Germany starts to worry about the Euro


           I was not expecting Germany to suddenly welcome the UK idea that we might have a  new relationship based on trade, freed of many of the burdens of the EU. That will take time to shift France and Germany, as our referendum approaches and as it becomes clearer UK people will vote for exit if we do not get a very different approach from today’s.I will continue to press for an acceleration of the timetable. In particular a Mandate referendum soon could be a game changer, if the rest of the EU was suddenly confronted by a very large vote in the UK for a new relationship based on trade.

           What  I do expect is more Anglo-German agreement and co-operation. Germany is suddenly more lonely. Hollande is seeking to make France the leader of the subsidy seeking south, rallying countries to the cause of opposing German led austerity. Meanwhile at home Frau Merkel for the first time faces a serious political challenge from Eurosceptics. The new Alternative for Germany party wants a break up of the current Euro. They will campaign long and hard against more German money being used to bail out overspending countries and bankrupt banks around the zone.

            Whilst I do not   presume to tell people how to vote in other countries, I wish Professor Henkel well. The founder of the new party, he lobbied me to get the Uk to join the Euro in the 1990s. More recently he has written a book explaining why he was wrong. He kindly came to the Uk to apologise in person to a few of us who had resisted his case. He is an able, well briefed expert on currency matters, who has changed his view in the light of experience.

         Meanwhile, Germany has just had to agree to an extension of the debt union which lies behind the Euro. Ireland and Portugal have been given longer to repay, which means a further softening of the terms of their loans. Cyprus is seeking  more assistance. The Euro can only carry on all the time Germany and a few other richer countries are prepared to lend or grant  others more of their money. As some countries cannot afford the loans, more of it will end up as grant.


  1. alan jutson
    April 14, 2013

    As you say John, it is the german people will eventually decide on the fate of the present Euro set up by voting in their own elections.

    Let us just hope they rally around a sensible political leader when doing so.

    One thing is for certain, they are not going to give up on their belief in sound money, and continue with bailing out basket cases who refuse to live within their means, but just want to continue to spend, borrow or support the alternative of printing.

  2. lifelogic
    April 14, 2013

    What do you mean “as our referendum approaches”? The only thing approaching is Miliband and Balls in two year time. Even in the, hugely unlikely, event that the Tories win, and with a real majority, then Mr Heart and Soul would undoubtedly just rat again on Tory voters. Nothing he promises will be trusted even if he has a remote chance of winning.

    As I see it he simply has no chance he could not even beat sitting duck Brown after he supposedly Detoxified/Modernised the brand from the Lady Thatcher line. Making it just another, fake green, tax borrow and waste, ever bigger state, and pro the anti-democratic EU party.

    1. Disaffected
      April 14, 2013

      Well said Lifelogic.

      The toxic Tory brand was the Major/Heseltine government where sleaze was abound, ERM lost the UK taxpayer billions, lost jobs, homes and businesses went bust and then we had the Maastrict Treaty (no lending to countries- that disappeared when it suited). Europhiles (Tory and Lib Dems) still advocate the UK to be in the Euro!!

      Perhaps the politicians so keen on wreaking havoc on individual bankers through loss of titles and income would be willing to do the same to Major and Heseltine who cost us all a lot more? These sort of politicians should not be allowed any where near the current government, Lords or anywhere else to influence the fortunes of UK let alone make recommendations for Osborne to follow.

      Margaret Thatcher’s death acts as a good reminder and reason for Tory voters to migrate and vote UKIP to distance themselves from the Major/Heseltine government. Teresa May is correct about the toxic Tory past only the wrong era. Let us not forget Cameron was an advisor to the Major government and vice versa.

      1. lifelogic
        April 15, 2013

        Who on earth would want any advice from John Major or David Cameron on any issue at all? The have been wrong on almost everything so far?

  3. Mike Stallard
    April 14, 2013

    This is one of the most sensible evaluations of the Euro situation that I have read: well written!

    What we will not stand in UK is a fudge whereby a small concession (like going after tax “criminals” – people who are quite legitimately avoiding tax deliberately confused with those who wilfully submit false claims) is presented as a major change.

    Also, of course, the people in charge of the EU, which includes a sizeable chunk of British officers, (33 staff @ AD16 from UK among the UKs 1322 staff at the EU), will take absolutely no notice of a “populist” referendum. Just like the Argentinians over the Falklands referendum, they will discount it.

    And then there is the “cast iron” guarantee after the 2015 election result……

  4. Richard1
    April 14, 2013

    One argument that used to be advanced for the euro which has been rendered redundant by technology is that a single currency leads to price transparency and transaction simplicity. Never the major point but now its completely irrelevant, German voters will focus on the pure economics and politics of it, and probably decide they have taken unlimited liability and have been stitched up by misuse of available cheap borrowing by the garlic belt. Rather like the innocent Lloyd’s names in the London insurance market, if that doesn’t stretch a comparison too far.

    1. lifelogic
      April 14, 2013

      Indeed but the “major point” of the single currency was always clearly a ruse just to grab power to the centre.

  5. colliemum
    April 14, 2013

    Mrs Merkel is in an unenviable position. The Southern EU countries clamour for more German money, while the German electorate sees how more and more of their money is being squandered on ‘help’ with no change in the conditions leading to these bail-outs.
    With the looming elections, she is between a rock and a hard stone.
    However, the ‘AfD’, that new party in Germany, campaigns only for a break-up of the €, as you’ve mentioned in your post, John.
    They are not working towards a break-up of the EU, nor are they working towards Germany leaving the EU.
    It is important to keep this mind, because comparisons with UKIP will lead to grave errors in analysing what possibilities will become available for Mrs Merkel, for Brussels, and ultimately for us.

  6. Brian Tomkinson
    April 14, 2013

    JR: “In particular a Mandate referendum soon could be a game changer, if the rest of the EU was suddenly confronted by a very large vote in the UK for a new relationship based on trade.”
    You know that will not happen. Firstly, your leader and his clones in the LibDem and Labour parties don’t want such a relationship and so will never ask the British people their views. Secondly, no such arrangement is possible without leaving the EU which, although what I want to see, is anathema to Cameron, Clegg and Miliband. The “more Anglo-German agreement and co-operation” you expect will be nothing more than a device to allow Cameron to try and trick the British public just as Harold Wilson did in 1975. The euro will carry on until destruction because those making the decisions are determined to achieve political union and the subservience of the member states.
    Margaret Thatcher 1990:
    “The President of the Commission, Mr. Delors, said at a press conference
    the other day that he wanted the European Parliament to be the
    democratic body of the Community, he wanted the Commission to be the
    Executive and he wanted the Council of Ministers to be the Senate. No.
    No. No.” She was sacked by your collegues for having the temerity to state this but I agree with her. I only wonder why she was persuaded to support our entry in 1972 and support the ‘Yes’ campaign in 1975.

    1. Denis Cooper
      April 14, 2013

      Angela Merkel 2012:

      “The EU commission will eventually become a government, the council of member states an “upper chamber” and the European Parliament more powerful … ”

      So what’s the difference between the Delors proposal of 1990 and the Merkel plan of 2012?

      Apart from 22 years of pushing for it against all objections and gradually achieving it, while British Prime Ministers lacked the patriotism and the backbone to fight it?

      1. Brian Tomkinson
        April 14, 2013

        As so often, you and I are in complete agreement.

      2. lifelogic
        April 14, 2013


        “So what’s the difference between the Delors proposal of 1990 and the Merkel plan of 2012?”

        Well just the name and the presentation.

  7. Single Acts
    April 14, 2013

    How refreshing to hear a man say “I had a theory, I looked at the evidence and I was wrong; I now admit it”

    There are many who could follow this example rather than ignoring inconvenient data or simply making stuff up or simply deleting contra information.

  8. Peter van Leeuwen
    April 14, 2013

    I cannot help but read in this blog slight hints of projection (it is the UK which has become lonely) and wishfull thinking (will the Euro still break up in the face of adversity?).
    Mr. Henkel’s party is a good development. Germany, like other countries, deserves a well informed debate on all issues. In the Netherlands we have an anti-euro and anti-EU party, as well as a group of intellectuals and populists (funny mixture!) who are very concerned about the democratic problems facing an integrating Eurozone, and they have achieved y petition that this will be debated in the Dutch parliament. No wishful thinking on my part (although you might disagree), I’m pretty sure which way this will go: a very slowly integrating EZ, a banking union, a European Council “initiative” to have a good look at better use of subsidiarity, and, over time, the emergence of a structure in which national parliaments will be much more involved.

  9. Roger Farmer
    April 14, 2013

    Do not be easily fooled by this new bonhomie between Cameron and Merkel. My instinct is that they are laying down a smokescreen of a tweak here and there to the rules of the EU to give a very watered down version of serious reform. There will be no forensic dissection of the tonnes of legislation that pours out of Brussels on a daily basis. The referendum, which logic says will never happen, will not be an in out one under Cameron. It will be something along the lines of do you like the re-negotiated arrangement or not. Not will not be the path to us leaving. Always remember that Cameron is a fully committed Europhile because those who pull his strings demand that he is. I strongly suspect the banking fraternity many of whom have a lot at stake over the continuation of the euro farce. What democrat would stay silent at the pillaging of individuals wealth in Cyprus and do nothing to stop it. There is a vast unseen corruption abroad in Europe and Cameron is one of it’s instruments.
    You may ask what is the solution. because nothing will happen in the aftermath of a rout of conservatives in local and European election. Can I suggest that the roughly 100 real conservatives in the current parliament defect to UKIP at the end of 2014. UKIP is closer to the thinking of their last great leader Margaret Thatcher than any of the devout cameroons who are little different from their lib/dem partners and labour. This would give UKIP a powerful boost and end the farce we have had to endure since 2010.

    Reply There is nothing to defect to – UKIP have NO MPs!

    1. lifelogic
      April 14, 2013

      Indeed UKIP will never will but they will put pressure on the fools like Cameron. We surely might as well have Ball and Miliband as Cameron. What is the difference.

    2. Roger Farmer
      April 14, 2013

      You do not defect to one lonely MP, you defect to a philosophy and a party. It would not surprise me if UKIP picked up the odd seat through bye elections between now and the next election. You only have to do the numbers to know that the conservatives will be greatly diminished after the 2015 election. It may also surprise you to know that I will continue to vote conservative out of respect for my conservative MP.

  10. Denis Cooper
    April 14, 2013

    From the Observer:

    “In his keynote speech on Britain’s future in Europe earlier this year, Cameron pledged to hold a referendum during the early part of the next parliament – by the end of 2017 at the latest – if the Tories win the next general election. He has argued a new settlement is needed before UK voters are asked if they want to end ties with Brussels.

    A Downing Street source said there was agreement from Merkel that there would be the necessary treaty change at some point although there has been no agreement yet on timing or the substance of the changes.”

    I hope this will be made clear in the Tory manifesto – Cameron gives a cast-iron guarantee to hold a referendum by the end of 2017, provided that the Tories get an overall majority and provided that the Empress Angela graciously allows it to happen.

    Meanwhile we should not forget that back in 2010 when the Empress wanted an EU treaty change to give the eurozone states the right to set up the ESM bailout fund she got that quickly enough, through European Council Decision 2011/199/EU of March 25th 2011, with Cameron assenting to that treaty change and getting nothing substantive in return, and with it being carefully framed so that Hague could use his new “referendum lock” law to rule out putting it to a referendum in the UK.

    1. APL
      April 14, 2013

      Dennis: “Hague could use his new “referendum lock” law to rule out putting it to a referendum in the UK.”

      That sounds like a deliberate stitch up by the Tory party high command. JR apparently approves of such measures in this newly ‘EUrosceptic’ tory party?

      What ever happened to George Eustice?

      Reply: Try looking at the facts for a change. I urged Hague to make it a proper Referendum Bill at the time, and then voted for an immediate referendum.

      1. Denis Cooper
        April 15, 2013

        It helped that the proposed EU treaty change and the UK referendum Bill were being drafted in parallel.

        It would be absurd to suppose that Merkel et al were unaware of what form of EU treaty change would unavoidably trigger a UK referendum and what form would make it possible for Hague to deny a referendum.

        In fact it was reported at the time:

        “European leaders have given way to German demands for a change to the European treaties, but the procedure for the change and its size has been calculated explicitly to avoid the danger that it could provoke referendums in some EU states.”

      2. APL
        April 15, 2013

        JR: “Try looking at the facts for a change.”

        The facts?

        The fact is William Hague has framed a referendum bill that a blind beggar could drive a horse and cart through with out scraping the sides.

        What ever happened to George Eustice?

  11. Lindsay McDougall
    April 14, 2013

    The key point here is that it is in Germany’s financial interest for the indebted Club Med countries to leave the Euro zone. If Frau Merkel resists for political reasons, we should ensure that the German electorate is made aware of the facts. Professer Henkel’s party will be very useful for that task.

  12. MajorFrustration
    April 14, 2013

    JR – I rather think that any agreement, understanding or accord that might have been engineered over the last few days with Dave and Merkel is just background nosie to keep their voters happy.
    What is required now in the UK is legislation to ensure that a referendum is held during the next Parliament. A Politicians word counts for nothing these days,

    1. Denis Cooper
      April 14, 2013

      There is a Private Members’ Bill:

      “Summary of the United Kingdom Membership of the European Union (Referendum) Bill 2012-13

      A Bill to make provision for a referendum in the next Parliament on the question of whether the United Kingdom should remain a member of the European Union; and for connected purposes.”


      “The sponsoring MP has nominated 26 April 2013 for the second reading. As the House is not expected to sit on this day it is unlikely to be debated on this date. The sponsoring MP may choose another day for the second reading.”

      Reply I support this along with other proposals to get on with this issue. However, there are not enough votes to get it through, unless and until we persuade the Conservative leadership, and then persaude enough Lib/labs to abstain.

  13. ChrisS
    April 14, 2013

    As the problems in the Eurozone become increasingly difficult to resolve the size of each new sticking plaster required gets larger with less chance of success.

    The latest news from Cyprus must surely make Cypriots realise that they would be better off leaving the Euro than taking the punishment. If they don’t, they’ll come round to that view after a year or two of deep recession with no sign of any improvement.

    How long will the people in Greece, Spain and Portugal put up with unemployment at 25% and growing with no end in sight ? The election in Italy is probably a good indication of how things are likely to go when their electorate next have an opportunity to give their verdict on the politicians that got them into this mess.

    Even more surprising, young people are not yet taking to the streets on a weekly basis with youth unemployment rates over 50% in Spain and Greece.

    Dan Hannan pointed out yesterday that poverty takes time to really take hold although it’s already having a significant impact in Greece.

    The refusal of the EU to address it’s democratic deficit is a real and increasing threat and there is no appetite, even amongst European leaders Like Hollande, to have their country’s finances controlled from Brussels on the German model which is what is required to save the Euro. They are possibly even coming round to realise that the electorate in many of the 27 countries will eventually come round towards the British way of thinking, it’s only a question of time.

    That’s probably why Merkel is becoming just a little more conciliatory towards David Cameron.

    1. uanime5
      April 15, 2013

      The latest news from Cyprus must surely make Cypriots realise that they would be better off leaving the Euro than taking the punishment.

      Are you claiming that Cyprus would be better off leaving the euro, setting up a new currency, and printing money to pay off all their debts (hugely devaluing this new currency) rather than reigning in their financial industry? I doubt many Cypriots will support that.

      How long will the people in Greece, Spain and Portugal put up with unemployment at 25% and growing with no end in sight ?

      Well given that these have nothing to do with the EU or euro leaving either won’t fix these problems.

      Dan Hannan pointed out yesterday that poverty takes time to really take hold although it’s already having a significant impact in Greece.

      Are you claiming that Greece would have less poverty if it wasn’t in the euro?

      The refusal of the EU to address it’s democratic deficit is a real and increasing threat

      What democratic deficit are you referring to? Given that the European Council is made up of elected leaders, the European Parliament is made up of MEP elected using PR, and the European Commission is made up of commissioners appointed by the member states and approved by the Parliament it’s clear that’s there’s no democratic deficit. Unlike the UK where MPs are elected using FPTP and the Prime Minister can appoint as many Lords as they want.

      That’s probably why Merkel is becoming just a little more conciliatory towards David Cameron.

      How will being conciliatory towards non-eurozone countries help the euro?

  14. Hope
    April 14, 2013

    We are reminded today that Mrs Thatcher was brought down by Europhiles who are fanatical about their supranational EU state. Those responsible for her downfall are still close to Cameron and his Europhile Tory cabinet. Mr Heseltine recently had 81 of 86 of his recommendations in his report accepted by Osborne who, it should not be forgotten, wants a more social liberal approach to conservatism. Perhaps that also means an acceptance of the £1.3 billion increase to the UK budget for 2013, money that the UK will borrow with interest to give away to the EU. As Maggie pointed out, we did not roll back the state to have it imposed by the EU. Cameron has stated he will fight with his heart and soul to stay in the EU and he made a three line whip to prevent an EU referendum taking place. Now we are expected to believe him for an EU referendum at some distant point in the future! What contempt he holds us in.

    1. APL
      April 14, 2013

      Hope: “Mr Heseltine recently had 81 of 86 of his recommendations in his report accepted by Osborne who, it should not be forgotten, wants a more social liberal approach to conservatism.”

      Ahh! That might explain why the Chancellor decided to get into the estate agency business this last budget.

      But it also shows how interventionist and corporatist the modern Tory party is, all we need now is a slogan, I suggest something like ‘ The Tory party will take control of the commanding heights of the economy.”

      Would be appropriate.

  15. Leslie Singleton
    April 14, 2013

    The Euro is a constraint on Europe and it is undeniable that matters would be improved all round if it were to be split. It could only remain in statu quo if outlying views (such as Hollande’s) could be frozen out, which could only happen if the whole were to become one sovereign entity (like the Roman Empire for instance on Gold and Silver–for of course it is not the single currency per se that is the problem, nor even close). There is no prospect whatsoever of all countries coming together to the extent necessary, and Germany knows this better than most. There might (maybe, or might not) be some small (extremely small) argument in favour of the Euro if all European countries were in it but that is not the case and again there is no prospect of that changing. Given that there is not going to be uniformity anyway, there seems no reason why the present zone should not be intelligently split in line with experience. Even a simple North South split would make a big difference as rates adjusted to get rid of the present rather ridiculous constraint, with half having interest rates too low and exchange rates too high and vice versa. Anything else is Utopian: other than geographically, there is no such thing as Europe.

  16. Man of Kent
    April 14, 2013

    Keep up the pressure John.
    We cannot expect any progress at all in bi-lateral talks with Germany unless there is a stick as well as the carrot of DC recommending continued membership of the Eu in the increasingly distant and notional referendum.

    Incidentally Last week I heard both Nigel Farage and Dan Hannan speak in Kent.
    It was good to be present at an old fashioned hustings ;with Simon Heffer an excellent warm up act for Farage .It was the very varied audience which impressed me -I sat next to a 20yo politics student from Essex who had recently joined Ukip and was biding his time before outing himself to his left wing peers !
    There were ex-Labour and Torys present but no Lib Dems that I could make out .
    Very impressive turnout of over 300 with standing room all used up.

    Dan Hannan spoke extremely well, as always, to a crowd of some 50 OAP Torys [me among them] and made the point that for DC to have reneged on his ‘cast iron referendum guarantee ‘ was the biggest mistake of his life.

    The Ukip problem is that they seem to be drawing support from all 3 parties plus some who have not been bothered to vote for the past 20 years .This makes their task of winning at a general election much harder on a first past the post system.

    But they are a real threat;or should that be opportunity?

  17. Denis Cooper
    April 14, 2013

    It’s wishful thinking to suppose that either the German people or their ruling class will want to break up the euro.

    As far as the people are concerned, last week a poll found that support for the euro is at an all-time high:

    “A new Forsa poll for Handelsblatt shows 69% of Germans want to keep the euro, the highest proportion since its introduction, with 27% in favour re-introducing the D-Mark.”

    As far as the ruling class are concerned, Merkel expressed their view in May 2010 when she stated the goal that eventually all EU member states should join the euro, and making no exception for the UK:

    “Merkel: “Our goal must be that all EU member States join the euro one day””

    So the often proposed solution that Germany should leave the euro can be ruled out – thankfully, as the rest of the eurozone would very quickly undergo a chaotic and total and extremely damaging disintegration if Germany, the strong and deep-pocketed leading member, walked away – but also there will be great reluctance to allow any other eurozone country to ever leave, let alone arrange for that to be an orderly and legal withdrawal from the euro but not necessarily from the EU.

    So the German people and their ruling class want to keep the euro; and the ruling class, at least, want the euro to become the single currency for all EU member states, with no exceptions; but neither the German people nor their ruling class want to pay the price for overcoming its intrinsic instability; and from the narrow viewpoint of the German people why should they pay for that, when Germany has the power to force people in other countries to pay?

    Even though it was German politicians who did more than any others to sow the seeds of the present debacle, by insisting that patently unsuitable countries – Italy, Spain, Portugal, then Greece, and so on – must be allowed to join the euro.

    And apparently even now there is scheme to help even more countries to join the euro, which would involve the UK chipping in with £6 billion to further a project which is very clearly a deadly threat to our national interests:

    “Tory MP Douglas Carswell said: “This sounds like a slush fund to bribe countries to try to get their political elites to join their crazed monetary project.

    “The EU should be looking to assist countries to escape the euro, not join it.””

    Precisely, but it seems that his party leader does not agree with him.

    1. Peter van Leeuwen
      April 14, 2013

      @Denis Cooper: Denis, how come I fnd myself agreeing with you! That is, on Germany, not on Carswell of course. If anything, I think that the UK has much too cheap a deal, profiting from the single currency, major reforms in Southern EU countries, and all that without having to contribute to bail-outs.

      1. Denis Cooper
        April 15, 2013

        Apply the same kind of thoughts to the US and its dollar and you will see how foolish they are. However the crucial difference is that there has never been any plan that we would eventually cease to issue our own national currency and instead use that issued by the US.

        1. Peter van Leeuwen
          April 15, 2013

          @Denis Cooper: As an EU member the UK profits more from the SIngle Market than of the USA market, and thus also more from reforms taken in the Southern paret of the EU.

          1. David Price
            April 16, 2013

            According to recent ONS data our imports from the EU outweigh our exports and that is before you take account of the £50m+ per day subscription charge, IMF loan through etc.

            Unlike with the EU, we export more to the US than we import, so on that basis you are completely wrong to say the UK profits more from trade with the EU.


          2. Denis Cooper
            April 16, 2013

            Peter, first you said that the UK is profiting from the single currency, complete nonsense; now you have changed that to the UK profiting from the Single Market, and others have knocked that idea on the head as well.

          3. Peter van Leeuwen
            April 16, 2013

            @David Price: Isn’t it amazing that the UK always forgets that it is a major exporter of services. Should that deficit not have been added? Oops it’s not a deficit but a huge surplus, conveniently left out. Don’t expect the continental Europeans to fall for that trick please.

          4. David Price
            April 18, 2013

            @Peter van Leeuwen
            Thanks for pointing out my mistake – that data only covers trade in goods, so I did a bit more digging. Based on estimates using ONS data, even taking services in to account, we seem to profit more from trade with the US than EU.

            According to [1] our trade in goods for Nov 2012 – Jan 2013 was;
            – EU 10b loss
            – US 2b profit

            Also from [1] our global trade in services was about 18b but no geographic breakdown in the figures is given.

            The most recent 2013 ONS analysis I can find of trade in services is [2] which shows for 2011 EU at 31% of trade surplus and US at 21% of trade surplus. Assuming the same proportions applied to the 2012/13 18b services trade then the EU would contribute around 5.6b surplus while the US would contribute around 3.8b surplus. for the period covered in [1]

            If you combine those with the trade in goods;

            – EU = -10 + 5.6 = 4.4b loss
            – US = 2 + 3.8 = 5.8b profit

            This suggests our trade with just the US is more profitable than that with the EU and then you have to deduct the other costs levied by the EU which makes the imbalance worse. If you add the trade figures for rest of the world the comparative EU position won’t improve.

            I would like to see a clear, concise and honest summary of comparative trade but it seems to be unnecessarily obfuscated by ONS data. As a voter this does not give me a good message.



          5. lojolondon
            April 18, 2013

            Remember, Peter, that UK exports by ship largely go via the Netherlands, so if Britain exports something to Canada, for example, then the EU conveniently classes that as an export to the EU. It is believed that 40% of our exports are falsely registered as EU exports. Google for ‘Rotterdam effect’ if you need to learn about this –

          6. Peter van Leeuwen
            April 19, 2013

            @David Price: Thanks for your reaction of 18-4-2013 which suggests the UK is better of with the USA than with the EU. What can I say? Leave the EU and be better off? Learn more languages and cultures and be more competitive inside the EU? It is all up to you. It does explain maybe why the City likes the UK to be an EU member. So does the USA, be it for other than economic reasons. You should of course feel absolutely free to leave the EU, if you think that you get a bad deal. I believe that you get too good a deal and that the trade decifit in goods may only reflect that former UK politicians (I won’t mention names) didn’t care too much about British industry?

      2. Mark B
        April 15, 2013


        Peter, sorry mate but the UK does contribute to bailouts:

        We also, thanks to Cameron, have to pay higher contributions to the EU when other countries will have to pay less. So, we are subsidizing them as well.

        1. Peter van Leeuwen
          April 16, 2013

          @Mark B: Ireland is the one exception. Banks in Ireland and the UK (e.g. N.Ireland) are closely related, Britain was serving its own interest here.

          1. David Price
            April 18, 2013

            And whose interests are the German, French and Dutch banks serving in their contributions to bailouts?

  18. JimF
    April 14, 2013

    The US dollar has worked for quite a few years now. So Professor Henkel was correct to think that in principle a currency union could work across states but this presupposes a political union. Perhaps he assumed that that would happen whereas you didn’t?

    Germany has been and is in the driving seat here. Had they set up manufacturing facilities to make their cars and machines in Greece, had they taken steps to ensure that productivity and government debt in the south matched their own, we might not be facing the disparity which exists today.

    We just didn’t and don’t want to be part of this project, whichever way it turns out. If it means having a similar trade relationship as we have with North America so be it.

  19. Tad Davison
    April 14, 2013

    It isn’t just Professor Henkel who was wrong, I think the likes of Heseltine, Hurd, Howe, Major, and a host of others need to eat a bucket-load of humble pie too! Yet unlike the eminent professor, they haven’t got the strength of character to admit their error, and thus their cowardice deserves our most bitter contempt.

    But the thing I find totally incredible, is that the evidence that this mess would ultimately happen, was not just debateable, it was stark! The whole EU project has been based on economics that cannot possibly work in the long term!

    I hope that the political classes learn by past mistakes, but I am filled with a sense of foreboding. Even a different relationship with the EU might not go far enough, and we could still be tethered to this profligate, wasteful, and sinking ship indefinitely.

    Perversely, our own future could conceivably be determined by the outcome of the next elections in Germany, which could either see the back of Merkel, or deliver much of the same old waste should she win. And that makes me feel ill at ease. Best we in the UK go it alone, and have nothing to do with the EU politically.

    Tad Davison


  20. margaret brandreth-j
    April 14, 2013

    A grant I imagine would really tip the scales .Money initially given away for others demise without returns…or would it be ?What conditions could a grant be given on ?Perhaps even more control or then again cooperation and guaranteed trade.
    France has always had an advantage with its finger in the pie of all energy sources.
    In the meantime even if this hypothetical exit is to eventualise we need to keep building our own trade relations and have an industry in every port.

  21. Terry
    April 14, 2013

    …..All of which leads me to conclude that the Euro cannot survive. Certainly neither in its present form nor without the German funding support.

    The easiest exit strategy has to be that Germany returns to the D Mark and/or the status of the Euro is changed to a “Common Currency” whereby all in the EZ revert to their original currencies based on the FX rate they entered with.
    Their debts can be held in Euro but their own currency will float on the FX markets to find their own levels of competitiveness. What alternatives are there?

  22. Normandee
    April 14, 2013

    WHAT Referendum ? We have not got a referendum cast in stone (or iron if it comes to that). We have a “promise” based on circumstances and conditions that are still only vague and loose. Hannan has done the same this morning talking about “a referendum” as if the damn thing actually exists, it doesn’t, and if Cameron loses the next election which he will if he keeps playing fast and loose with his core voters, then it all means nothing. Both you and Dan Hannan need to cut the umbilical cord that ties you to Cameron and do something about it. You remember my post yesterday, “conviction politics” the only conviction you will ever get is if dreaming becomes a crime.

    Reply If I had fought the last election for UKIP I would have no voice or vote in the Commons today. Why do you always wish to marginalise our cause?

    1. JimF
      April 14, 2013

      Making a rational analysis isn’t marginalising your cause.
      You agree that the polls and rational thought don’t lead to a Tory outright majority at the next election?
      You agree that a referendum will only occur in this circumstance (barring a UKIP victory or Tory-UKIP coalition, which also aren’t favoured on current thinking)?
      Therefore it is entirely rational to believe that a referendum won’t happen with the status quo. It is also rational to believe that a referendum WILL only happen under earthquake conditions posed by a Eurozone break-up or a Tory party break up. The former you can do nothing about, whereas the latter you can- hence the comment. It is entriely rational.

      1. margaret brandreth-j
        April 15, 2013

        It may be a positive device for taking an agenda forward?

  23. uanime5
    April 14, 2013

    I was not expecting Germany to suddenly welcome the UK idea that we might have a new relationship based on trade, freed of many of the burdens of the EU.

    Well this change is solely for the benefit of the UK, so it’s unlikely that any other EU country would be interested in it. Also if the UK was allowed to ignore EU law then every other member would also want to ignore EU law, so don’t expect the UK to be given this.

    The new Alternative for Germany party wants a break up of the current Euro.

    It will be interesting to see how many votes they get. If they get few votes then this implies that the Germans do want to remain in the euro.

    The Euro can only carry on all the time Germany and a few other richer countries are prepared to lend or grant others more of their money.

    It can also carry on if the countries that need to be bailed out have to raise part of this money themselves and are forced to reform.

    1. libertarian
      April 14, 2013

      The EU had been ignoring EU law for quite some time in case you hadn’t noticed

  24. Johnny Norfolk
    April 14, 2013

    The only way is out. They will never agree to our pick and mix. It will be yet another con of the people.

    Reply As many of you keep saying. You keep ignoring the issue that we have had a series of Parliaments with no majority for out or even for a referendum!

    1. James Matthews
      April 14, 2013

      “You keep ignoring the issue that we have had a series of Parliaments with no majority for out or even for a referendum. ” Well yes, but one point on which you and David Cameron seem to agree is that we have never had a real parliamentary choice. Both of you tell us that if we vote for (UKIP) candidates who are commited to take us out we will just get a Labour government, so we should keep on holding tight to nurse for fear of finding something worse. Thanks to the inequity of our electoral system you may well be right, but more and more of us have decided that we can no longer afford to give in to this blackmail and must take the risk and vote for a party which offfers us what we want.

      Reply: Therein lies the problem. I am fed up with Eurosceptics overall losing elections, despite having a majority in the country. We need votes in Parliament, and we need them now. That’s what I am working on.

      1. lifelogic
        April 14, 2013

        Even a (highly unlikely) majority, in parliament, under heart and soul ratter Cameron would clearly achieve nothing.

  25. Gordon
    April 14, 2013

    Mr. Redwood,
    It must become very frustrating for you sometimes, when there is initially objection to your views, only for history, to ultimately prove you right!

    Thank you very much for this regular feature of my everyday reading, long may you continue to shed your light into those dark corners.

  26. Normandee
    April 14, 2013

    We have been here before, but I will bring it up again but in the context of Margaret Thatcher. I have complained to you before that you do not make enough effort to try and bring about a change in direction re europe in the conservative party, and I refer to it as being afraid to leave your “comfort zone”. Try and think about this, Was Mrs Thatcher in her comfort zone when she took on the miners ? was she in her comfort zone when she was the first to recognise Gorbachev?, was she in her comfort zone when she went to Brussels to bring back the rebate and change in the EU, was she ever afraid to leave her “comfort zone”? no and why? because she had conviction not just fine words. You are not a Eurosceptic you are Eurovague, with no real convictions.

    I forgot to mention the Falklands, no Prime minister is in their comfort zone going to war.

    Reply How dare you say such things. I was at Margaret’s side as her adviser on several of the great issues you raise from the past. I have consistently fought against EU power, resigning from the cabinet over the EU, leading a campaign against joining the Euro, persuading the Conservative party to be an anti Euro party, regularly voting against new Treaties and transfers of power etc etc. Try reading my books and speeches before lying about me.

    1. Brian Tomkinson
      April 14, 2013

      You did however form a pact with Clarke in 1997 and urged your erstwhile supporters in the leadership contest to back that most Europhile Conservative, reportedly on the grounds of party unity and your postion as shadow chancellor under Clarke. You have now assured us that you are putting country before party and will vote to leave the EU in a referendum regardless of the reult of any ‘re-negotiations’.

    2. Normandee
      April 14, 2013

      And yet here we are, still in europe, you still in a minority in a pro europe party, and unlikely to be able to change that. As for lying, I am calling it as I see it, it was Margaret who was in the fore, leading from the front. It was her who was run out of office not you.

  27. Barbara
    April 14, 2013

    While Cameron, appears to be on good terms with Merkel, that does not mean it will come to a good deal at all. In fact, this week as been nothing more than a softening up exercise and it will back fire once the other states realise what the UK is after. I agree we should have a free market place where all goods can be bought and sold, but it has to be an open market not one geared towards Germany’s rule of the zone. If Cameron thinks standing beside Merkel will enhance his chances of people here voting for him on this exercise alone he’s going to be very disappointed, what we want is the chance to vote, nothing more nothing less.
    He won’t get much off the Germans, and the political scene back home is getting warmer for both countries; we here will definately vote NO, and in Germany the question is now being raised more loudly. Its an expensive club as the Germans have found out, and now they are realising we in the UK may have the best idea after all. I hope they will now see changing the fundemental rules of the expensive club, especially for those who pay for it, is getting more important. If they fail to agree then I can see we in the UK will be out in 2017, and the Germans not far behind us. As the bills increase and the demands from the poorer states get larger, all those who do pay will say, enough is enough.

  28. stred
    April 14, 2013

    The future of the whole Euro banking system has been thrown into question following the decision to solve the situation in Cyprus by raiding bank accounts. The young Dutch finance minister seems quite proud of their achievement and without shame.

    Now it seems that M.Hollande is lining France up with those requiring loans, while spending on high pensions and early retirement is allowed to continue. Recently it took 2 months to return a large sum, originally intended for a property purchase, to a British euro bank account. Now, although we need a small account to pay bills on my small holiday house in France, my partner and I have recieved a haughty letter telling us that our accounts will be closed in 6 weeks time and warning of legal sanctions and charges if we do not do obey. We have no other French account to take run the house expenses, direct debits or pay cheques. The manager says it is an instruction from head office. They do not want foreign customers. They have had our Euro savings for 4 years, paying no interest, while my partner was unable to decide on a property purchase- thank goodness!

    So much for European fraternity.

  29. Denis Cooper
    April 14, 2013

    If we had the Swiss system of direct democracy then we could debate whether we should have a referendum as of right, rather than constantly debate how we could possibly induce a politician to give, or in this case sell, us a referendum.

    Because that is what Cameron is doing – he is offering to sell us an EU referendum in exchange for our votes at the next election, although with no guarantee of delivery even if his party wins an overall majority.

    It’s disappointing that some notable Tories who previously advocated direct democracy are now content to see the continuation of this disreputable practice of politicians trying to sell us what should automatically be ours by our rights as citizens.

    1. Mark B
      April 15, 2013

      Not only that, but for the Swiss a referendum would be legally binding.

      Even if we have a referendum and, even if we should win, Cameron or whoever are under no constitutional obligation to obey. For me, that’s what makes this hole charade so unpalatable. The establishment and the political class are playing games with us, like a cat with a mouse.

      Its sick !

  30. David Langley
    April 14, 2013

    France is in big trouble as its leadership is currently without popular support due to financial corruption. Eight out of ten French people think their government is corrupt.
    The EU is good for their farmers and its always been us that heavily subsidises their exports and finance. The truth is coming home to the French that they are in a pack of cards game, and they are in trouble.
    We still need to sort out our government too. The HoL has a lot of bent peers and there are too many MPs. The whole thing needs sorting. I do not support granting financial aid to the EU we need it here at home.

    1. Derek W
      April 15, 2013

      You are describing our UK political class as well as the French.Most are not patriots but self seeking apparatchicks for any system that supports their lifestyle, e with a few honourable exceptions.Margaret Thatcher was a true patriotic politician which is why the rabid Left and the Wimpy Right also the flaccid LibDems play down her achievements.I will add that JR is one of these honourable exceptions.

  31. Chris
    April 14, 2013

    I have little confidence in David Cameron’s talk of reform and feel we have heard it all before. I have been struck by a particularly good analysis by Richard North on the fatuity of all Cameron’s talk of reform. North implies says that the news from Merkel/Cameron is of little consequence, as it is all talk with nothing concrete, and yet sadly this news has drowned out the really important news from the EU which warrants the closest of scrutiny – the release of the EU Court of Auditors’ Report (which demonstrates the huge waste of many billions in the EU, and opportunities for money to go astray/be unaccounted for, and which shows that if this were tackled the need for the Amending Budget would be removed in one fell swoop). See North’s eureferendumblog “EU politics: the fatuity of reform”.

  32. Paul
    April 14, 2013

    The only way we will get an in-out referendum is if the Conservatives form a pact with UKIP at the next GE. Mr Farage has rightly said he will not do a deal with the Conservatives if Cameron is still the leader at the time of the election. Cameron’s EU announcement did nothing to placate the threat from UKIP – UKIP voters, the real Conservative voters, are not daft. They know not to trust a word that comes out of Cameron’s mouth. It is obvious the Conservatives will lose in 2015 with him as leader. If things carry on the way they are, one of the two coalition parties will be in power after 2015 – the Lib Dems. The EU will love a Lib/Lab pact and will laugh at the fact the Conservative Party allowed it to happen. Ditch Cameron and start taking UKIP seriously.

  33. Tim Hedges
    April 14, 2013

    You think Germany should have an anti-Europe party but Britain shouldn’t?

    Reply I think the UK should have a referendum, and we need to make sure we vote for one.

  34. Remington Norman
    April 14, 2013


    With some 60+% of UK laws made by the EU, over which we have no right of amendment or veto, the sovereignty of the UK parliament is compromised. Perhaps you would explain how, you, or any British politician, can justify this state of affairs. Reform (an unlikely prospect) will not alter this state of affairs. This alone is sufficient reason for our leaving the EU.

    On the EU referendum: this will not happen unless Mr Cameron is re-elected in 2015. There is no prospect of this, so speculation on the consequences of an ‘out’ vote is pointless.

    Reply I have been pressing for a referendum and voted for one, as I want to change this position. I am the one MP who has made speeches (available on this site) pointing out just how much power has gone thanks to Nice, Amsterdam, Lisbon and the rest, and how this should be unacceptable to more people.

    1. lifelogic
      April 14, 2013

      To reply:- indeed you have, as you say done that. |Further you have been proved right on almost every issue (other than perhaps Capital punishment) but it will make no difference, with a leader like Cameron will it (a leader you voted for alas)? We might just as well have Labour.

      I see the BBC wheeled out Baroness Helena Kennedy QC on Andew Marr to attack Lady Thatcher today. They clearly have no shortage of these bitter, chip on the shoulder people to wheel out. Having become a QC one might have thought she would have grown up.

      The only sensible attacks on Lady Thatcher are that she did too little too late. She failed to cut the state sector, she helped the green religions, she signed the single European act, she closed Grammar schools and permitted John Major to replace her.

      The idea that she destroyer much of British industry is lunacy. She just stopped the mad tax payer subsidy of basket cases. Something Cameron could usefully learn from on the green and HS rail front.

      1. sjb
        April 15, 2013

        Lunacy, eh?

        “When [John Harvey-Jones] became chairman [of ICI] in 1982 the company was making a loss, bleeding heavily from the harsh effects of Margaret Thatcher’s economic policies on British manufacturing. Industrial customers for its plastics, paints and pigments were shrinking or going bust. Sir John knew whom to blame, once describing the prime minister as British manufacturing’s greatest handicap.”

    2. Remington Norman
      April 15, 2013

      Thank you for the reply John. The stronger point is that the ‘in-out-reform’ debate is based on the false premise that reform could make the EU acceptable to the UK. As long as the British parliament is no longer sovereign, there should be no political support for our remaining in the union. The economic and social arguments, which you put well, are irrelevant to what should be (but sadly isn’t) a matter of clear principle.

      Reply Indeed – I have always sought to uphold Parliamentary sovereignty and voted No when we did get a referendum.

  35. Mike Stallard
    April 14, 2013

    I think this is one of the best analyses I have read of the meeting between the Chancellor and our PM. Well written!

  36. Jon
    April 14, 2013

    The German support was based on them believing the EU in that they would not need to divest wealth to the Mediterranean whilst the EU also said to the Med that the north would share their wealth. IF the Germans have seen through this folly then things may well change.

    1. Denis Cooper
      April 14, 2013

      I don’t believe for one moment that the German government was ever deceived about anything to do with EMU. It is a competent government with good sources of intelligence and access to high quality forensic accountants and economic and financial experts. And in fact it has now been confirmed that Chancelor Kohl was strongly advised that Italy, and also the Iberian countries, should not be allowed into the first wave of the euro, but nevertheless he insisted that they must be admitted purely for political reasons. Likewise it beggars belief that the German government was taken in by Greek politicians cooking the books to blag their way into the euro.

  37. Chrissy1
    April 14, 2013

    If Professor Henkel can apologise for trying to persuade us to join the Euro, isn’t it time Lords Howe and Heseltine apologised for their past behaviour?

  38. Peter Stroud
    April 14, 2013

    Professor Henkel represents many, including myself, who believed the propaganda spread by Tory wets, LibDems and Labour politicians who assured us that the Euro could not fail. Now he represents us again. At least those who now realise that a common currency cannot succeed without a unified political structure. We ordinary people can have little effect on the matter. However, Professor Henkel can, hopefully, change the political view of the most important state within the Eurozone.

  39. James Reade
    April 15, 2013

    Ah, isn’t human nature all about greed – take the benefits, baulk at the costs. We do that here in the UK – we want that common market (benefit), but when we realise it means common regulation (cost), we baulk – and forget that if there wasn’t EU regulation there’d be UK regulation.

    Now the Germans have their movement which is saying exactly the same thing – we’ll take all the benefits the euro’s given us over the years – we’ve been able to export with a cheap currency much longer than would have been the case had we had our own currency (benefit). There have been those in the Union less fortunate, and now they are struggling (cost), we’ll cast them aside.

  40. John Wrake
    April 15, 2013

    Any member of the Conservative Party who votes against Party policy in a debate is simply a protest voter, with no real influence. Present Conservative policy is in favour of EU membership, so protest voters like John Redwood, small in number, are irrelevant.
    Our membership of the EU is contrary to our historic Constitution, contrary to our interests and was brought about fraudulently.
    I do not need to plead for ownership of what is mine. My freedom to be governed by the Monarch and her Ministers, whom I can dismiss for misbehaviour, was won by the sacrifice and effort of my forbears and is enshrined in our Constitution.
    Until those who claim to represent the electorate return to a lawful form of government, Party policy, of whatever hue and Commons majorities, in whatever cause, have no real meaning.
    it is not a referendum on EU membership that we need, but M.P.s and members of the House of Lords with an understanding of our Constitution, a willingness to be subject to it and the bottle to uphold it against all comers, however labelled.

    Reply. I am more than a protest voter – Eurosceptic Conservative MPs have influenced the government to keep the UK out of the Fiscal Treaty, to stop contributions to the bail outs, to cut the EU budget, and now to have a referendum in due course.

    1. Lindsay McDougall
      April 20, 2013

      Eurosceptic Conservative MPs have succeeded in slowing down the EU integration juggernaut but not in reversing it. Only when we reverse or withdraw from exising Federal Treaties (Maastricht etc) can these MPs claim to have made real progress. They need to turn the PM’s 5 principles of renegotiation into a cast iron negotiating position with ‘bottom lines’ and to purge the Conservative Party’s candidates list (for both Euro and national elections) of all known ‘pro-European’ men and women.

      There is a problem of trust at two levels. The first is that Labour’s February 1974 election manifesto promised a thorough renegotiation of our Accession to the Treaty of Rome, to be followed by a referendem. The renegotiation turned out to be limited and the EEC persuaded the Wilson government that they had to recommend acceptance of the renegotiated terms in the 1975 referendum. The second is that David Cameron supported John Major throughout his spat with Norman Lamont over Europe in the 90s. It is up to Mr Cameron to convince us that we can trust him.

  41. Derek W
    April 15, 2013

    Thanks for scrubbing my comment!!!

  42. Vanessa
    April 15, 2013

    “The Euro can only carry on all the time Germany and a few other richer countries are prepared to lend or grant others more of their money”

    Yes, like Britain (not in the euro) giving huge amounts of taxpayers money via our £53 million a day “subscription” to a club we never voted for AND via our increased “contributions” to the IMF, now a flimsy imitation of an EU institution. Lucky Cyprus, Italy, Greece, Portugal, Ireland……………..need I go on?

  43. lojolondon
    April 18, 2013

    John, I am sure someone has already said this – Just like Cast-Iron Dave, Merkel thinks that by looking as if she is questioning the EU she can bring Eurosceptics onboard and save her political career. Merkel talking to Dave about re-negotiation of the treaty is like Dave promising us a referendum to draw voters away from UKIP. Equally dishonest, equally desperate and I hope it is as much of a failure.

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