The Euro meeting leaders will not attend


    Today the Leaders of the Euro zone should be meeting to sort out their position ahead of another week when the markets can test their approach to country debt. Instead, they are keeping their disagreements to the beach and to the odd phone call.

            My best advice to them is to split up the Euro zone before it does more damage. That is not their view, so the following agenda sets out the minimum they need to consider and decide to keep their zone going.

         The Agenda should include:


1. Progress to proper supervision of spending and borrowing levels in each member state, with revised credible plans for those borrowing too much.

2. Treaty changes and legislation needed to legalise transfers and enforced supervision of budgets.

3. The role of the ECB in buying in bonds that have deviated too far from the average borrowing rate, and the scale of the operations needed to do this. Is further share subscription to the ECB needed?

4. The role of the ECB in supervising member states commercial banks. How will the lender of last resort facilities operate at a time of stress?

5. The size, scope and use of the European Financial Stabilisation Mechanism and fund.

6. What use will be made of Euro bonds issued in the name of the Euro authorities?

7. The likely future extent of transfers needed from the richer to the poorer parts of the Union.

8. Who will speak for Euroland and ensure the communication of a strong, consistent and plausible message based on these decisions?

                There is no need for the UK and other non Euro members planning to remain outside the scheme to be at this meeting. The Uk should send a message wishing them success in their deliberations, and reminding them that the UK will want a looser arrangement with the emerging Euroland central government as its price for agreement to all this, to be negotiated as soon as Euroland has these decisions in place.

         It would of course be sensible to discuss first if they want to carry on inflicting so much economic and pain and cost on the zone, or if it might be better to drop some members out now whilst they still can. There seems no wish to even discuss this.




  1. Antisthenes
    August 7, 2011

    What ever happens the Western Nations bar a few exceptions need to lower taxes, drastically cut spending, suspend green taxes and policies and deregulate much nearer to the norm in countries like China and India. Otherwise in the long run it will it will all be academic as the West becomes less and less competitive. As for the EU leaders on the beaches have they got their spades or their heads in the sand.

    1. Tim
      August 7, 2011

      The only question we should be asked is “when are we having our in/out referendum on our continued membership of the EU”? An undemocratic organisation thast costs us £13.5 billion a year NET for their benefit!! We pay more for our food through the imposed French CAP, £9 billions annully in admin costs to impose its uncompetitive laws and directives (China and India just keep on laughing), they have robbed us of our fishing industry and have to follow the vindictive judgements of the EUHR Court where they tell us we have to keep terrorists and criminals to our detriment on a weekly basis.
      After 15 months of coalition its clear that Cameron/Osborn are just more of the same as New Labour with £11.5 billion foreign aid bells on it.

    2. StevenL
      August 7, 2011

      Do you want the norm for things like sanitation in Chindia? I think we’ve got to recognise the areas of regulation and standards we want to keep and sort the nonsense from the neccessary myself.

  2. Peter van Leeuwen
    August 7, 2011

    Is it wise to respond to market panic with a panic meeting? I wonder. No doubt your agenda points are sensible and would be discussed, even if by telephone, but the eurozone is a bunch of democracies and democracies take time to process decisions taken. Merkels nor markets can change that.

    1. norman
      August 7, 2011

      I think that’s why John Redwood (and others) have said until they are blue in the face over the last year that the only way out of this is either complete political union or individual countries leaving the Euro.

      A currency bloc that takes months to react to volatile situations whilst member states go under (did I read last week that Spain has declared they are postponing their August bond issues? Until when, summer 2012?) isn’t practical.

  3. John Page
    August 7, 2011

    I assume John’s post is satirical, in that these issues have been around for months, heads of government have been wilfully blind to them, and none of them could be settled in a day.

    That’s why I think the politicos may as well stay on holiday.

  4. lifelogic
    August 7, 2011

    Perfectly summarised. The problem will not solve itself – either they need to control the PIGIS by some form of direct rule and control from the centre and effectively central communal borrowing or they need to break it up. Just kicking the can down the road a few more yards (sorry metres) will not solve anything.

    They also need to cut government expenditure and over regulation all around the EU too. As does the BBC’s Sainted Obama.

    Where does Cameron stand on getting the UK out of this mess? Firmly with the EU and LibDem’s mad policies, I assume, given his actions so far?

    1. lifelogic
      August 7, 2011

      Yesterday you said –

      “The spend now pay later model followed by the US, and much of Euroland, only works if enough of the money is spent wisely on productive investments which can pay the interest and repay the capital in due course.”

      Indeed but when have governments ever done this? In the UK Cameron’s idea of “investments” are HS2, white elephant Olympic venues, pointless green house Bling, endless pointless QUANGO’s, the equality and human rights commission and pointless wars. Indeed almost everything they waste the money on cannot remotely be considered an “investment”.

      Usually rather more of a kick in the teeth to the real economy.

    2. lifelogic
      August 7, 2011

      Lord Oakeshott this morning on the Andrew Marr Show seem clear that the 50% will not be reduced. Why on earth not since it will help the economy, set the right positive direction and raise more tax? Win win for all in fact.

      Translated as “We will hinder growth and tax revenues just for the appearance of pathetic superficial fairness say the LibDems”. Also “we will put expensive pointless green Bling on private houses for similar pointless reasons of appearance”. That will make the Libdems popular!

      Still Cameron has only himself to blame for loosing the last sitting duck election.

      1. uanime5
        August 7, 2011

        Removing the 50% tax rate will not help the economy or raise more tax, it will give the rich a tax cut and cause the treasury to lose £2.1 billion per year in tax revenues.

        1. lifelogic
          August 8, 2011

          Simply not true removing the 50% (and reducing CGT and IHT too) would encourage high paid workers to come in (and not to leave). Encourage banks and similar to set up here rather than elsewhere and set a proper direction pro business direction. The money is likely to be spent here too and thus taxed here anyway in some form.

          Overall it would be a net benefit telling high earners and business that it is best to leave or take it easy is not the way to go. Who would invest say £10M in the UK knowing they will have to make nearly 10% return on it just to keep it worth the same in real terms after tax at 50% and inflation. Then have 40% IHT to look forwards too on it later? They would have to be mad.

          Would you advise them to do that when the government is clearly to anti wealth and business and likely to be followed shortly by an even worse labour one?

        2. lifelogic
          August 8, 2011

          How do you know how many businesses and wealthy individuals it deters? Just one or two large businesses thus deterred by the 50% rate would reduce the net tax take by more than 50% actually raises.

  5. Mike Stallard
    August 7, 2011

    Wel, well, well.
    I have just looked up the approach to the First world War. Guess what? All the leaders were on holiday!
    And now the second (OK very different). Guess what? Hitler used the holiday to ramp up the pressure until September when he finally went for Poland.
    Dangerous times Augusts!

    However, the proposals above are about the same as Churchill’s excellent advice to parliament before September 1939.

  6. Martin Cole
    August 7, 2011

    I did a fair amount of research yesterday afternoon on the background and framework workings of the EFSF and the new Treaty provisions of the ESM, the results of which are summarised on this posting:

    It is quite clear to me that even Germany cannot now take on the Italian bond buying programme, either within the restraints of the various existing arrangements nor by boosting the finances of the ECB. (Just confirmed by Deutsche Welle and Der Spiegel).

    I have posted again this morning on the clear end results of a continuation of trying to save the euro beyond this weekend, which you appear to be urging, surprisingly, apparently joined by Bruno Waterfield in the Telegraph.

    I maintain my view that the only meeting we should be urging is one between the leaders of our three national poltitical parties, to agree a common stance to the economic whirlwind now about to be released.

    Reply: I have always said the best answer is to split up the zone, but I know they do not intend or wish to do this. I wrote a couple of books explaining why this scheme could not work.

    1. Denis Cooper
      August 7, 2011

      If the ECB embarked on large scale purchases of Italian and Spanish bonds, then surely it could simply create whatever new money was needed?

      According to Article 123 TFEU the ECB could do that, provided it only purchased previously issued bonds in the secondary market rather than buying them direct from the governments.

      “1. Overdraft facilities or any other type of credit facility with the European Central Bank or with the central banks of the Member States (hereinafter referred to as “national central banks”) in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments.”

      It would then, however:

      a) Arguably be in breach of Article 124 TFEU, by rigging the market so that the governments could continue to sell new bonds to investors who would not otherwise have bought them:

      “Any measure, not based on prudential considerations, establishing privileged access by Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States to financial institutions, shall be prohibited.”.

      Of course there is the precedent that the Bank of England arguably breached Article 124 during the period of “quantitative easing”, as the UK’s “opt-out” protocol does not provide an exemption from that Article.

      b) Risk failing in its primary objective of maintaining price stability, Articles 119 TFEU and Article 127 TFEU:

      “1. The primary objective of the European System of Central Banks (hereinafter referred to as “the ESCB”) shall be to maintain price stability.”

      as well as departing from “the principle of an open market economy with free competition, favouring an efficient allocation of resources” laid down in the treaties.

      c) Risk bankrupting itself if the value of its accumulated portfolio of bonds – assets on its balance sheet – drops too far below the value of the new money it created to buy them – a liability on its balance sheet.

      It’s understandable that at least some members of the ECB Governing Council are very reluctant to be dragged any further down that road, and would prefer the EFSF to borrow existing money and lend it on to the governments of distressed eurozone states.

    2. Denis Cooper
      August 7, 2011

      On the ESM treaty signed on July 11th:

      I hope that MPs will read it and think hard about it before they approve the amendment to Article 136 TFEU embodied in the European Council Decision 2011/199/EU of March 25th.

      Basically that amendment would give the leaders of the eurozone states licence to do more or less whatever they agreed among themselves – which in the case of the leaders of the smaller states would usually mean agreeing to whatever the leaders of the larger states demanded – while allowing those leaders to more or less escape from the control of their national parliaments.

      Perhaps the Irish people should be concerned that their government has already decided that neither the amendment to Article 136 TFEU, nor the ESM treaty which it is being erected on that new legal base, will be put to a referendum – Written Answers to Questions 65 and 74 here:

  7. lola
    August 7, 2011

    As you say, Point (9) should be. “Or, shall we call the whole Euro thing off and help he failing countries to get out of it?”

  8. alan jutson
    August 7, 2011

    What I find interesting, is that with all of the people employed by the EU, with all the fancy job titles, with all the high salaries, with all the exenses and hangers on, when it comes down to it, no one is in fact in seems to be in charge of an agenda at all, who can take a lead and push things forward.

    It seems like the whole thing is run by a series of committees, with France and Germany seen to be the main driving forces.

    Whilst I understand that no country wants to be seen as being subservient to an overall leader, committee politics, committee anything rarely works when it comes to big decisions, as you tend to get fudge answers and compromise policies.

    The EU is now being put under severe strain, it needs to go one way or another, total integration for everything, or seperate states with their own monetry policy, with a simple loose trading arrangement.

    The existing system has so many faults it is doomed to failure, either now or very shortly. Individual States will eventually be put to the test, do you want to give up control of your own country, yes or no. In or out!

    I wonder how many leaders will vote to give up control of their own countries, because that is in the end is what total integration is all about, leaders will no longer be Presidents or Prime ministers they will be a single voice, one of 27 around a table, no political party can then have an election manifesto, because it would mean absolutely nothing without the other 26 people agreeing..

    Interesting times ahead me thinks.

    1. Mike Stallard
      August 7, 2011

      At the moment we have a second eleven in control and you are so right – they are way out of their depths.
      If things get rough – massive inflation leading to rioting and looting in the streets of capital cities (like at Tottenham) and a strong leftist army on the streets – then this whole EU government contraption which you so accurately describe can turn very quickly into a dictatorship as ordinary people look for vengeance, peace and law and order at all costs.

  9. Freeborn John
    August 7, 2011

    You are remarkably cavalier with other people’s sovereignty. Why propose enforced supervision of government budgets, large-scale redistribution between nations, etc. for other countries when you would not tolerate them here? The voters of eurozone countries deserve to live in a democracy just as much as Britons do, where they can vote out their government if they don’t like budgets or excessive taxes. You would deny them that.

    The conservative tradition may be to resist change, but your resistance to the break-up of a currency you opposed is the most remarkable example of this.  You even go beyond defending today’s status-quo to advocating the overthrow of democracy in 17 other countries that you would put under economic supervision to defend a currency which has proven not to work very well and very costly to sustain. I believe that you must only value democracy in your own country if you make such a proposal, but that is short-sighted. Europeans deserve democracy but even on grounds of UK interest we have a vital national interest in preserving the democratic nation-state on the Continent as the best system for ensuring peaceful and mutually beneficial relations between European nations. This interest far, far exceeds any merit in propping up this broken currency. 

    (Furthermore i do not believe your proposal would fix the euro anyway.  Private individuals and companies (note: not the governments you would put under supervision) in high-inflation eurozone countries borrow too much under the one-size-fits-all interest rate. This produces magnified ‘Celtic Tiger’ like booms during the upturns but also magnified busts. Only when the bust arrives is there a large government budget deficit to ‘supervise’ and by then it is too late to prevent it. Ireland and Spain ran public-sector budget surpluses during most of the last decade, thanks to the large tax revenues generated by their over-stimulated private sector. If what you propose would not have prevented the last boom/bust it will not prevent the next either.)

    Reply: I have always made my clear my preferred option is to break up the Euro. I am just pursuing the logic of what the Euro area governments say they want, as they are not yet ready to abandon their project.

    1. Freeborn John
      August 7, 2011

      I think important questions of you (and indeed George Osborne) are if you believe the preservation of the democratic nation-state on the Continent is in the long-term Britush interest? And if so whether this interest is greater than any perceived (mistakenly in my opinion) British national interest in keeping the euro on life-support?

      Unless the answer to both those questions is ‘No’it is very hard to understand you and Osbourn advocating fiscal federalism on the Continent. One night say this a tactical negotiating tactic to be used to regain some powers from Brussels, but presumably this makes sense only if you calculate fiscal federalism will breakdown in the end such we negotiate ‘something for nothing’ ultimately? Or that you value the return of these powers (and in your book you only ask for a tiny number of powers back) more than the continuance of the democatic nation-state as the prevalent form of government on the Continent. It is far from evident to me that this represents a good long-term bargain, especially given cast-iron Cameron’s personal disinclination to play hardball. Rather it smacks of the ‘course of least resistance’ attitude so characteristic of British EU policy; i.e. pretending to agree with something you know is contrary to the national interest. 

      Better to argue for the democratic nation-state and that the cost of keeping the euro on life-support will drag down growth in our main trading partners, hurt the UK economy indirectly, and that therefore the euro is a dead-weight best jettisoned.

      Reply: For heaven’s sake, I have spent 20 years explaining why the Euro will not work and why it wouild be better not to have it. Can’t you bloggers see that the rest of the EU does not agree, and wants to plough on. We should therefore allow them, at the price of gettngn us out from under the traffic accident. If we don’t make the right noises now another opportunity to get soem fo our democracy back will be lost.

      1. Robert Christopher
        August 7, 2011

        JR’s Reply: For heaven’s sake, I have spent 20 years explaining why the Euro will not work and why it wouild be better not to have it. ….”

        I believe you, and I am a UKIP member!

        Your action list shows how the Continentals are leaderless, just going with the flow. How can they have a meeting and not have your list as an agenda? It just beggars belief!

      2. Freeborn John
        August 7, 2011

        There are large and increasing numbers of EU-sceptics in the eurozone who look to Britain with renewed respect as a country that self-evidently made the right call on the euro. These people will ask what now is the solution to the eurozone crisis proposed by those that got it so right in the UK. And frankly they will scratch their heads in amazement and bewilderment that you advicate selling them down the river to an undemocratic fiscal union in return for one or two pieces of silver in the form of the return of some very minor powers to Westminister. 

        Events have vindicated the ‘Walters critique’ of EMU yet you now appear to believe (you have confirmed it in other comments) that fiscal federalism can fix the euro. Presumably you therefore believe the Uk could be a eurozone member if we would be bailed out periodically like Ireland and Italy?

        Euro-federalism is being rendered intellectually bankrupt by poor policy outcomes. You should be pointing it out far and wide on the airwaves rather than calling for more of it. When it is broken on the Continent we will get powers back here.

        Reply: I have always stated that the least bad answer to the current mess is to split up the zone. Why do you deliberately ignore my central message?
        As the Euromantics wish to press on regardless, it is important to face them with the consquences. Single currencies only work for single countries. Single countries only work if the overwhelming majority of people in them accept obbligations to each other, including payign tax to send to the poorer inhabitants of the Union. I do nto myself think German taxpayers are ready to accept such obligations to Greece, so their leaders need to be confronted with the issue and the possible size of the bill, so they can reach a conclusion. I am not however a German politician, and think that issue has to be studied and resolved by Germans, not by us.
        My main concern is the UK. I want us to be self governing, which is why I have proposed that in future we have the right to veto or repeal EU laws we do not want.

      3. Denis Cooper
        August 8, 2011

        Is it really true that “the rest of the EU does not agree, and wants to plough on”?

        You can look at it in different ways: whether it’s the people in a country who wish to plough on, or only the politicians; and whether the politicians in a country really want to plough on, or are being bullied into it by the politicians from other countries; and whether it’s an EU country which is already in the euro, or one which has a legal obligation to eventually join the euro, or one of the two which are neither in the eurozone nor under any legal obligation to join it.

        Whatever their politicians may say, would the Greeks welcome the possibility of leaving the euro? Would the Estonians have preferred to have been able to vote against joining the euro, rather than being told that they’d already voted to join it when they voted in the referendum on whether to join the EU? Would some Swedish and Polish politicians be relieved if their countries were freed from the treaty obligation to join the euro? Would the Danes prefer not to be left as one of only two EU countries which had not joined the euro?

        I certainly don’t see it as being in our national interests to be left as the only EU country still outside the eurozone, and then to be bounced into a eurozone which had become a federal tyranny with encouragement from George “get a grip” Osborne.

        This is why I say that I don’t agree that the UK should stand aside and let the eurozone countries get on with it; the more patriotic of our politicians need to be thinking about how to protect our longer term national interests against the threat posed by an inexorably expanding eurozone which would eventually, inevitably, swallow us up as well.

    2. Denis Cooper
      August 7, 2011

      I have to agree that reading some of JR’s articles over recent months has left me with the impression that he’s inadvertently drifted into supporting the “Save The Euro” campaign, and therefore like Osborne into advocating federal solutions which would destroy the national democracies of the eurozone countries and eventually become a very serious threat to our own national democracy.

      It’s true that in this article he starts by saying:

      “My best advice to them is to split up the Euro zone before it does more damage.”

      and he ends by saying:

      “It would of course be sensible to discuss first if they want to carry on inflicting so much economic and pain and cost on the zone, or if it might be better to drop some members out now whilst they still can. There seems no wish to even discuss this.”

      but in between he sketches out an agenda of federalising measures.

      I don’t agree that the UK should not be involved in these discussions.

  10. Dr Alf Oldman
    August 7, 2011

    I agree that JR’s proposed agenda would be relevent.

    However, the reality is that we are advised of a teleconference this weekend of G7 Finance Ministers & central bankers, and I suspect that the agenda will be more focused.
    With most countries now wary of fiscal stimulus, I suspect that QE and its inflationary impact is likely to dominate the agenda. The other key theme is likely to be coordinated actions to stabilize markets.

    This weekend, many politicians and journalists have called for greater leadership and more decisive decision making.

    Politicians need to secure immediate stabalization However, It is probably timely for governments to review options, strategies and related risks.

    I would like to see the IMF contribute much more to policy and generally improve its game. For me it would make sense to capture the following list in the process:

    1. QE to finance investment in Public Sector infrastructure
    2. Focused fiscal stimulus to promote personal and corporate investment
    3. Leanings towards deflation or inflation, at the margin
    3. Orderly write down of sovereign debts and continuity of finance for countries & banks.
    4. Comprehensive options paper on the Euro, with risk assessment & costing
    5. International regulation of the credit rating industry, especially in relation to sovereign debt
    6. International regulation on short-selling by hedge funds.
    7. Increasing competition in the Financial Services industry, breaking up large banks that are protected by quasi monopolies

  11. Martyn
    August 7, 2011

    Any day now I expect someone to announce that the EU and the Euro are “too big to fail or be allowed to fail”. And then what?
    Tottenham on an EU-wide scale, maybe, as people see their money and savings disappear down the drain? Not a comfortable thought…..

    1. Gary
      August 7, 2011

      FRANKFURT -(Dow Jones)- Germany’s government thinks Italy is too big for Europe’s rescue fund to save, Der Spiegel magazine reports in a preview of an article to be published Monday.

      The government doubts whether even tripling the size of the rescue fund, known as the European Financial Stability Facility, would enable it to save Italy because the country’s financing needs are so enormous, the magazine reports without naming the source of its information.

  12. Publius
    August 7, 2011

    Mr Redwood. You surely know that a centralised EU government would be a political and economic disaster for those who participated. It would rapidly become a tyranny.

    1. Mike Stallard
      August 7, 2011


      1. Denis Cooper
        August 8, 2011

        So we don’t want another tyranny rearing its head across the channel, and of course with part of it across the Irish Sea as well.

  13. Steve Cox
    August 7, 2011

    I noticed in an article in one of the papers this morning that the Italian government has stayed in session to pass emergency measures to slash government spending. In addition, they intend amending the constitution to prevent governments from being able to get their finances seriously in the red in future. That sounds like it may be a good idea to me, though I don’t know the details. Something to consider for an EDM, perhaps? Or maybe one of the new e-petitions?

    Reply: Parliament is on holiday so EDMs are not possible.

  14. cronshd
    August 7, 2011

    John, can you give us your analysis for the degree of the support for you views within (i) the Conservative Party and (ii) the Coalition.

    What would it take to get more momentum behind this logical, common sense approach?

    What is blocking this?

    Reply: I have good support on the Conservative backbenches. Ministers agree with some of the analysis, but find it difficult to move as far as some of us would like for Coalition/EU/civil service reasons.

    1. Robert
      August 8, 2011

      I always thought the Civil Service was to serve the Government of the day, obviously not!

  15. Liz
    August 7, 2011

    At the moment Europe’s leaders would rather the citizens of the component countries (who who are regarded by the elite as peasantry) were reduced to penury rather than give up their Euro project – such is the way with all such idealistic but ultimately impractical, theories of government supported by zealots but which eventually collapse in the face of human nature. The Greeks will not turn into little Germans however much Germany might wish it and any attempt to unite Europe politically upon German/French lines will lead to tyranny and eventually a “Europe Spring” or worse. The one thing it was set up to avoid.

  16. Bernard Otway
    August 7, 2011

    I see comparisons being made with [Tottenham] above very very soon,as well as the word
    Tyranny being used to describe the EUSSR that is looming. I watched a film called
    SERENITY on tv 2 nights ago,in it mankind has to leave our planet for a new solar system
    with several planets that they Terraform to become habitable and then become a Federation,
    and outside planets that become sort of lawless.This federation sets about CONTROLLING it’s populations using various methods,they then colonise an outer planet and discharge into the atmosphere a chemical mind control substance,which has two effects ,it actually controls the majority so much that they eventually all SHUT DOWN and die having arrived at a moment of not having reason to live,however for a minority they become the EXACT OPPOSITE a violent mindless mob who wreak havoc and death all around them.
    This knowledge the rulers [ironically the PARLIAMENT as the story calls them] try to keep secret,for absolute fear of what this occurance and it’s creators will engender in their populations. I saw this movie as a JUXTAPOSITION to what the EUSSR is trying to do,
    and hope that sense prevails [a la what all us anti the EU] want,otherwise the commenter
    who used the TOTTENHAM analogy is absolutely RIGHT,and the WHIRLWIND will be
    reaped,totally unnecessarily.

    Reply: Violence is not acceptable in democracies where public opinion and voting can effect peaceful change. Democracies need the consent of the overwhelming majority so peace and strong debate can be maintained, and criminals dealt with under an agreed criminal law.

    1. sm
      August 8, 2011


      Our democracy…. is is dependent on the MP’s faithfully representing public opinion. When will public opinion be able to effect peaceful change. I really hope this is demonstrated soon.

      1) Withdrawal from the EU.
      2) An end to mass immigration.
      3) Effective control of monopoly providers.
      4) A review of the ECHR and the Supreme Court and Parliament.
      5) More referism,e-petitions with real power.
      6) Protection from overpowerful executive government-pursuing policy at odds with its population in survey after survey.
      7) Control of the gravy trains.

      Lets say the EU federalizes and major transfers create disharmony between…Sarajevo and Berlin add an Arch Duke or similar EU commissar a spark and.

      They could try it but its a disaster waiting imho.but it does buy them more a future cost.

      So a big Disclaimer may not be big enough.

  17. Gary
    August 7, 2011

    In or out of the euro, essentially no difference. When the USA is staring into the abyss, it is starting to look quite quaint how we are autistically focused on the euro. There is a giant sucking sound behind us, and we had better stop pretending we can’t hear it. When the US defaults (they did it before in 1971, remember?) all euro gazers and everyone else will be washed away.

  18. Damien
    August 7, 2011

    There is little we can do to alter the mindset of the EU leaders as they themselves know what they have knowing that they cannot bring about the necessary fiscal union without the political cover of say a sovereign default or downgrade of Spain or Italy. For practical reasons I cannot see how a euro member can leave the currency.

    Our government can give advice to the Euro zone but we should be preparing ourselves for a double dip recession in the US. Every time the oil price has remained persistently high (as mentioned here before) a recession has followed. Also every time there has been two quarters in a row of 1% growth there has been a 50/50 chance to a double dip recession.

    Couple this with the research released last week that corporate America has stockpiled $1.5 trillion rather than hire workers, hardly a vote of confidence in the economic outlook. Here Lloyds announced a £3.5 billion provision for bad debts from its Irish exposure, reporting delinquencies of 64%. Overall British banks are exposed to £80 billion of Irish debt.

    I thought that Vince Cable articulated the UK coalitions position well this weekend. Nevertheless we need to be constantly stress testing our own economic assumptions particularly given the volatility that will emanate from the US and the Euro zone.

    If we cannot raise taxes (nor should we) and have difficulty in cutting public spending (in real terms) then we should be selling public assets. We have missed the window of opportunity to dispose of some of the shares in the nationalised banks, likewise on selling the publicly owned property. There are buyers for these assets (even though sellers always think that they can get more by waiting). This is called speculation and governments track record as speculators is not good.

    1. Robert
      August 8, 2011

      Re public spending we simply don’t have the political will to do what is necessary. Yes, there is inevitably going to be riots as the political establishment have failed to tell the truth about the last 10-15 years if not more as we are forced eventually to make real cuts in public spending. It is obvious that ‘political expediency’ has been put in front of doing the right thing! I will never forget phrases such as ‘sharing the proceeds of growth ‘or ‘we are all in this together’, we are not!! The Government and the BOE continues to hit those (admittedly who have able to) who have saved and been responsible rather than those who have borrowed to sustain a life style/overstretch themselves and bail out the feckless ( though again this will include some who have simply fallen on hard times). We have no choice but to materially cut public expenditure way beyond what you have advocated John, mark my words!

  19. Epigenes
    August 7, 2011

    Mr Redwood, your question presupposes that there are ” Leaders of the Euro zone “. They do not exist.

    Even if there was a semblance of leadership in the Euro zone I doubt that they would understand your questions.

  20. Matt
    August 7, 2011

    Time for the UK to become a place to do business – to do something dynamic.

    Drop top rate tax to 40%

    CGT to 20%

    Negotiate out of EU working directives

    Re impose tight limits on Employment tribunal awards

    Cap redundancy payments – let people take private insurance if they wish

    Reduce maternity/paternity leave

    Germany can afford to give such generous hand-outs; it has some great products for export – that’s not so much prevalent here.

    This would encourage indigenous business and attract foreign investment – and would give the younger generation a chance

    Not a short term fix, but a long term benefit, in my view.

  21. matthu
    August 7, 2011

    It’s always useful to know where our PM’s priorities lie:

    “We understand the strength of feeling of some who would prefer us not to be in the EU at all and that, like you, would like an in/out referendum to take place. There are some perfectly respectable arguments in favour of holding such a referendum. But there are also many strong counter-arguments, such as the fact that we had a referendum on that issue in 1975, which produced a very clear result.

    “And we should not lose sight of the EU’s very useful work, such as ensuring that all the nations of Europe are equipped to face the biggest challenges of the 21st Century: global competitiveness, global warming and global poverty. These are compelling arguments for why we believe Britain should be an active member.”

    I fear that when the PM still publicly declares global warming to be one of the biggest challenges of the 21st century, he loses my respect.

  22. Jedibeeftrix
    August 7, 2011

    “The Uk should send a message wishing them success in their deliberations, and reminding them that the UK will want a looser arrangement with the emerging Euroland central government as its price for agreement to all this”

    Oh dear god yes!

    It has been suggested by some that the price should; include Britain’s escape from the Social Chapter, the Common Fisheries Policy and the European Convention on Human Rights, but we cannot ignore the Tory’s coalition partners. The Lib-Dem’s are, not to paint with too broad a brush, largely in favour of the acquis communautaire principle whereby once a ‘competence’ has been granted to the EU it cannot come back. Clegg it would appear holding this point on principle.

    His problem is that merely by maintaining our current status, during a process of economic fusion within the eurozone we will, de-facto, be creating a two-speed europe. In itself this is a fine thing, for while i am sympathetic to the notion of being in the EU long enough to shape europe’s future towards a healthier course, the strong british free-market presence in the commission being a good example, perhaps we are reaching the apogee of what that purpose can achieve.

    We now how an EU with new members favourable to free market solutions, and we can no longer continue to play at the centre without ceasing to be a sovereign nation state. More to the point, it is not for Britain to frustrate the legitimate ambitions of our partners across the water, if economic union is both desired and required then we should not stand in its way.

    The very nature of the crisis is certain to create a two-speed europe, it is merely a matter of whether this momentum can be used to regain that which is essential for the operation of a sovereign nation state, albeit a 21st century version. Being without the Schengen area and the Eurozone, and having boxed security and defence into intergovernmental avenues, with the potential for social, judicial and economic freedom, the potential for an independent Britain certainly exists.

    Spare a thought for the transnational progressive, for whom the idea of an al-a-carte europe is an anathema, for their dreams are dust.

    1. Robert Christopher
      August 7, 2011

      “Clegg it would appear holding this point on principle.”

      I gather Clegg has a $50k pa EU pension, dependent on supporting EU thinking, so his decisions may not be based on what is best for Britain.

  23. Mr Leslie Smith
    August 7, 2011


    Here is an MP Jon Redwood, reading, posting and commenting on our responses to his Blog, whilst Europe and the UK burns.. The so called “Leaders” of Europe and the UK are all on holiday, making phone calls to each other. They all know that the Heat in the Kitchen on Monday will be at furnace level and they are too cowardly to face the World Media, as their Dostic Stock and Bond Markets tank tomorrow. This is not going to continue in such a passive manner, as thousands lose savings and pension values. Well done Mr Redwood, for remaining on deck with the rest of us…. Democracy is truly being tested right now and failing us all badly.

  24. backofanenvelope
    August 7, 2011

    I see that the EU, with breath-taking tactlessness, has appointed a German bureaucrat to supervise the Greeks. If I was a Greek, I would wonder just why I should work harder, retire later and pay my taxes. If I was a German I would wonder why I should work harder, retire later and pay more taxes for the benefit of the Greeks. Perhaps both Greeks and Germans will say, thanks but no thanks.

  25. Bazman
    August 7, 2011

    The Tory Riots have began.

  26. Mr Leslie Smith
    August 8, 2011

    Bets on that the Euro, in its present form will not see this Year out..!!

    There is no way the German Voter will take the ever increasing demands for extra guarrantees and extra taxes on hard working Germans. Why on earth should they bail out Greece, Spain and Italy and also Ireland? I cannot see more than 2-3 more months of this Euro disaster, before it breaks up…. Truth Time!!!

  27. Bernard Otway
    August 8, 2011

    John for once you gave a typical Weasel word reply,which I did not expect in fact it did not address my point,ie the totalitarian mindset of those wanting the EUSSR,which could cause
    bad things to happen.

  28. Kevin Breslin
    September 5, 2011

    Why would the Eurozone give the UK a looser arrangement … will they threaten to dump their debt on them? Oh the irony!

  29. Kevin Breslin
    September 5, 2011

    I’m refering to the UK as the debtor there.

Comments are closed.