratic, prosperous and free future and you deserve our gratitude.
December 9, 2011
In my view the summit was a sham and most of the eu attendees knew it, including the UK.
To me all the signals from Germany are that it will not accept mutualisation within the Eurozone as it will be footing most of the bill. Instead it will force mutualisation across a much wider scope by allowing the Euro to fail. All of these summits do is fill the time.
This will mean that it will force the UK, the U.S., China and, of course, private investors to take the hit.
I donât believe there will be a treaty as I donât believe there will be a Euro.
That explains why the UK will not give up any regulatory powers as this would be futile (and explains why Mr Clegg so readily agreed with the UK veto).
The BoE is advising banks to brace themselves. I suspect the Euro will be finished when many bonds mature in the middle of 2012, around about the time of the Olympics. Then, we will all be for the high jump.
NB the BBC coverage has been disgusting today. They talk of âTory backbenchersâ forcing the PMâs hand as if these âTory backbenchersâ were some kind of troublesome rump. The Conservative Party gained the most seats at the last election. These âTory backbenchersâ are, in aggregate, the British People.
The BBC is a quango and like most quangos, it recoils at democracy.
December 9, 2011
It is pretty obvious that Sarkozy/Merkel did not want a treaty by 27, or even by 17. A treaty amending the EU Treaty would require an intergovernmental conference and an IGC can be convoked by a simple majority. If the Eurozone has a fraction of the solidarity it claims to have, nothing could have been simpler to arrange than convoking an IGC. The normal tactic them would have been to build up the pressure and sense of inevitability to overcome UK resistance. This would also however have left time for others to have second thoughts and Cameron probably acted in too much good faith in making his position so clear at such an early stage, leaving the others to proceed as they wished by a faster route rather than leading them up the garden path to a refusal at an IGC.
Even the non-EU treaty now contemplated is fraught with difficulty; it may have provided an easy way to get a cheap headline about British isolation, but the 17, 23 or 26 is an unstable alliance of the impecunious led by the imperious. The notion that Greece or Italy can immediately comply with the obligation to reduce to a 0.5% structural deficit and keep within 3% overall is simply unreal. We have been here before, with the Growth and Stability Pact and not even Germany and France could keep to that.
It is far from clear that this lot will form the sort of scary bloc the BBC is talking up; contrary to the BBC line, this is nothing new, the UK already being excluded from the Eurogroup economic discussions.
Insofar as this group might throw its weight around beyond the stated purpose of Eurozone budget discipline, some of those inside have plenty to fear; Ireland’s corporate tax rate has long been regarded as an intolerable insubordination by France and if I were the Irish Finance Minister I would be feeling very nervous indeed as it is certain that the price for keeping the credit lines open to the Eurozone will be compliance with a demand to end this embarrassingly successful example of tax competition at work.
December 9, 2011
Cameron blocks change (according to Dutch prime-minister)
British Prime Minsiter David Cameronâs demands for âa series of exonerationsâ for Londonâs financial services were insupportable, his Dutch counterpart said. âLondon would then get an advantageous competitive position above Amsterdam, Luxembourg, Paris and Frankfurt and thatâs going too far.â
My take is that Cameron probably knew this in advance, so acted on purpose. Otherwise it would betray a rather naive negotiation position.
December 10, 2011
A recent speech by Steve Baker MP (Conservative) in the House of Commons :
“Why are we in this debt crisis? I have just checked the M4 money supply figuresâI am sorry to return to aggregates, but needs must. When Labour came to power the money supply was about ÂŁ700 billion and it is now about ÂŁ2.1 trillion, so it has tripled over the past 14 years. Unfortunately, most economists talk about money flowing into the economy as if it were water poured into a tank that found its own level immediately, but what if it is like treacle or honey? What if it builds up in piles when poured into the economy and takes a while to spread out? What if that money was loaned into existence in response to individual choices led by the excessively low interest rates pushed by the central bank? What if it was loaned into existence in particular sectors, such as the housing sector, where prices have more than doubled over the same period, and what if it was the financial sector that received the benefit of that new money first? Would that not explain why financiers and bankers are so much wealthier than everyone else, and why economic activity and wealth has been reorientated towards the south-east?”
Thank Heaven at least one MP is paying attention.
December 10, 2011
Mr Reade,
1. Did you have a problem with the first point?
2. Mr Reade you should have left this blank too, because this response adds nothing to this debate.
3. Why?
4. 3.7 per cent growth old son
5. Hey! You are the smart guy, enlighten us with some facts for a change. As in a ‘Monty Python Sketch’ “argument cannot consist of just gainsaying.” Do some work.
I think on balance, that I will continue to support my MP, who does have a proper job, and a proven track record, both in business and politics, and also in the field of education..
I am really annoyed with myself for condescending to respond to a ‘troll’ but hey we are all human, and prone to error, except, of course, you Mr. Reade.
December 10, 2011
This is beginning to feel like to the run up to the fall of the Berlin wall. When will the EU learn that you can’t buck the markets?
Given the balance of payments defecit we have with the EU and their dependence on UK imports of cars and wine I am not sure the UK has much to fear from the solution which the BBC seem to be obsessed with. There are plenty of countries in the Commonwealth who would be delighted to trade with us.
I also wonder how much richer we would be if we hadnt wasted money on the failed European experiment and subsidising French agriculture?
December 10, 2011
Well, well. The 26 are eagerly bricking themselves into a true Correctional House of Horrors, complete with fiscal dungeon for the naughty boys, presided over by dominatrix Frau Merkel and her big whip.
Though they are keen to don the fetish suits and chains now, it won’t be very long before the sounds they emit as Frau Merkel’s merciless whip lashes them turn from whimpers into howls of outrage, and they have no option but to break down the walls as they struggle to get out. All pain and no pleasure ain’t what they imagined they were in for, but that’s the inevitable outcome, and it’ll all end in tears
December 10, 2011
Did Cameron “sprach nein” to avoid a referendum which might risk decades of unpopular plans so obviously drawn by unelected mandarins? The coalition should be praised for proving without any shadow that whitehall runs the country and politicians merely add that touch of colour like wallflowers near the lawn. Dark is the deed done by any representative who ignores the free will of the people but whose people do they represent? You may ask for England to fall on its sword to save the Franco-German empire but read history books and then look at europe and its politicians with fresh and informed eyes. To coin a phrase from kissinger – they don’t have friends, they have interests.
If you want to be run by the EU, the northern line in London goes to Waterloo (southbound) and the Eurostar runs pretty frequent. One way tickets are cheaper than returns as I recall reading. Bon Voyage mein hopefuls. đ