There are waves of voters on the continent wanting substantial change to the Euro scheme which lies at the heart of Project EU. The endless austerity policies designed by Germany to avoid the need for substantial transfer payments from the richer parts of the zone to the poorer parts are universally unpopular in the south and west of the EU. Voters swept aside the two traditional main parties in Greece, only to see their chosen champions Syriza blown away by a resolute EU defence of austerity. In Italy now a populist government has been formed, as 5 Star and Lega have almost destroyed the two traditional centre left and centre right parties of that country. In Spain Cuidadanos and Podemos are on the march again and poised to do well from any early election. Even in fortress Germany herself, the home of Euro orthodoxy, a growing impatience with just how much Germany is nonetheless committed to has led to the worst ever result for the two traditional parties in the last general election.
All of these pressures go back to the Maastricht rules and criteria. These rules still have some sway in the UK, a non Euro member. The UK Treasury has used the budget discipline rules to require progressive reduction of our deficit, with the aim of starting to reduce the debt as a proportion of our national income. I often support the policy of controlling public spending and debt, and agree it should not be allowed to get out of control. I doĀ not support our subservience to an inflexible EU rule that pays little attention to the state of the cycle, the level of unemployment and none to the tightness of monetary policy. Today tight fiscal policy in the UK is reinforcing tight monetaryĀ policy with the inevitable slowing of the economy we saw in Quarter 1. Ā I think we need to look at all of these Ā things together to get the right policy trade offs between inflation, output and future debt levels. A lot of Maastricht thinking is based on the pre crisis European economies. Today with mass migrations affecting wage inflation, and the liberal global supply of goods and services keeping down prices, the old identities that full capacity automatically led to high inflation do not work.
Much Ā more serious than our position is the impact these disciplines have had on the south and west of the Euro area. Far from creating stability, the Euro scheme Ā gave Ireland and Spain a wild ride. First it led to a massive boom, with asset inflation on a big scale, over development of property and over extension of bank credit. Then it gave them a big bust, where all of that reversed. In Italy’s case it has given them more than a decade of pitifully low growth and high unemployment. In Greece it has led to a major slump with large falls in living standards. In Cyprus a banking crash led to people not being able to withdraw their Euros from some banks, and suffering losses on larger deposits.
Today the voters of Italy and Spain are saying they want reform of the Euro. They want more latitude to spend more, tax less and borrow more to try to accelerate growth and job creation. It is important how the EU responds. If they seek to do to Italy what they did to Greece, we are all in for a very bumpy ride. What they need to do is to move more rapidly to complete their political union, and to put into it a system of transfers of cash from rich to poor and from surplus to deficit areas. In the UK large sums are moved to the areas that need it via the nationwide benefits system and the Council revenue support grants. That is why the sterling single currency area does notĀ have these periodic crises we see in the Eurozone. If they are not prepared to do this then they need an orderly break up of the zone so deficit countries can devalue against Germany and price themselves back into markets. When they broke up the rouble zone the countries that got out and established their own currencies soon did well out of that reform.
June 2, 2018
An orderly break up of the zone so deficit countries can devalue against Germany and price themselves back into markets is what is needed.
One size fits all is clearly insane for the many various economies. The exchange, policies and interest rate that is right for one country will be wrong for the others. Even if these rates are right today they will be wrong tomorrow and the day after. They need to float or as you say, it needs to be one country with government & huge government cross subsidies efficiently done (which is very unlikely). The former is far preferable as there is no Demos across the 27 for a democratic EU single government. It could never be remotely democratic and would become a tyranny (indeed it largely is a tyranny already).
Only the former would allow some real democracy to be restored. But doubtless the EU bureaucrats will “try to do to Italy what they did to Greece” as they always make the wrong choices.
June 2, 2018
One size fits all is clearly insane for the many various economies’ Yes, and fundamental to the problems in the Euro zone… The Eu elite have always been in too much of a rush to gain and test their powers. If they’d had patience economies would have slowly converged, perhaps, but the other thing to remember is the unfairness of the EU. France and Germany got the big industrial facilities, while Greece, for example, was forced to give up thriving industries because they were already established in other EU countries….apart from their lax tax system, this was one reason Greece – went bust.
The EU has to control everything – there has to be a rule of law for every aspect of life and business, which leaves little room for innovative ideas to flourish – It can be likened to a soul-less automaton, totally devoid of any spirit of play.
June 2, 2018
The EU is part and parcel of the globalists’/NWO/deep state plan, and as Donald Trump knew, before he took on the Presidency, it will be a herculanean task to dismantle. Obama was already 8 years into the Plan, and Hillary was meant to complete it. They could not believe she lost – there is too much at stake for them – power, trillions of dollars so they are fighting it tooth and nail.
The EU is part of this plan to dismantle national entities and move towards a one world government, made up of large trading blocks with open borders, hence its fanatical zeal to prevent its break up. We need a President Trump in the UK to engineer Brexit. Nothing less will do against the eurofanatics. In my view, they are not only fanatics but hugely dangerous being a true and active threat to the survival of individual countries and cultures, their livelihoods and wellbeing.
June 4, 2018
Chris – I can only agree with you …. Various other political unions were planned based on the success of the EU, but they are clearly changing tactics as the EU has been a disaster and allowed too many things to come out of the bag.
Thank the Gods that there are still enough people with enough marbles to resist the push towards a very undemocratic OWG – No wonder they make ‘Populist’ a dirty word.
I fear our political elite have already fallen, meaning the fight is on several fronts.
June 3, 2018
This is the man who is proudly boasting about how his party taxes the rich till their pips squeak in the Daily Mail yesterday. Don’t take my word for it -page 7 in old money lol. What a what a sheep in wolves clothing Mr Red is.
Reply Said no such thing. Have said here and elsewhere we need to get the bulk of our tax revenue from the better off – as we do- and that requires setting tax rates that are internationally competitive. I was making the point that we raise more in income tax on the better off at 45% than at 50% and would raise more still at 40%
June 3, 2018
Exactly what I said you said -you are Screwing the wealth producers and you merely reiterate here your awful Mail comments. I wish business people would pay more attention and listen to what is coming out of the horses mouth and stop supporting a party that regards them to mix meataphors as their milch cow. Did you get s Masters degree in Chutzpah at your university perchance?
45%? That’s ok then! Someone needs to be De- selected ( seriously)
June 4, 2018
niconoclast,
What a very odd rant you are having.
Are you in favour of lower top rates or higher top rates of income tax?
June 4, 2018
The only proper rate of tax for income tax is 0% but Rome was not sacked in a day. It should be eliminated over a generation perhaps. It was only introduced as a temporary tax in time of war but as we all know there is nothing as permanent as temporary.
Governments tax to discourage certain activities they nany-ishly deem harmful like smoking and drinking – which is bad enough – but why would Any government seek to discourage wealth creation,trade,industry entrpreneuralism commerce by taxing income?
But the main reason to oppose taxation is because it is theft pure and simple and any government that acts like a criminal by stealing wealth from those who produce it renders itself automatically illegitimate, exchanging its role as a protector to that of a predator – on an industrial scale.
June 4, 2018
Why are IQ tests being deployed before one can post now – is it a way of keeping out idiots like me cos I fear it may well succeed! If one has to struggle with them each time it may well prove be an onerous bridge to far.(I was third in my class for everything but there were only 3 in the class).
June 2, 2018
All government buildings to display a Christian cross in Bavaria I read. The religious symbol is apparently already compulsory in public schools and courtrooms in Bavaria. Why on earth should someone of no religion or of any other religion have to put up with this sign of execution & discrimination in all public building?
Clearly it is the government just trying to win votes using public money. It is surely no roll of government to use tax payers money to indoctrinate children and adults into a particular religion. It will surely tend to have the reverse effect anyway.
When some areas become majority Muslim, how will the Christians likes it if the Muslims do the same or perhaps carry it rather further?
June 2, 2018
They don’t need to be in a majority before they start causing trouble!
June 2, 2018
Not really seeing much sign of either life or logic…
June 2, 2018
Well, I played my part in keeping us out of the euro, and although that was an extremely small and arguably insignificant part I can still look back and be glad that I was not one of those people who were suckered into supporting that crazy project. Of course in the UK there are now few people who will openly admit that they did support it …
However one way or another we did not join; and thank God for that – not Gordon Brown – because as pointed out again recently:
http://johnredwoodsdiary.com/2018/05/29/the-eu-doesnt-like-democracy/#comment-937653
the euro is designed to be a trap; once a country has joined it cannot change back to a national currency without leaving the EU altogether, and for many of the poorer EU member states that creates much higher barrier. Otherwise I expect that Greece would now still be in the EU, but out of the euro and issuing its own currency.
June 2, 2018
Denis, and we all know how hard it is to leave the EU when the establishment want us to stay in. Who really believes we will LEAVE?
June 2, 2018
When May made nine new Conservative Peers and eight were remainers then I think her position was made crystal clear. Even if the sound one was the excellent Peter Lilley.
June 2, 2018
I am sure May looked hard to find competent and qualified Brexiteers to offer a peerage to. No amount of searching will find something that is not there. There are plenty of incompetent and unqualified Brexiteers but little else.
Virtually nobody who has successfully held a high office of state or a senior position in business in the last 25 years thinks Brexit is anything other than a car crash.
June 3, 2018
Andy, surely there is no need to descend to this type of unpleasantness. It’s also nonsense. I would say that that attitude may have been part of the reason why Remainers lost the referendum, by underestimating Leavers. The fundamental reasons we voted for Brexit have been set out superbly by our host, for example above, on the euro.
June 3, 2018
The rich elite establishment love the EU
It’s groupthink.
June 3, 2018
That is untrue.
June 3, 2018
Andy, Leave is being managed by Remains. They’ve not done very well have they?
June 3, 2018
Andy
Do you live under a rock ? Two of the most successful chancellors of the last 40 years both voted Leave, Duncan Smith, Howard, Lilley, Hoey and many more former senior ministers voted leave
Business people
Dyson
Bamford
Buek
Keswick
Miller
Goldsmith
Forte
Adderley
Mordaunt
Harris
Marshall
Hintze
Martin
Freeman
Cuddas
Johnson
Ode
Hosking
Hargreaves
As you aren’t really into real life Andy ALL these people are senior execs/founders/owners of multimillion ( in 4 cases billion) pound UK companies
There lots more but I gave you these as a taster
June 2, 2018
LEAVE means LEAVE.
So we will “leave”.
June 2, 2018
I would like to think so !
June 2, 2018
But in name only with May and Hammond.
June 2, 2018
I am beginning to doubt it. It seems incredible that Soros, Kofi Annan and other assorted foreigners, ex PMs, washed up politicians, current MPs, civil servants and the Mecia can overturn the referendum but it us beginning to look like it will happen.
Quite what they the will follow that I don’t know, do they think this country could still be governed? On what terms do they think we can be forced back into the EU? The old ones, Cameron’s ‘reforms’ or complete capitulation. Have they even thought that far ahead?
As a patriot I despair.
June 2, 2018
If I can allow myself to speak up for the EU if only once, no-one compelled nations to adopt the Euro.
All the implications were clearly indicated by the EU High Command. The ruling circles convinced their populations to give up their sovereignty.
Personally I believe if it were a hanging offence for Treason then it would act as a deterrent for certain politicians of great intelligence selling their countrys’ souls to the Devil.
In our own case. The Brexit “debate” in Parliament would have ended, as it should have done, on 24th June 2016 when the result and decision was crystal clear.
June 2, 2018
For all those countries which joined the EEC/EC/EU after the Maastricht Treaty it was made a condition of their accession that they would also join the euro at the earliest opportunity. The Swedes have got away with it so far, but the Poles especially have been explicitly reminded that they are under a treaty obligation to join the euro.
In 2010 Angela Merkel expressly stated that every EU member state should join the euro, and notably she made no exception for the UK or for Denmark, the two EU member states with treaty opt-outs from ever having to join the euro.
So it is true that before it joins the EU a country can decide that it will not accept the EU’s standard accession requirement that it will scrap its own currency and adopt the euro as soon as possible, it is not compelled to accept that accession condition, but then in that case it will not be allowed to join the EU.
JR published several of my comments with details and links about this on this thread back in July 2011:
http://johnredwoodsdiary.com/2011/07/26/the-uk-needs-a-new-relationship-with-the-eu/
“Well, weāll be faced with constant external pressure from foreign politicians like Merkel, who made her position clear last May … ”
“Estonia became the 17th member of the eurozone on January 1st 2011. Some Estonians argued that such an important decision should be put to a referendum, but they were told … “
June 2, 2018
“…….no-one compelled nations to adopt the Euro.”
That’s true. But no-one had any experience of just what it meant to give up their own currency and use someone else’s instead. People tended to assume, probably wrongly as it turns out, that their Governments had consulted the best expert opinion available and had been assured that the risks were minimal and were far outweighed by the potential the benefits.
They should have listened to Milton Friedman instead! Mind you, its easy to say now with the benefit of hindsight.
https://www.project-syndicate.org/commentary/the-euro–monetary-unity-to-political-disunity
June 2, 2018
Indeed but it was very easy to see at the time too. Even Mrs Thatcher failed take the sound advice of Alan Walters joining the ERM. All the sensible economists (only about 20% of economists seem to be sensible unfortunately but they are easy pick out from the dopes) knew that it was idiotic.
You should always listen to Milton Friedman on almost any issue but governments never do. They always want ever more tax and ever more government.
Reply When Alan was Economic Adviser, and when I replaced him as Economic Adviser, we did advise and she accepted that we should not join the ERM
June 2, 2018
Except that no-one persuaded anyone of anything.
Instead politicians decided to either ignore the wishes of their electorates or simply to not ask for their electorates’ opinions for fear they did not get the answer they sought.
Or even worse, it never occurred to them that their electorates might have an opinion or that it mattered…
June 2, 2018
Nothing stopping it issuing a parallel currency and insisting that taxes are paid in that currency.
June 2, 2018
NHSGP
You think?
June 3, 2018
https://ec.europa.eu/info/business-economy-euro/euro-area/euro/use-euro/euro-legal-tender_en
“Within the euro area, only the euro has the status of legal tender. “
June 2, 2018
Off-topic, regarding the UK government’s latest crackpot scheme to solve the ‘problem’ of the Irish border, which is already being torn to pieces:
https://www.irishnews.com/news/brexit/2018/06/01/news/border-could-get-buffer-zone-under-new-brexit-proposals-1345240/
“DUP hits out at ‘contradictory’ plans for ‘buffer zone’ on Irish border”
I think the real problem is that Theresa May and other Remain ministers, and most of the civil servants, and quite possibly David Davis as well, are all instinctively wedded to the EU’s “single market” model for securing frictionless trade as if there was no alternative model which could achieve that same purpose in a more acceptable way.
Which of course there is; as explained two weeks ago, here:
http://johnredwoodsdiary.com/2018/05/17/the-business-of-england/#comment-935654
“parallel marketability” provides the simple answer that Theresa May needs, but she and others have been too blinded by EU “single market” ideology to see that.
June 2, 2018
The real problem is that Brexit is incoherent. A series of mutually incompatible pledges.
You can not ātake back controlā of your borders if you do not have a border. You can cut bureaucracy while creating more of it. You can add more friction into trade and claim to be in favour of frictionless trade.
This incoherence is now evident to all – I suspect even to Brexiteers but you are all too proud to admit to.
June 3, 2018
We cannot have a proper border until we actually leave the EU.
If you fear more bureaucracy then look to the EU where the outpouring of directives regulations and new laws creates more extra bureaucracy than any organisation on Earth.
The UK wants free trade with zero tariffs not the opposite.
June 3, 2018
If you control your border you can do what you like with it, whatever seems to you to be most appropriate. That could be to erect a high wall with watch towers and machine gun posts, or at the other extreme it could be to just plant a small marker at the position of the border and leave it at that. In the case of its land border with the Irish Republic it would most appropriate for the UK to change nothing at all at the actual border when the UK leaves the EU, just carry on with the present completely unhindered flows.
June 3, 2018
There is absolutely nothing coherent about open borders.
June 3, 2018
Andy, Brexit – British Exit – cannot be “incoherent”, otherwise most of the countries in the world would be equally “incoherent”. You have never explained why you think the UK, alone of the 169 (196 – 27) non-EU nations in the world, cannot exist outside the EU.
June 2, 2018
Yet another Brexit “simple answer” that demonstrates, as always on this site, a superficial understanding of geopolitics. “Parallel Marketability (PM)” is, in EU terms is “differentiated integration”, both internal and external.
Denis, are you suggesting that the UK deploys with relevant agreements, PM, as a member of EFTA/EEA; or something like the old Finnish model? You will be aware that the current EFTA states would, currently, turn down a UK application for membership.
Worth having a read of “Back to the Future? Lessons of Differentiated Integration from the EFTA Countries for the UKās Future Relations with the EU”
(Sieglinde Gstƶhl and Christian Frommelt)
June 4, 2018
We both know what it means, acorn, having discussed it before, and as you do not want a solution to the Irish ‘problem’ it is understandable that you will not want this simple but effective solution.
I said nothing at all about EFTA.
June 2, 2018
Whatever plan we come up with over the Irish Border will be rejected by Barnier and the 27.
The only solution they will accept is for us to remain in the SM and CU which, of course, would strangle Brexit at birth and will not fulfill the obligation put on the Government by the 17m who voted to leave.
It is likely to end in tears with either No Deal or us capitulating. I would place a large bet that the undemocratic Remainers lings in Parliament will not allow us to leave with No Deal – they will force Mrs May to capitulate.
June 3, 2018
Brexit means Brexit in name only with T May that is surely clear. Why else would she have put 8 more reamainers into the Lords? Worse still she will lead to Corbyn, Mc Donnall and Venezuela.
June 3, 2018
I think you are right. At first it was thought that the Irish government would be fairly co-operative over Brexit and the border, not least because Ireland stands to be hit hard quite economically if its interests are not safeguarded through a good agreement on UK withdrawal. That changed soon after Leo Varadkar took over as premier in June 2017, when the Irish government moved to its present absurd extreme and intransigent position, with the backing of Michel Barnier. By December it was quite obvious that the UK government should accept that the Irish would not be moved from that, and in fact steal a march on them by saying that for its part the UK would leave the present border arrangements completely unaltered so if there were any changes they would be the responsibility of the other side. But then of course in March in her Mansion House speech Theresa May threw that away by gratuitously accepting responsibility for solving whatever problems the Irish and the EU might choose to create. Whoever advised her to do that should be sacked, at least.
June 2, 2018
Denis, I’m sure you are more EU wise than I but it is my belief, and forgive me for repeating myself, it is my belief that May is in Hammond’s pocket and Hammond is in the pocket of the “few” who benefit from EU membership. Aka single market membership. She has no personal convictions. She is doing as she is told.
June 3, 2018
+1
June 2, 2018
Jeremy Hunt presides over the appalling NHS that is killing and failing thousands every single month, it can never work as currently funded or structured but he does nothing to address this.
Hos main concerns are distractions from this, the gender pay gap in the NHS (lots of female nurses and more senior male doctors), a sweet ban at supermaket tills and bans on advertising ājunk foodā. Even the relatively sound Norman Lamont (who cost me a about two million with his absurd ERM mismanagement) seems now to be in favour of the totally idiotic sugar tax and the Scottish alcohol price controls. So even the sound wing of the Tories are becoming lefty high tax, interventionist dopes now – just like the dreadful May and Hammond.
How will Hunt define ājunk foodā one wonders. Will a packet of salt, sugar, butter or a bottle of olive or sunflower oil be considered junk food – they are very high in fat, salt or sugar? Fruit especially dried is very high in sugar too. What is wrong with a nice burger or a chicken kebab? People just need to eat rather less and move a bit more.
June 2, 2018
Just as in the USA where people did not want to vote in a President who was more interested in body parts than saving the economy and jobs, we will not vote in a Party who seems incapable of identifying the critical problems facing this country e.g. jobs, high and ever increasing taxes, lack of entrepreneurial freedom and pride in our country, the struggling health service, infrastructure problems brought on almost solely by the unsustainable mass immigration programme that is part and parcel of membership of the EU.
June 2, 2018
Good morning.
A very thoughtful piece.
I wholeheartedly agree with the last paragraph. However, a full political, monetary and economic union is unlikely. This is down to Germany holding out against the idea of being the lender of last resort. And with political pressure pushing hard from within which is against helping others in the EU, I think this crisis has long to go.
Our kind host forgot France. Remember, Le Penn and her FN Party did well but not well enough. It too President Macron’s new party to save the day as the old one were also spent.
Europe and the EU is on the path to decline. There are so many factors acing against it it is hard to quantify them all. But one thing is for sure, the EU Project is approaching 100th birthday. Yes, this silly idea was thought about 100 years ago by two men. Jean Monet and Sir Arthur Salter. I always thought that ideas that are that old do need periodic review and revision. This to keep them both fresh and relevant to an ever changing world. The EU Project is neither fresh or relevant to the world of today but it is stuck in a 19th Century Mindset. It represents the past, not the future.
June 2, 2018
There are some properly extreme parties within reach of government and real racism throughout the EU (including Ireland and Scotland.) England has nothing by comparison.
June 2, 2018
France like the UK has FPTP so it is very much far harder for populists to break through against the antagonism of the MSM; FN have been trying without success for decades. What En Marche demonstrated was that a globalist controlled MSM can market a rebadged Europhile socialist party as something entirely new and wonderful whilst giving the unpopular mainstream parties of the left and right a good kicking to ensure the success of their new product. Perhaps, the bliar Mk II party will be launched to hysterical adulation from the BBC soon if they can find a poster boy like Macron that is?
June 2, 2018
Are you sure about FPTP in France? To start with, whether for presidential or MP elections it includes two runs.
The site http://www.theweek.co.uk with the content “How does the voting system work?” gives the details and these do not agree with your assertion.
June 2, 2018
1981: Jean-Marie Le Pen did not get the 500 signatures of “grands electeurs” and cannot participate in the French presidential elections. In the following presidential elections the FN is present and its results in the first round are:
1988: 14.38%
1995: 15.01%
2002: 16.88% (JMLP gets to the 2nd round and loses to Chirac 72 to 28%)
2007: 10.44%
2012: 17.90%
2017: 21.70%
In 1986, Mitterand has a proportional voting system for the elections of MPs, and the FN gets 35MPs. Then the voting system gets back to “scrutin uninominal a deux tours” (two-round majority voting system) and in 1991, 1997, 2002, 2007, the FN has no MP. In 2012, it gets 2 MPs and 8 MPs in 2017. At the 2014 European elections (proportional voting system), the FN gets 24MEPs.
Most of the analyses made by various commentators when Macron was elected in 2017 pointed out that one of Marine Le Pen’s main mistakes was the dog’s breakfast of her ideas on the EU and the euro.
June 2, 2018
forthurst, you might want to follow French news a bit closer as I do not think the wave of repeated strikes of the last two months, particularly in the transport industry, is indicative of Macron being too “socialist”.
Or maybe you have your own very peculiar way of judging what a “socialist” is.
June 3, 2018
hefner
Really ? You might want to follow French news a bit closer as you obviously dont. The French strike ALL the time no matter who is in power in France .
Average days not worked in France 2008-13 171 ( per 1,000 employees) The second worst strike rate in Europe
June 4, 2018
Is that proof that Macron is a socialist. I think that was the original point.
And just as a joke, how comes that with all those strikes and working less hours than the British, their overall productivity per hour and per week is some percent points higher than that of the Brits?
June 2, 2018
M B,
good piece. In a nutshell, it appears Germany’s attempt to take-over Europe, for the third (?) time, is on a rocky path to failure. At least its not costing lives this attempt.
June 2, 2018
It is costing lives in Greece.
June 3, 2018
It is costing some lives but not very many as yet. As too is the greencrap expensive energy religion and the absurdly structured and not to be reformed by May and Hunt NHS ( many thousands of lives here).
June 2, 2018
“This is down to Germany holding out against the idea of being the lender of last resort.” Comments on this site seem to think you are some sort of expert, I hate to dissolution them.
Germany can’t be the “lender of last resort” because Germany is not the Euro currency issuer; the ECB is. The fact that German Banks are owed ā¬902 billion from sub-prime loans to other EU states, is Germany’s problem within the Eurosystem; but, ultimately the ECB’s problem. Not that the ECB will worry, it has a bottomless pit full of Euro currency. There is nothing it can’t buy or bail-out in the Euro currency area.
June 3, 2018
Acorn, Actually the Germans are not too keen on the idea of the ECB printing money with gay abandon. So try again please.
June 3, 2018
Without German participation the Euro project will fail. Or do you suggest that Greece should take up the slack ?
Germany will not allow wealth transfers on the same lines as the UK or USA. I think most here would understand and accept that and would not resort to snide remarks.
June 4, 2018
Without Germany, the Euro would devalue and make life a lot easier for the other eighteen Euro using member states.
June 2, 2018
Possibly the main reason for the French Revolution was the multi layered bureaucracy
with endless sinecures with the Farmers-General not unlike CAP as market forces were subservient to the vested interests.
June 3, 2018
Yes. Too many upper-class snouts in the public trough.
June 2, 2018
There will be no low cost solution to this. It any EZ countries do succeed in exiting the euro, I believe they will be faced with huge euro debts – much owed to Germany. That, no doubt, is the reason why Italy’s latest Finance Minister has previously called for the creation of a fund to help countries with the process.
June 2, 2018
Well would they have to pay their euro debts fully in reality?
June 2, 2018
There is absolutely no chance of the ā¬900billion owed to Germany in Target 2 payments ever being paid. While Germany persistently runs an 8.5% surplus with the EZ it can only get worse.
I see the Sun newspaper is turning on May as she continues to capitulate to Brussels. Is this a watershed moment.
June 2, 2018
@Ian Wragg
I see the Sun newspaper is turning on May as she continues to capitulate to Brussels.
It is not the Sun Ian, it needs to be 60+ of her party in Westminster to trigger a leadership contest. If we are going down which we surely are, lets go down fighting.
June 3, 2018
The 60+ MPs of the ERG seem to prefer Theresa May to go on with the Ā«Ā discussionsĀ Ā» with Barnier and the EU, whatever the result, and then a bit before the next General Election to dump her for another (I did not say better) candidate.
Despite the noise the ERG is producing, JRM and his followers are just a bunch of sissies, some more Ā«Ā intellectualĀ Ā» than others, as can be seen every day on this blog.
June 2, 2018
Or indeed bank depositors! We have already seen in Cyprus governments steal large chunks of peoples bank deposits.
Indeed even in the UK government has essentially done this using QE, not quite as blatantly admittedly.
June 2, 2018
Even in Germany they are becoming more sceptical about the Project and indeed you can see why because the reality is they are subsidising the less efficient, some would say corrupt countries and it looks like continuing into the foreseeable future. Why should their voters subsidise a failure to collect taxes in Greece or reform bloated public sectors?
To date they have been āconnedā by the claim that the vast bailout moneyās they have provided is repayable but over 80 years at zero interest rates or whatever it is, but the reality is this is effectively written off. It will be interesting to see how long their patience lasts and/or the political concensus holds.
June 2, 2018
Good analysis. What’s happened to all those pro euro voices in the UK who used to assure us we must be in to avoid economic Disaster? I recall the Financial Times journalist Philip Stephens, a prominent and vitriolic critic of brexit, saying opponents of the euro were “little Englanders at best, xenophobes at worst”. They have all moved seamlessly from pro euro hyperbole to continuity remain hyperbole.
The other point on the euro is it illustrates that wen required the EU is not as rigid and rules bound as it likes to make out. Sweden for example is in breach of the Maastricht treaty by having rejected the euro, yet there is no attempt to force it to join (yet). In the same way the EU is in fact perfectly able to agree a bespoke FTA with the UK.
June 2, 2018
Indeed you ask:- “Whatās happened to all those pro euro voices in the UK who used to assure us we must be in to avoid economic Disaster?” And also that we needed to be in the EURO and the ERM.
Alas they are mainly alive and well and still trying to kill Brexit and defeat the democratic will of the people. Or busy writing books like Clegg’s book:-
How To Stop Brexit (And kick the voters in the teeth).
The good old Libdims neither liberal nor democratic nor honest. In the proud traditions of people like Jeremy Thorpe, Cyril smith and Clement Freud! Wrong on every issue from climate alarmism, high taxes, big government, anti-democratic and pro EU just like the appalling BBC.
June 2, 2018
5 posts from you (so far) today. Can’t you get a life? No one’s interested in your rants and it gives the wrong impression about ‘brexiteers’. Mr Redwood regularly asks for a maximum single brief post from people per day which is especially important during his working week. In your case posts much less often than that would be appreciated.
June 2, 2018
Not fair MPC. I for one am interested in Lifelogics “rants”.
June 2, 2018
MPC
I like reading Lifelogic. Anyway, I have a really cool thing on my computer mouse called a scroll wheel, and just a slight movement by my index finger scrolls down to the next Commentor if I so wish. Though I try to read everyone’s comments. I really do. It’s a question of time. I like the personal experiences abroad and in their own towns particularly interesting.
June 3, 2018
MPC
Stop stalking Lifelogic , go somewhere else or just dont read his posts.
June 3, 2018
I like reading Lifelogic. Anyway, MPC, it is Mr Redwood’s blog and he will decide, not you.
June 2, 2018
We do not have to kill Brexit.
Brexiteers have proven themselves so monumentally incompetent that it is already dead.
We are, however, very much enjoying watching the Tory hard-right pensioners destroy themselves in the process.
June 2, 2018
If Brexit is dead why do you keep hammering on the head of the corpse?
June 3, 2018
Which brexiteers are you referring to, bearing in mind this is not a brexiteer government?
June 3, 2018
Andy, You still won’t (can’t?) say why the UK – solely as a consequence of leaving the EU – will not prosper as an independent nation.
Oh, and your notion that there are 17.4 million “Tory hard-right pensioners” is, frankly, bonkers. But funny.
June 3, 2018
Andy
More contradictions from you then
You are a very bitter boy.
June 2, 2018
The EU treaties and laws are there to be strictly enforced when that promotes “ever closer union” but to be quietly bent or broken when that is more convenient. It is a principle enunciated by the Italian statesman Giovanni Giolitti:
āThe law is something we apply to our enemies. For our friends we interpret it.ā
Yet for the sake of European integration most of our own politicians have been, and still are, prepared to turn a blind eye to blatant illegalities by the eurocrats.
June 2, 2018
Well, Denis, it’s a relief to hear someone else voicing one’s own opinion. Makes one feel less isolated! Because the way things are going, one does sometimes feel that it’s like shouting into the wind, with a lone voice.
(I do rant at home, and my Best Beloved gets the tiniest bit tired of it….)
June 2, 2018
Have you had a fireside chat with Mr Hammond by any chance?
He might benefit from a word or two in his shell-like ear.
Tad Davison
June 2, 2018
Yes one might perhaps explain to him why his ‘highest and most complex taxes for forty years’ are such an economic and electoral disaster. How he is killing the tax base, chasing out the wealthy, hard working & non doms, killing job mobility with his 15% stamp duty, harming the gig economy and generally making a complete fist of everything. This while wasting cash all over the place and delivering dross by way of most public services.
Perhaps you could ask him what he has against landlords and tenants, private pensions holders, people who die, the prudent and his other target groups. Or you could explain why ‘tax complexity’ is a further tax (that raises no money) but costs everyone loads on top of the actual tax.
June 2, 2018
‘Lifelogic
Jaguar Land Rover manufactured 532107 cars last year and now being hit with the envy tax on its customers that every car over Ā£41k will pay extra excessive Road Fund Licence.
Who and what idiot thought this one up? Surely the plan to save the world is to get old inefficient engines and cars off of the road. All electric cars are just a drowning man clutching at straws until the overall end product can compete on a level playing field without subsidies and the safe disposal of the batteries can be properly handled without any side effects on the environment..
The plan should have been obvious: All vehicles prior to 2000, Road Fund Licence raised Ā£200. up to 2010 raised Ā£150, up to 2018 raised Ā£100. All new vehicles after 2018 raised Ā£175. By attacking the critical mass of older cars in this way would surely raise more duty for the government and increase the number of old vehicles removal rate from our roads. It would assist the whole cars sales market. Tighter proposed plans on the MoT plus non payment of the RFL resulting in immediate destruction of the vehicle with a Ā£3000 fine and two year automatic ban will make drivers think twice about breaking the law and also have a massive impact on fuel pollution.
Our previous leader claimed that we were all in this together. Hitting hard the people who have been successful enough to be able to buy a more expensive vehicle is totally immoral and unfair in that to be able to afford to buy and run such luxury top of the range vehicles means that they or their companies have payed a lot in income tax to start with.
June 2, 2018
Agree JR, for the Euro to work properly, all who use it need to have all of the same rules and laws, which can only come with political unity, which in effect means they need to become, think and act, like one large State.
The problem is the Populations of all of theses individual Countries were not told this would need to be the case, they were not asked, they were not consulted, they were simply lied to.
Some in those Countries still do not really understand what the political end game is, but enough are now becoming clued up, and simply do not want to be part of one very large State with no National identity and are voting accordingly.
Thus the EU have bought this people population rejection upon themselves, by trying to be devious and clever with policies which slowly take away the ability of National Governments to make their own decisions.
It will all end in either tears, or with one super EU State, time will tell.
June 2, 2018
Many are quick to blame the Germans, but is it fair. They work hard in a productive manner and are genetically frugal. They have achieved a lot because of this, witness the unification of Germany. If they are to blame for anything it is not understanding that not all the people of Europe are the same as them. Southern Europeans seem from my observation to put quality of life higher up the scale of desirability. They have their disciplines but not necessarily the same ones as the Germans.
There are three possible answers to the Euro question. First is a USEU with similar monetary arrangements to that of the UK and USA, but in my judgement it is now politically too late for that. Second is a reversion to national currencies throughout the EU. Thirdly the Euro zone could shrink to Germany and those countries that aspire to similar values, while largely southern Europe reverts to national currencies. I think that this latter scenario is the more likely at this point on the political spectrum.
The UK was wise to have stayed out, and now with political determination will leave the EU with a free trade agreement on trade and services, although much of the rhetoric spilling from the EU and the fifth column in the UK could put this in doubt, but do not despair WTO rules work well for 60% of our trade which is in surplus with the rest of the World. Our trade with the EU could drift into surplus because they could lose out to competition from the rest of the World, particularly in food. It is all down to a clear headed determination from our negotiating team. We do not want the camel that should have been a horse.
June 2, 2018
The blame rests primarily with one German, Helmut Kohl:
http://www.spiegel.de/international/europe/euro-struggles-can-be-traced-to-origins-of-common-currency-a-831842.html
“The documents prove what was only assumed until now: Italy should never have been accepted into the common currency zone. The decision to invite Rome to join was based almost exclusively on political considerations at the expense of economic criteria. It also created a precedent for a much bigger mistake two years later, namely Greece’s acceptance into the euro zone.”
“… the Kohl administration cannot plead ignorance. In fact, the documents show that it was extremely well informed about the state of Italy’s finances. Many austerity measures were merely window dressing — either they were accounting tricks or were immediately dialed back when the political pressure subsided.”
June 2, 2018
I do blame the Germans. They have a vastly undervalued currency, which is causing havoc not only in the EU, but across the entire global trading system. I believe a few years ago Bernard Connolly (he wrote ‘The Rotten Heart of Europe’) calculated the optimum value of the Euro v the Dollar for various countries. For Greece it was something like 35 cents, but for Germany it was $2.36. The Euro closed at $1.17 on Friday. That shows you the extent of the problem.
To solve the problems by fiscal transfers as we have in the UK and USA would require larger transfers than the reparations envisioned in the Versailles Treaty, and we all know where that lead. I do not think that is a goer at all, no matter what Macron might think.
But you have failed to advocate another answer. Germany could leave the Euro. If she did so the Euro would fall greatly in value and at a stroke most of the debtor states would find the burden eased. Germany would lose of course and end up with a currency that better reflected her economy, which would probably be bad initially, but better longer term. But if Germany thinks she will ever see the Target 2 balances then she is in for a rude awakening – they are an illusion.
There is one thing that is certain. No matter what the Germans might think, particularly their political class, one way or another she will pay for this mess and pay handsomely.
June 2, 2018
Agricola, The Germans are not as productive as they think they are. They benefit from the mercantilism inherent in the Euro.
It comes back to one size doesn’t suit all, from 20 or more years ago. The EZ economies have diverged since they locked their currencies together. Yet the Euro is an “averaging” currency. Consequently Germany benefits from an artificially lower value currency than it would have, if it used its own Mark.
June 3, 2018
NickC,
Look at the statistics, the Germans are about 33% more productive by producing hour than the British and they work 300 hours less a year, as well.
Nick, stick with the facts
June 3, 2018
Hans, I didn’t say the Germans weren’t productive. I said they benefit from Euro mercantilism.
Hans, stick with the facts.
June 5, 2018
as do most countries northern and eastern Europe and so what?
June 2, 2018
I agree.
They (rEU27) whether members of the Euro or not, have given up a significant portion of sovereignty. ie He who controls the purse strings controls everything. And consequently, they control nothing.
June 2, 2018
Why don’t all the super rich, elite Brexiteers move to Italy, and while they’re about it take all of the Brexmoaners on this website with them?
It will lance the boil of the nasty nationalism in the UK and the rest of us can get on with our lives within the EU.
June 2, 2018
I’m sure that the EU would welcome the blue and gold impoverished, but do no expect the free handouts to be as good as that which you currently enjoy.
June 2, 2018
This nasty Brexitteer is in a small town in the south of France at the moment. Its market day and the place is so full of pensioners that I can’t ride my bike. Its a bit like an open air home for the demented. Most of the good restaurants have gone bust. Market traders survived because they avoided the tax rises. Every year the council finds more expensive things to do. Quite like home bur a vision of the future in Europe.
June 2, 2018
You are free to move yourself and allow the majority, who wish to leave the EU, to do so. Love Europe. Hate the EU.
June 2, 2018
You’ve got it in one. Moved to the Europe I love some 11 years ago, but hate the EU when I see on a daily basis what it has done to diminish the lives of Europeans. They are just beginning to awake to the reality.
June 2, 2018
B&G
Looks like one of the Super rich you refer to may have already gone, due it is alleged to Political incompetence, or some sort of an agenda.
People with money have a choice, and they will make that choice if messed about too much.
But do remember that they take all the taxes they would have paid with them, and the taxes that their employees would have paid to.
Shame our EU negotiation team headed by Mrs May do not have the same common sense in recognising when they are being messed about, and still try to flog a dead horse, when its time to pack up and leave.
June 2, 2018
So you’d like proud Brits to move abroad, so that your pet EU takes complete control here? Perhaps you should read the blog and understand that the EU is deteriorating before our eyes. Or perhaps you should move to an EU country still totally behind the whole movement: not quite sure where that is now, Macron’s France maybe…
June 2, 2018
Blue and gold. Because wewant to live in a free and sovereign UK. We don’t want to live in a country ruled by the EU. You and your fellow remoaners love the EU so much so it would be more appropriate for you to move.
June 2, 2018
Hey. We rejected the only party with the word ‘nationalist’ in it. It only ever garnered 500,000 support out of 64,000,000 British people. Fewer than 1%.
There are real nasty nationalist parties with a shot at government throughout the wider EU.
There is a nationalist party in Scotland and proud to call itself such.
June 2, 2018
Not a bad idea at all, lots of very nice and very cheap houses, excellent and inexpensive food, generally cheerful people, beautiful towns, countryside and villages and a sensible new tax cap too for new arrivals (Euro 100K). Good transport connections, good skiing, nice beaches and fairly low crime rates too, just keep most of your money safely elsewhere.
The odd earthquake and a few poisonous snakes.
June 2, 2018
B&G, Why don’t you and your establishment Remain extremists go and live in your beloved EU, instead?
It will lance the boil of the nasty betrayal of our nation by Remains in the UK and the rest of us can get on with our lives within our own country.
June 2, 2018
Indeed. There is not one ounce of credit from such as B&G for the patient and democratic way in which we expressed our disatisfaction with the EU – which was given plenty of warning but sent David Cameron packing with a portion of ‘thin gruel’ on the eve of a most vital referendum.
I don’t see myself as at war with the EU.
I see myself at war with Andy, Newmania, B&G… I would forfeit everything rather than see them win.
I voted to leave the EU because of their haughty contempt for me which long preceeded the referendum, nay caused it.
June 3, 2018
Nick C,
and you asked me to condemn the wording of the so-called remainers, so I could I avoid being criticised the same way as I did not vote remain.
Your choice of words and language I criticising people, just confirms your double morals,you should really know better and behave better as well
June 3, 2018
Hans, So where are your criticisms of B&G (his comment above), Andy, and various other Remains from time to time on here who major on personal abuse? Then there are the Remains elsewhere who seem to think that calling us Leaves thick, uneducated, mad, knuckle-draggers, flat-earthers, etc, etc, constitutes a rational argument.
If you support their position without condemning their language then you place yourself in their company. And if you think we should sit back and not retaliate to the foul-mouthed Remains, and your rotten EU apologists and politicians, you have another think coming. We didn’t start this – we had no need to, because we thought we’d won.
June 5, 2018
I am not aware that I have anything to do with the rotten EU apologists, but you obviously believe I do , so I do not need to say anymore, I think you have justly underlined my point. Thank you very much
June 4, 2018
Libertarian,
Another unnecessary remark
June 2, 2018
Trump imposes tariffs and the BBC goes wild about it.
B&G’s beloved EU has been threatening Britain with tariffs (an end to frictionless trade) since 2016 but that’s OK.
The hypocrisy of Remoaners knows no bounds.
BTW. Our steel industry would not be facing US tariffs had our politicians honoured their promises as Trump does.
June 2, 2018
Discontent rattling around the EU will shake off some of its chains, enabling freedom for those who find life better outside.
June 2, 2018
Adam
That is a nice thought but I am afraid you may be wrong. They cry, as is always the case, is for “more Europe”. Or to put it another way, more power to the centre and Brussels / Commission.
June 2, 2018
“What they need to do is to move more rapidly to complete their political union, and to put into it a system of transfers of cash from rich to poor and from surplus to deficit areas.” – quite so, and it would be then easier for the UK to deal with the resulting single state rather then the existing separate states.
More likely, however, is that the Evil Empire will collapse under the strains produced by enforcing unity and given its inherently hostile attitude towards the UK, that would advantage us, clearly. Accordingly, the quislings in the Foreign Office need to be forced to stop stabbing us in the back and start stabbing the Evil Empire in the front by doing all they can to set the political union process in motion. Over to the people’s Blue Boris to get that organized.
June 2, 2018
It is all very well pontificating about what the EU should do in the future but when is our government going to make its mind up about our BREXIT future and then try and agree it with the EU.
There is a tide in the affairs of men that our government is at serious risk of missing.
June 2, 2018
It would appear that an agreement with the EU is not possible as the EU does not want one.
June 2, 2018
We are leaving so we shouldn’t be concerned about what the Europeans do..it would be much better for us now if we could concentrate on progressing deals with our new trading partners overseas- although I must say I think we can rule the US out as a trading partner for the moment- at least until after the next US presidential election? and maybe for another four years again
June 2, 2018
I think Trump is 100% correct. He has highlighted the EU as being a protectionist block surrounded by an unfair tariff barrier. All he wants is fair trade something which is not what the EU is about. He was also right on pulling out of the Paris climate accord which Germany and Japan continue to ignore.
June 2, 2018
Frankd. It would help trade and relations with USA if the media and politicians stopped slagging Trump off.
June 2, 2018
Yesterday you remarked how appropriate it was that universities enjoy large endowment funds, all the better to keep them in clover and free of the pressures imposed by the real world, and it occurs to me that having access to German wealth in the form of regular cash transfers in the Eurozone amounts to giving the PIIGS and other wealth-challenged member states much the same thing. Lack of such access was the one point that made me hesitate for a moment about the otherwise conclusive merits of Brexit.
The FCO might nominate Germany for a Nobel Prize if the cash transfers become a regular thing.
June 2, 2018
Germany winning a Nobel Peace Prize? Surely not, Physics and Chemistry yes, but peace?
June 2, 2018
Well put it this way, the Nobel Peace Prize for Germany certainly does not incorporate a Lifetime Achievement Award.
June 2, 2018
We declared war on Germany TWICE !! And in both cases we were not treated but dragged in thanks to our alliances with the French.
June 2, 2018
In Cyprus a banking crash led to people not being able to withdraw their Euros from some banks, and suffering losses on larger deposits
=======
Lets be honest.
It meant that governments stole people’s money.
June 2, 2018
The UK Treasury has used the budget discipline rules to require progressive reduction of our deficit, with the aim of starting to reduce the debt as a proportion of our national income
============
So are you going to tell the civil servants that they aren’t owed a pension, that their retirement isn’t a debt of the state and that you won’t pay them?
June 2, 2018
Wouldn’t that be nice? Too much to hope for though as the main recipients of taxpayers’ money run the government.
June 2, 2018
It seems the fly in the ointment is the ultra efficient Teutonic juggernaut. Maybe the EU should give Germany an ultimatum… either Germany cross-subsidises the poorer parts of the empire or Germany leaves the EU and allows the Euro to float to a lower level.
June 2, 2018
The UK Treasury has used the budget discipline rules to require progressive reduction of our deficit, with the aim of starting to reduce the debt as a proportion of our national income. I often support the policy of controlling public spending and debt, and agree it should not be allowed to get out of control.
John this has been a HUGE mistake. Private debt is what matters not public debt which are just private sector “sterling savings”
This is what happens when you trick the population to believe the MONOPOLY issuer of the Ā£ operates like a household budget. It is madness John we’ve left the gold standard.
The simple accounting facts will always be there John.
Government budget deficit = private sector surplus to the penny.
National debt is that surplus moved into gilts.
Sure, too much private sector “Sterling savings” can be a drag on the economy but Hammond and Osborne Should have been targetting foreign ” sterling savings” held as gilts like Trump is doing. Not destroy domestic ” sterling savings” and push our domestic sector into more debt.
June 2, 2018
Italy and the other southern EU states financial problems are the consequence of their own over-spending. The Euro and Germany aren’t to blame.
Gullible electorates have voted in over-promising politicians. They could have used the good times to pay off debt, leaving themselves with more flexibility when the crash occurred, but instead they used those better times as leverage to borrow yet more.
The electorates got the governments they deserved.
June 2, 2018
Please stop using the term populist. It’s offensive and a contrivance designed to tarnish and slander decent people who despise the authoritarian construct that is the EU
It isn’t populist to want to weaken unaccountable politicians and their vice like grip over the nature of peoples lives.
The real bigots are those who embrace the destruction of national democracies and engineer to weaken the lines of democratic accountability. It is these people who are the real enemy, the anti-democrats
You either believe in independence and sovereign democracy or you don’t
I have become convinced that the pro-EU mindset is one of subterfuge and deceit. They use slander to destroy and silence the enemy which then allows unopposed destruction of our democracy
I dislike politics and politicians who call for more politics and less accountability. I find that sinister. The EU equals more control, more politics, less democracy and less accountability. Why anyone would want a situation like that is beyond me?
Surely the point of democracy is to have your say and hold to account those people who take decisions that affect our daily lives. To sever that relationship is tantamount to servitude
We know what needs to be done. Germany is the EU. Without Germany, its economy and its debt leverage the EU is dead. The UK must leave this contrived political and economic farce. Then we must liberalise and slash business and income taxes.
The UK could become another Taiwan. An economic powerhouse.
The first step is a PM who believes in:
A free UK
The free market
The individual – that living, breathing human being rather than a social contrivance
The private space as opposed to socialist tosh that affords the state leverage over us and our lives
Get rid of the politicised May and her ilk and let’s have a proper leader who halts the process of politicising individual beings and using them as though they were some form of political capital
June 2, 2018
Surely the events in Italy and a new Government at odds with Brussels is indicative that the EU is a Dictatorship (a European Empire). The member Countries are all different and are being held in line by threats. Migration is not willingly accepted by the majority, unilaterally opening the flood gates by Chancellor Merkel and then finding the German people do not not want them was a big mistake. Financially punishing any Country that will not take an ever increasing quota will not work.
Strangely Soros is way out of date and throwing his money at an unworkable project – a looser EU partnership. āThe EU is in an existential crisis. Everything that could go wrong has gone wrong,ā the 87-year-old Hungarian-American speculator told the audience of the European Council on Foreign Relationsā Annual Council Meeting in Paris on Tuesday.
I have always advocated that the allocation of refugees within Europe should be entirely voluntary,ā Soros said. āMember states should not be forced to accept refugees they donāt want and refugees should not be forced to settle in countries where they donāt want to go.ā
He, like so many others does not distinguish between refugees and the vast majority who are economic migrants.
David Cameron had the idea of returning to the old EFTA, a cooperative economic partnership, but that got nowhere with the Brussels bureaucracy.
It is time the Tory renegades (whingers) realised a soft Brexit with ‘EU acquis’ and the jurisdiction of the ECJ, is not implementing the referendum, nor saving the EU from its Euro problems.
June 2, 2018
Irish Foreign Minister Simon Coveney is giving us TWO weeks to come up with proposals regarding the border. Wheel on Boris to put two fingers up the next time he sees him from afar to make sure he does mean TWO
June 2, 2018
I remember when the Irish Economy was on its knees and the UK loaned money to it. Nice to have friends.
June 3, 2018
Have we had it all back yet?
June 2, 2018
Mr Redwood,
Your short essay is, as usually, political and only partially factual.
First the UK/BoE position re public finance and monetary policy. I am sure that any serious and truly central banker (not a politician then) would agree with current UK policies and strongly disagree with political attempts to expand the money supply beyond what corresponds to the non-inflationary needs of the real economy.
Politicians like to buy votes and under current best practice paradigms (read any textbook on monetary policy), monetary policy and in a different way, fical policy do not create growth. But bad, risky monetary/fical policy can destroy growth. So the politician’s job is to reduce friction in the economy and convince the electorate that a certain level of prudence is required. But fical policy beyond cutting waste and concentrate on essential tasks) neither the NHS nor a marginal addition to the US nuclear strike force are essential tasks for a small (the size of an average Chinese province) country on the edge of a continent in relative decline.
Your remarks about Spain and Italy are basically wishful thinking. Politicians in Italy and Spain are not going to ruin the EUR (their Central Bankers will not allow it, nor would the markets) and their voters are not prepared tp pay the price of exits.
In all European countries there is healthy debate about the future. For the Northern part, that means “money and markets”, not the romantic visions paraded occasionally and more part of “southern” political culture. Salvini in Italy and Sanchez in Spain will play a critical, but constructive role. Podemos and 5* is a different matter. Time will tell.
Reply I said Spain and Italy will wish to stay in the Euro, but they vote in increasing numbers for parties that wish to shift the Euro to a reflationary policy. You are wrong about UK monetary policy which has been too tight.
June 2, 2018
Rien, It is as possible to have a “single” market based on mutual recognition as one based on centralisation. However your view that “the politicianās job is to reduce friction in the economy …” is better served by mutual recognition than by a rule-for-everything centralisation. As Mrs Thatcher recognised, and the EU didn’t.
Did you really think that having a separate Regulation for a pottery sheep ornament (EC 1462/2006) is conducive to reducing friction in the economy? It is not just that the EU is corrupt (eg Semayr, Target2), it is sclerotic due to its fanatically detailed centralism, and failing due to its one-size-fits-all Euro (which doesn’t).
It is also a sick joke that Malmstrom claimed the USA had tried to use the threat of trade restrictions as leverage to obtain concessions from the EU, when the EU is currently threatening the UK with trade restrictions to obtain concessions from us. Reduce friction? The EU’s sole aim is to increase its own power, at the expense of everyone’s economy.
June 3, 2018
Mr Redwood, thanks for your reply. Agree with what you said about Spain and Italy but I do not believe that they will make the difference. As to “reflationary policy” in general, the current style of monetary policymaking is to try to be as accommodative as possible but based on the belief that “activist” policymaking is not the job of independent centeral bankers. That keeps politicians where they belong, in parliament and supervising/correcting the work of public servants. I thought that it was a long held belief in the Conservative Party that one should let the markets do their job and be aware that intervention tends to lead to unintended consequences.
The ECB is too loose, if anything, not too tight and if Italy and other countries believe they would do better outside, let them go. But ruining sound economic management is not what the North (and Lega, I am sure) wants. Your seem to have Leftish sympathies….
June 2, 2018
This is a discussion better left to Italians, who have a far better understanding of their country than we do.
We are making a mess of running our own country, in the worst political and economic crisis since Suez. No one is going to take our advice seriously.
June 2, 2018
You need to visit Milan and Como.
June 2, 2018
“worst political and economic crisis since Suez. ” Hahahahaha. We have so much peace and contentment it is almost boring. It’s only silly comments from remoaners which stop us all falling asleep.
June 2, 2018
“Today the voters of Italy and Spain are saying they want reform of the Euro. ” I’m not sure this is correct about Spain. There is very little euro-scepticism here. My Spanish friends say that the UK is the odd one out not ‘getting’ the euro and the EU, I reply that Spain is the exception with virtually no euro-sceptic voices.
June 2, 2018
āIn the UK large sums are moved to the areas that need it via the nationwide benefits system and the Council revenue support grantsā. I canāt help getting cross about this statement, if the State doesnāt share out regionally then you move homeless people out to cheaper to house, poorer regions without jobs or a need to get a job in order to live here – what do you expect?
I see the contortions at C4 about moving it out to one of the regions, now itās only going to be 300 jobs, pathetic. Their audience is all over the UK! The main reason they donāt want to move it is the highly paid staff donāt want to move to the held down regions and 2nd Cities because culturally thereās nothing for them there and the enclaves of socialists spouting diversity whilst living in areas with their cliques like in London, Surrey and yes Berkshire doesnāt exist. The cheapest and most central place to relocate is Stoke on Trent, it would provide a good excuse at last to demolish old Stoke and link up itās railway and provide some hope for the next generation there, they ruined their best chance of attention when they didnāt elect a UKIP MP, not because I support UKIP but because it would give them attention instead of once again being forgotten about.
Iād like to see Jon Snow, Fatima Mandi, Cathy Newman, and Krishnan Guru-Murthy move to Stoke too and actually try living there to see for themselves the lack of things to do outside work.
Reply I was describing, not criticising!
June 2, 2018
No wonder the Greeks and the Italians, for example, are looking with dismay at the situation in their countries, especially as news out of the USA about President Trump’s economic/jobs policies are being described in superlatives:
see this from the New York Times, Neil Urwin:
āWe ran out of words to describe how good the jobs numbers are.ā Neil Irwin of the @nytimes.
June 2, 2018
You are blaming the EU for the idea we shoud try to reduce our Debt from 90% of GDP ?
You are joking right ?
June 2, 2018
Last week you moaned about austerity.
Now you back the EU when it demands more reductions in state spending.
Make your mind up.
June 3, 2018
Well said indeed. Newmania.
And its even worse than 90%.
We have enormous unfunded pension liabilities and expectations amongst people that they are going to get get free health and social care even if life expectancy suddenly rises to 200.
This National Debt might well me manageable at current interest rates. But what happens when interest rates normalise?
And the current budget deficit is certainly not acceptable. The budget needs to be balanced NOW.
June 3, 2018
So you favour more austerity Ron?
June 2, 2018
John
This is of course a very important subject for Europe and the EURO currency countries, but I have some questions which are much closer to home ,which I do not have the answers for?
The majority on this site seem to think that “no deal ” would be better than what we currently know and we should walk away, is this correct?
If, there is no deal, the alternative is the WTO agreement that we all trade under, is this correct?
What happens now, that both China and the US are breaking the WTO rules?
Are we still better off, therefore going alone?
Are we vulnerable not being part of a larger trade-block in this context?
What are the potential alternatives , if the WTO route breakes down?
Reply The WTO governs the trade we have in or out of the EU, so we need to help make it work
June 2, 2018
So, I feel I’m being a bit thick here regarding the Trump imposition of duties on the EU for steel etc. The EU have thrown up their arms saying a trade war is upon us?? I thought we were negotiating a free trade deal post brexit which the EU don’t want to offer us??. Remainers are talking of the horrific cliff edge of a no deal scenario and seek a 2nd ref! Does this not fly in the face of what leavers have been asking for over the past 18 months? A FREE TRADE DEAL WITH THE EU!!
June 2, 2018
JR – I asked a perfectly valid rhetorical question, following the second post from Lifelogic which has been deleted … Is this an example of prejudice and censorship now practiced by all politicians?
I did expect better from this blog – I trust you will feel a little bit guilty because it’s actions like that which are turning our society into a crumbling neurotic mess, when certain subjects cannot be broached, even in broad terms.
June 3, 2018
I’m surprised the Eurozone has lasted as long as it has. Had the UK joined, it would collapsed altogether in 2008/9.
If it’s going to work at all, it has to confine itself to its’ core countries who are closest in all respects to Germany.
It’s matter of debate whether it’s even suitable for France, but it seems, just about, to be holding on there.
Ireland might just about be able to cope with it because Ireland has the safety valve of easily being able to export its unemployed to the UK in difficult times, and we don’t appear to be too concerned about having them.
But let’s see how Ireland sees things after we’ve been out of the EU for while.
But the Euro is definitely unsuitable for, Greece, Spain, Portugal, and Italy. Greece more or less has balanced budget now, but the currency is hopefully overvalued for it. If Greece were now able to devalue its’ currency, its’ prospects would be transformed.
The fact is that the Eurozone is not an optimal currency zone. Neither, incidentally, is the UK. But we are willing to share the burdens between the regions.
Germany is not willing take responsibility for tens of millions of others. And to be fair why should they? But they should stop bullying others into trying to stick to it. And more fool others for accepting it.
Greece as been cowed into submission. Let’s see whether Italy will be. I wouldn’t count on it.
It should be relatively easy to set up new sovereign currencies overnight for the weaker countries , and with one bound they would be free.
June 3, 2018
“It is important how the EU responds. If they seek to do to Italy what they did to Greece, we are all in for a very bumpy ride. ”
Nobody reads down to here.
But, Mr Redwood, if you ever see this, allow me to congratulate you on a very true and perceptive piece. Well written!
June 3, 2018
I read you, there are others’s contributions which are so repetitive that just looking at who the author is enough.
June 3, 2018
Hefner, Speak for yourself.