The EU, Euroland and Germany drift


            Germany’s PR system has delivered uncertainty and a log jam at the heart of Euroland. Mrs Merkel is way short of a majority in the Budesrat, where the SPD still have a strong position. She has 311 seats in the Budestag, compared to the 319 seats majority of the Green/red/ left, were they ever able to act together. Today the SPD debate with themselves whether they could consider a Grand Coalition with Mrs Merkel.

            The price of coalition for Mrs Merkel, whether she tries the SPD or the Greens, is similar. They both want a Minimum wage and greater labour market regulation. They want a continued drive towards dearer energy and renewables. They want higher taxes on the higher earners. They want higher domestic state spending at federal and especially lander and  local level.

               The German election has broken the FDP, followed by the resignation of its leader. It has led to the resignation of the leaders of the Green party. The leadership of the SPD contains people very unwilling to enter coalition. They are apprehensive about being very junior partners.

              Meanwhile the EU seeks approval for higher spending than planned, despite the political pressure of a smaller budget. It seeks more assistance to broken banks in Euroland. An impecunious union, supported by some states that are themselves financially very distressed only knows one song – higher taxes.

                The tax, regulation and energy plans of the EU, buttressed by the left of centre German parties, is bad news for Germany’s motor and manufacturing industry. It means they will want to cling to the Euro for longer, as  a weak Euro from Germany’s point of view will offset some of the competitive damage done by the other policies.

                 The UK has to reassert its position that it will not help pay for a higher future EU budget, and will certainly not provide bail out money for Euroland banks. The Germans have been paying a 5.5% tax surcharge or “solidarity payment” for the expensive currency union of East and West Germany. They have no wish to start paying an even larger extra tax as a solidarity payment for the Euro. Nor will many of them welcome the idea of bailing out Euroland banks.

                    The truth is, in a single currency you do have to help the neighbours, as you share a bank account with them. The UK has wisely stayed out, so we must make sure not a penny of our money goes into trying to support such an uncomfortable structure.


  1. Brian Taylor
    September 27, 2013

    Unless we invoke article 50 of the Lisbon treaty we will have no control over the following.


    Renewable tax on electricity

    Human Rights law’s


    Farming subsidies

    I would like the MPs we vote for to do the work they paid for!

    1. Mike Stallard
      September 27, 2013

      Invoke Article 50 all you like.

      First of all, you need to convince the President of the Commission to introduce a bill into the Hemicycle to allow us to leave. If you read his ideas on the future of Europe in his State of the Union Speech to that very assembly this year, you will soon see that, not only does he want to keep Euroland together, he wants to extend EU powers to States which are not in the Euro too.
      Then you need to have a parliament here which will allow us to invoke that very magic article. At the moment there are precisely NO MPs who will do that.

      At the Euro elections next year, I have every intention of voting UKIP. But it will take more than an elecion to get us out of the EU, believe me.

      1. Denis Cooper
        September 27, 2013

        “First of all, you need to convince the President of the Commission to introduce a bill into the Hemicycle to allow us to leave.”

        Where have you got that from?

        Article 50 TEU starts on page 43 here:

        The EU Parliament would be involved, to the extent that it would have to give its consent to the withdrawal agreement:

        “It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.”

        But there would be no question of having to ask the EU Parliament to allow us to leave, which if necessary could be done without having concluded a withdrawal agreement:

        “The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.”

      2. Lindsay McDougall
        September 28, 2013

        No Mike, to leave we simply have unilaterally to repeal our Acts of Accession to the Maastricht, Amsterdam, Nice and Lisbon Treaties. We will be out in no time or allowed to negotiate on a basis that is acceptable to us. In our position, it is necessary to follow Mao Tse Tung’s doctrine, that (if necessary) power comes out of the barrel of a gun.

    2. uanime5
      September 27, 2013

      Human rights law has nothing to do with the EU. Even if the UK leaves the EU we will still be bound by ECHR decisions.

      1. Edward2
        September 28, 2013

        I don’t know why you keep peddling this myth Uni, as it is wrong and I suspect you really know it is untrue.

  2. Richard1
    September 27, 2013

    The German election is a real lesson in what a nonsense PR is. We won’t know for weeks who the real winner is. In the UK, the higher possibility of hung parliaments – since Labour need so few votes to be the largest party – means the politicians most likely to be in office are the least popular party – the LibDems!

    1. Peter van Leeuwen
      September 27, 2013

      @Richard1: What is the problem with a few weeks? Real democracy cannot operate that fast. Elections are not some military coup! Care has to be taken to translate the wishes of the majority of the electorate (being of the essence in a democracy) into a meaningful program of policies.

      1. lojolondon
        September 27, 2013

        Yes, just like Belgium – nearly a year with no government. Having a king would be a better system than that!!

        1. Denis Cooper
          September 27, 2013

          They’ve got a king! It is he who appoints the governments, including the caretaker government during any period when the politicians are unable to agree on forming a proper government.

    2. Mike Wilson
      September 27, 2013

      @Richard1 ‘ … In the UK, the higher possibility of hung parliaments – since Labour need so few votes to be the largest party – means the politicians most likely to be in office are the least popular party – the LibDems! …’

      Yes, our first past the post system is SO much better than PR!

      Still, as long as we have a system where a government has a large, absolute majority based on 35% of the vote – that, presumably, is fine by you. Very strange.

  3. Bazman
    September 27, 2013

    A bit of a blow today fantasists. This is not the BBC by the way and is also avalible on the BBC and many other news sources. The report is a comprehensive analysis for policymakers, written and reviewed by some 900 scientists who looked at more than 9,000 studies on climate change. This was NOT wrote by the BBC, but merly reported by and as you can see by SKY. Rupert Murdoch who is in no way in collusion with the BBC. As far as we know, but maybe the rays are getting theough huh!?

    1. libertarian
      September 27, 2013


      Do you believe in fairies and unicorns too? There has been NO warming for 17 years.

      The IPCC report ( if you actually read it ) says that their models were WRONG and that their predictions where WRONG. What they are now saying is that something that has never figured in all those scientists models is now causing this blip. They also tell us that Britain will be colder…WTF ? They really are just making it up as they go along.

      Your desire to believe them I’m afraid shows how lacking in open minded free thought you are.

    2. Edward2
      September 27, 2013

      You need to keep an open mind and not get taken in so easily.
      These are the same 900 scientists who wrote many similar previous articles, which are peer reviewed by each other and are based on the same computer models.
      The resulting statistics are proving to be wrong, with no warming since 1998 and no islands underwater, nor the glaciers gone as boldly predicted.
      Its called group think and its happened before in history.
      Time will tell, as even the IPCC said if we get 20 years of no warming it will be a puzzle for them.
      So just 5 years to go.

      1. Bazman
        September 29, 2013

        I 900 scientist said it was not happening and was all a fantasy by the left wing and increase wages by destroying b business you can be sure it would be took as gopasl truth by many. As 900 scientist wrote it and was scientific. It is not about science for many, but about politics. Mainly right wing politics and a race to the bottom to laughably compete with the third world on conditions and pay. A race they will have no part in or so they think.

  4. lifelogic
    September 27, 2013

    “They both (SPD and Greens) want a Minimum wage and greater labour market regulation. They want a continued drive towards dearer energy and renewables. They want higher taxes on the higher earners. They want higher domestic state spending at federal and especially lander and local level.”

    In other words they wand to go in entirely the wrong directions for jobs, growth and the economy. A direction Cameron has foolishly been following in the UK, in the main.

    “The UK has to reassert its position that it will not help pay for a higher future EU budget, and will certainly not provide bail out money for Euroland banks.”

    “Reassert?” just start to assert would be good. Cameron & Osborne have thrown billions away on soft loan and payments to the PIGIS, payments to the EU and the IMF. Doubtless Cameron will continue on this path, that is clearly where his heart and soul lie. After all, in his strange mind, we don’t want a “Greater Switzerland” for some reason that Cameron cannot quite bring himself to explain to the nation.

    Let us hope the sensible (perhaps just 100 MPs) can turn him round 180 degrees on this and nearly all the other issues:- energy, the green/renewable nonsense, over regulation, the EU, tax borrow and waste, warmongering, payday rip off loans, HS2 and get some real competition in banking and energy.

    1. Bazman
      September 27, 2013

      We already have a minimum wage and cheap labour Conservative like yourself have yet to tell us why this is such a bad thing and why the state should make up the shortfall in low wages such as funding rent and child support by higher taxation of low pay to bring them up to subsistence levels in order to fund this competition of poverty pay. An explanation of how this also fits into a middle class society such as your Greater Switzerland fantasy is as yet unexplained? Maybe if you just repeat it some will stick? Not here alas, Rigsby.

  5. Leslie Singleton
    September 27, 2013

    Very good till the bit about Eurozone countries sharing a bank account, which I don’t quite follow. Surely that phrase connotes a joint bank account just as it would between husband and wife but best I understand a Eurozone country cannot unilaterally write cheques on any kind of single account at the ECB or anywhere else. Each must of course have an account at the ECB but that’s slightly different.

    Reply When Greece or Cyrpus runs out of money in its bank account it expects top ups from the other members and seems to get them. The other members have to stand behind demands on Euros anywhere in the zone, otherwise there is no longer a single currency

    1. Leslie Singleton
      September 27, 2013

      Your Reply is true as written as it always is but does not mean that a Bank Account is shared.

      1. Alan
        September 27, 2013

        I agree with Leslie. I think it’s quite wrong to imply that any country can write cheques on a joint account or in any other way impose debts on the rest of the Eurozone. As I understand it the treaty explicitly makes the point that each country is responsible for its own debts.

        Reply The money is recycled thro0ugh the ECB (back door) and through the loan programmes (front door)

      2. lojolondon
        September 27, 2013

        Leslie but stop being pedantic, you know what John means. As he said, one country runs up a bill and another country gets to pay that bill.

        1. Leslie Singleton
          September 27, 2013

          The simple point is that to talk (and especially for someone like John to talk) as if there were a shared single joint account or anything even similar would be to give the impression that there is 100% trust and agreement in the Eurozone , which there is not.

      3. lifelogic
        September 27, 2013

        Well it is virtually the same in practice.

      4. Acorn
        September 27, 2013

        Leslie, there is no shared bank account because there is no Euro Treasury. That is the number one problem. There is a Euro Central Bank (ECB), that issues the currency, but no central Treasury, no proper Chancellor of the UK Exchequer or Secretary of the US Treasury, with the power to mint currency and budget the spending of it into the private sector of the whole Eurozone.

        His own central bank can issue new “reserves” AND swap them for 28 government’s debt instruments, Guilts, to increase or reduce “liquidity” and hence set an interest rate to boost or calm commercial banks activity. That is if he chooses to issue debt to the private sector, he doesn’t have to, his own central bank could convert them to currency and “reserves”, before the ink has dried on them.

        A currency issuing Treasury and its Central Bank, can never go broke in its own currency. That is why Mr Draghi, the ECB boss, said, “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” he said, adding: “believe me, it will be enough.”. These are words that should have been said by an elected Chancellor of the Euro Exchequer.

        Reply There is a shared bank account at the ECB, where surpluses deposited by e.g. Germany are recycled to deficit countries. UK sovereign bonds are “Gilts” – the government does not accept it is guilty!

        1. Acorn
          September 27, 2013

          Persons behind me are saying I left out the following. JR and his fellow gold standard neo-liberals would deny all the following.

          Taxes do not pay for anything, they are used to remove spending power from the private sector, when government and private sector spending is likely to cause inflation. Too much money chasing too few goods.

          The private sector can’t pay taxes in the only currency the government will accept, its own, unless it has previously spent enough of its money into the private sector before hand.

          The private sector can’t buy government debt in the form known as Gilts, unless the government has previously spent enough of its money into the private sector before hand.

          PS The odds on these two posts getting published are quite high JR

  6. Peter van Leeuwen
    September 27, 2013

    It is not just what the SPD or Greens want, it is what their voters want. The problem besieging Germany is forming a government from parties for which a majority or even large majority of the electorate have voted. It has got a name: democracy. To distinguish it from the UK – proportionally representative democracy. I know no better system.

    1. Sebastian Weetabix
      September 27, 2013

      I do. Swiss direct democracy. It prevents systemic capture by Gramscian Marxists, which is exactly what has befallen Europe.

      1. Peter van Leeuwen
        September 27, 2013

        @Sebastian Weetabix: I don’t know if the Swiss system would work so well in Germany. Their most recent experience with referendums are 1934 and 1936, referendums called by a certain politician who made British leaders rightfully claim that referendums are a tool for demagogues and dictators.

        1. Mark B
          September 28, 2013


          There is a flaw in you argument. You quoted from the very people (leaders) who are most likely to lose out through Direct Democracy.

          Switzerland has been an island of calm surrounded by stormy seas. It cannot be down to the mountain air.

          1. Peter van Leeuwen
            September 29, 2013

            @Mark B: You’ve got a point, it does work in Switzerland. In fact, Switzerland, as a multi-lingual federation with a single currency, may hold some lessons for the further construction of the Eurozone. Whether it should be direct democracy and whether this could be replicated on a much larger scale I wonder. For instance, pure direct democracy would put the Malthese at a great disadvantage to the Germans, as there are so few people in Maltha.

    2. ian wragg
      September 27, 2013

      Yes and they are a minority same is the limp dumbs in the UK. The tail wagging the dog.

    3. David ashton
      September 27, 2013

      Peter, the problem with this particular German election result is that >50% of the electorate voted for a right of centre party. But because of the 5% rule, the German people will end up with a coalition government which includes either an extreme left party (Green ot Linke) or with a more moderate left party but which would make up ~35% of the coalition.

      With regard to the UK, our first past the post system served us well when we were effectively a two party country, but with the rise of the LibDems, UKIP, Nationalists and others, we need a rethink.

      1. Peter van Leeuwen
        September 27, 2013

        @David ashton: You think that FPTP has served you well because you don’t know the alternative. But the swings from Labour to Tories and back to Labour etc. has meant real severe swings in direction of the country’s policies where most companies and society as a whole may be much better served with a steady and reliable policy direction over a long time, much longer than the 5 year period between elections.

      2. Richard
        September 27, 2013

        AV is the answer.

        A very good system, and a great shame it was not promoted by by the Conservatives.

  7. margaret brandreth-j
    September 27, 2013

    We now ( and NB how arrogantly I say we) can collide protons in a particle accelerator to a billionth of a second. Imagine that! The problem is the big ‘we’ . There are only a few who could sort out problems and make the political problems tick over well. If it wasn’t due to the bulk of awkward s**s who are running the Countries with high sounding degrees and positions to match, yet unexplained low IQ’s, all could be more prosperous. I can only just grasp atomic structure in it’s pink cows and blue sheep simplest form, yet the Country takes the credit for progress.
    Tony Blair advocated education, education, education. I though this was a good idea to make future generations understand progress and collaboration. My daughter studied European business studies and languages ,enthusiastically informed me about European enlargement and gained a degree. She can’t even remember how to speak the languages now and doesn’t understand business , due to lack of use. A Nurse straight from university cannot understand the simplest physiological measurement.. a blood pressure! One comment was “what is this diastole business , I am not a bloody doctor”
    Why are we wasting money putting these people through university when they come out with abilities to match the worst?
    We need to progress. Children need to be taught , how to progress, how to be politically involved , how to think , how not to let the establishment stand on their abilities and not let those through who denigrate their own lack of achievement through under the guise of humility , to positions of control.

    1. Mark B
      September 28, 2013

      “Why are we wasting money putting these people through university when they come out with abilities to match the worst?”

      Its the 21st Century equivalent of “Tractor production” figures. Socialists are obsessed with figures, as you can almost make them say whatever you mean.

  8. A.Sedgwick
    September 27, 2013

    This piece highlights the misguided Conservative Party view of our relationship with Continental Europe. I could not care less about German elections but because of our membership of the EU we as a country and taxpayers are inevitably affected. Whilst we are a member of the EU we are de facto a federal partcipant and the only solution is our exit. Expectations of meaningful negotiations are deluded and preposterous.

  9. Denis Cooper
    September 27, 2013

    “The UK has wisely stayed out”

    For the time being, but it is still intended to be no more than a temporary delay. As we know, Rome was not built in a day, and the eurocrats envisage that their new political construct will endure for long enough to force even the recalcitrant British to finally submit and accept total subjugation.

    As a Commission Vice-President, Margot Wallstrom*, once put it, “an opt-out is also an opt-in”; it just a matter of time before any “opt-out” is surrendered.

    And our government is helping this process along: “The UK has wisely stayed out”, but the UK is not helping any other countries to stay out – the Tories’ allies in the Czech Republic, the ODS, called for their country to be relieved of the legal obligation to join the euro, but Cameron remained silent, and he agreed to that legal obligation being imposed on Croatia through its treaty of accession to the EU – and nor is it helping any countries to get out – at one point the Dutch Prime Minister Rutte called for EU treaty changes so that a country could leave the euro without having to leave the EU altogether, but once again Cameron remained silent.


    Margot Wallström, Vice-President of the Commission:

    “First of all, on the Charter of Fundamental Rights, the European Commission does not like opt-outs. We would have preferred not to have any opt-outs. But what was the real political choice here? It was a weakened charter without legal force or a charter that is legally binding for the EU institutions with an opt-out, or preserving the full text of the charter. Then, I prefer to have a charter which is legally binding, and an opt-out is also an opt-in so this is not cast in stone.”

  10. Brian Tomkinson
    September 27, 2013

    Today’s Telegraph prints: “Britain could be forced to contribute €7bn towards a €50bn bank bail-out fund, under highly controversial plans being discussed by the European Commission.”
    You had better get working if you really mean : ” the UK will certainly not provide bail out money for Euroland banks.”
    Is the EU going to be formally discussed at your Conference and is that nice Mr Farage still invited to speak at the Bruges Group’s fringe meeting?

  11. Chris
    September 27, 2013

    With regard to the whole fiasco of the EU budget, and how Cameron will inevitably have to “roll over”, see the excellent eureferendum blog which has been following this for many months. There is nothing Cameron can do, and the following year’s budget is raising problems too – crunch time mid October apparently. (cites euroreferendum blog which I have not checked out ed)
    “EU Budget: sad little ripples”
    It was last May when, metaphorically, we put to bed the first installment of the €11.2 billion additional payment for the 2013 EU budget, comprising an extra €7.3 billion, as set out in Draft amending budget No 2.

    “We have not heard the last of this”, we warned in the closing words of our report, having already forecast that a second tranche of €3.9 billion would be required, with an agreement expected after the summer break.

    Well, it’s after the summer break so here we are, as predicted, facing up to the prospect of paying the EU another £400 million or so, bringing to about £1.2 billion the additional sums the UK is having to pay towards the current year’s EU budget.

    After Mr Cameron had put his foot down earlier the previous year, and had refused to pay any increase on the budget, the amendment budget represented a humiliating climb-down for the British prime minister. Predictably, therefore, we are going through the ritual of opposition, with the UK government saying it objects to the extra sum. The Mail in particular, is doing its fair share of huffing and puffing.

    In fact, though, huffing and puffing is all it is. EU Budget Commissioner Janusz Lewandowski is quite blunt about needing the money. There is a budget gap and the Commission has bills to pay, which it cannot carry forward. The Member States are going to have to pay up…”.

  12. Bert Young
    September 27, 2013

    I thought your comments reported in the press today on the position the UK should take in not reacting to the EU request to pump more funds into its profligate spending , were timely and very much to the point . How utterly stupid it is to force stringent demands on the likes of Greece , Spain , Portugal , Ireland etc , and at the same time not adopt the same discipline for itself , is laughable and unbelievable . I hope the political outcome in Germany will not succumb to this request . Cameron has to be tough and say ” Enough is enough ” .

  13. lojolondon
    September 27, 2013

    I have no pity for Merkel, she has damaged the German economy with her steadfast drive to keep the EU and Euro zones together.
    I am afraid there is going to be a lot more pain before the Euro fails and European economies can begin to repair themselves, so I welcome anything that brings the day of reckoning forward.

  14. Tad Davison
    September 27, 2013

    Aw heck. Germany could pick up the tab for a failing system. See if we care!

    Tad Davison


  15. Nick
    September 27, 2013

    Let’s see. No uk money has gone to the eurozone.

    Not quite the truth. It has. Lots of money has gone to Cyprus. Uk taxpayers money has gone there, so when you say not a penny must go, you’ve already failed.

    The uk has lots of tax payer’s money at the IMF, and that’s gone to Cyprus.

    1. Lindsay McDougall
      September 28, 2013

      Is it not true that Christine Lagarde has perverted the purpose of the IMF, turning it into a mission to rescue the euro, not help indebted countries? Should she not therefore lose her job?

  16. Antisthenes
    September 27, 2013

    It is my belief that the euro-land crisis is far from over and there are crises building up to occur in other western states as well. Because of the magic money tree policies too much money has been wasted or malinvested and not enough of national systemic flaws in the economies of western states have been properly addressed. Social democratic policies and practices continue at economically unsustainable levels coupled with too high taxes and bureaucratic interference. 2014 the centenary of the start of WWI appears to me when all these crises will blow up in our faces.

  17. Bazman
    September 27, 2013

    It seem like the unions, tax, regulations, and porous borders are causing real hardship for Germans and their industries. The sooner they join in the race to the bottom the sooner we will have some competition and they will be better off. Ram it.

  18. Mark J
    September 27, 2013

    So will the Government be giving into the EU’s demands for an extra £450 million to “stay afloat”

    It seems the EU do not understand the word austerity nor accountability.

  19. uanime5
    September 27, 2013

    They both want a Minimum wage and greater labour market regulation. They want a continued drive towards dearer energy and renewables. They want higher taxes on the higher earners. They want higher domestic state spending at federal and especially lander and local level.

    So by pure chance they just happen to want all the things certain Conservatives dislike. If these policies cause the Germany economy to improve will they stop criticising them and accept they’re not bad for the economy?

    Meanwhile the EU seeks approval for higher spending than planned, despite the political pressure of a smaller budget.

    It’s calling for a higher budget because most of the political pressure is for a higher budget. That’s why MEPs didn’t approve the lower budget Cameron claimed he negotiated.

    An impecunious union, supported by some states that are themselves financially very distressed only knows one song – higher taxes.

    As opposed to the UK’s song of higher taxes and quantitative easing.

    The UK has to reassert its position that it will not help pay for a higher future EU budget, and will certainly not provide bail out money for Euroland banks.

    As long as 50% of the UK’s exports go to the EU the UK will have to pay a higher budget and bail out euroland banks. As long as the UK is so dependent on the EU we will have to bail out the eurozone nations that are having financial troubles.

    1. Lindsay McDougall
      September 28, 2013

      The EU exports more to us than we do to them, so if they start a trade war with us, their loss will be the greater. Therefore, they won’t start one. Therefore, we don’t have to bail out the Euro zone. QED.

  20. Max Dunbar
    September 27, 2013

    The Germans’ 5.5% tax surcharge for currency union between east and west cannot be conflated with bailing out other countries. The alternatives to unification by cash were tried in 1939. The value that most Germans put on a unified nation outweighs the price. Large areas of pre-war Germany still remain under foreign occupation. The return of these vast territories for a further 5.5% tax surcharge would be cheap at the price. However, part of the reasoning behind EU political union at any price is the fear that a nationalist-minded Germany could make renewed demands to have these territories restored. The current EU German hegemony is deemed preferable.
    Last week I asked an SPD activist why he described the NPD (National Partei Deutchland) as (extreme ed). He said ‘they want Germany for the Germans’.

  21. Lindsay McDougall
    September 27, 2013

    “The truth is, in a single currency you do have to help the neighbours, as you share a bank account with them.”

    The corollary is that, if you haven’t got the resources to pay for the neighbours’ debts, then you have to some nice friendly person to print the money to pay for them. This is where the ECB comes in, with its friendly CEO who says he will do “whatever it takes” to save the Euro. When this process starts in earnest, expect support for the AFP in Germany to rocket.

  22. Mark B
    September 28, 2013

    Merkel, you use a phrase by Lord Tebbit, is in Government but, not in power.

    She may have won the election but will find it hard forming a government. Some serious compromises are going to be given for their coalescence – if that can be done.

    Her government, and therefore Germany, may be much weakened. Sad that the continent lacks a real leader to step up to the plate.

    Do we not have shares in the ECB ? If so, are we not liable for its, and therefore the Eurozones debts ?

    Reply We have a very small shareholding, with rights to subscribe for a larger one if we ever joined the Euro. No, we do not have to underwrite the ECB’s debts.

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