UK prime minister David Cameron ”has promised to do "everything possible" to stop other EU states discussing the single market without the UK” (BBC News UK Politics).
According to the Open Europe blog the EU institutions are ”all over the draft proposal” for an international treaty for a reinforced economic union. The signatories of the treaty will work towards "deeper integration in the internal market".
The EUobserver tells us that ”British PM David Cameron on Friday (6 January) vowed to do "everything possible" to prevent EU institutions from being used in a new fiscal treaty the UK has refused to join, but admitted there were legal difficulties in pursuing that path”.
It looks as if Cameron's strategy and tactics aim at driving as many of the non-eurozone member states as possible towards the euro core. With or without the EU institutions – where Britain has both the voice and the vote – the governments, or most of them, are bound to begin laying the groundwork concerning all aspects of economic policy, including competition, the internal market, tax issues etc. intergovernmentally.
Previous UK governments laid the foundations for Britain's obstructionist position in the European Union, but Cameron's policy of Eurotrolling is achieving a qualitative shift towards irrelevance in all matters except his country's potential for sabotage in Europe on (many fundamental) issues requiring unanimity.
The draft international treaty will do little to remedy the fundamental flaws of the European Union or the euro currency, but the government of the United Kingdom seems dead set on retaining as few allies among the EU members as possible, when they are forced to choose between the European Union and Britain.
I am waiting for how the English tabloids are going to construct Cameron's isolation as splendid.
Update 8 January 2012: Via @EuroCelt David Garrahy I noticed an op-ed piece on Irishtimes.com, where Paul Gillespie discusses how Ireland should handle Britain's self-marginalisation in Europe. - The UK seems to have set in motion a process of alignment by EU members with the eurozone core.
Ralf Grahn
Showing posts with label David Cameron. Show all posts
Showing posts with label David Cameron. Show all posts
Saturday, 7 January 2012
Wednesday, 14 December 2011
Defiant UK Parliament praises Cameron and rebalances EU relationship
Yesterday the UK Parliament (House of Commons) adopted, by 278 votes to 200 (all Liberal Democrat MPs abstaining), the following motion:
BBC News UK Politics offer additional information.
Comments
When prime minister David Cameron defended his EU summit blunder, he also soothingly said that Britain remains a full member of the European Union and that EU membership is vital to Britain's national interest.
Parliament has now changed tack in the relationship between the United Kingdom and the European Union (and its member states).
The general tenor of the debate and the wording of the praise can be described as defiant.
Parliament calls for a rebalancing of the UK's relationship with the European Union towards economic arrangements solely.
When Parliament commends prime minister Cameron for his refusal to allow an EU agreement – not affecting Britain – to pass, it has to be noted that the ”safeguards for the UK” had nothing whatsoever to do with the treaty proposal at hand at the European Council.
There is a positive expectation from Parliament for more British vetoes to come.
Leaders of the EU institutions and in the member states have expressed wishes to see the United Kingdom become a responsible and constructive member of the European Union, but in vain as we now see.
If the Liberal Democrats were able to explain Cameron's European summit catastrophe as an unfortunate accident, the new course set and the hostility shown from the government benches breaks the moral backbone of the coalition.
This is a watershed for the Liberal Democrats, who have tried in vain to temper the tribalist spirits among the Conservatives. If Nick Clegg and the other LibDem ministers do not resign, they make a historic mistake. Better to live with honour, than to suffer the contempt from such coalition partners.
Ralf Grahn
That this House commends the Prime Minister on his refusal at the European Council to sign up to a Treaty without safeguards for the UK; regards the use of the veto in appropriate circumstances to be a vital means of defending the national interests of the UK; and recognises the desire of the British people for a rebalancing of the relationship with our European neighbours based on co-operation and mutually beneficial economic arrangements.
BBC News UK Politics offer additional information.
Comments
When prime minister David Cameron defended his EU summit blunder, he also soothingly said that Britain remains a full member of the European Union and that EU membership is vital to Britain's national interest.
Parliament has now changed tack in the relationship between the United Kingdom and the European Union (and its member states).
The general tenor of the debate and the wording of the praise can be described as defiant.
Parliament calls for a rebalancing of the UK's relationship with the European Union towards economic arrangements solely.
When Parliament commends prime minister Cameron for his refusal to allow an EU agreement – not affecting Britain – to pass, it has to be noted that the ”safeguards for the UK” had nothing whatsoever to do with the treaty proposal at hand at the European Council.
There is a positive expectation from Parliament for more British vetoes to come.
Leaders of the EU institutions and in the member states have expressed wishes to see the United Kingdom become a responsible and constructive member of the European Union, but in vain as we now see.
If the Liberal Democrats were able to explain Cameron's European summit catastrophe as an unfortunate accident, the new course set and the hostility shown from the government benches breaks the moral backbone of the coalition.
This is a watershed for the Liberal Democrats, who have tried in vain to temper the tribalist spirits among the Conservatives. If Nick Clegg and the other LibDem ministers do not resign, they make a historic mistake. Better to live with honour, than to suffer the contempt from such coalition partners.
Ralf Grahn
Tuesday, 13 December 2011
EU in Britain: When David comes marching home again... (Updated)
Before discussing if the decisions of the European summit were enough in the face of increasing headwinds, I published one more assessment of the EU politics of the UK government led by Cavid Cameron.
Having read the prime minister's statement, I wondered (on Twitter):
Cameron's public reasons
Cameron described his demands to the other EU members:
Analysis
Irrelevant: First of all, Cameron's demands were not relevant to the issues at the European summit and these issues figured nowhere on the agenda.
Immodest and unreasonble: Springing totally irrelevant demands on the EU leaders, could Cameron even imagine that they would be accepted? Was this his 'good faith'?
How can he call proposals to roll back the internal market to decision-making based on unanimity, modest and reasonable?
Qualified majority voting replaced unanimity in 1966 in the common market, and without this step there would be no internal market today (imperfect as it is).
Loss of credibility: There are only two major EU policy areas, where the United Kingdom has been a visible driving force. One is the internal market, the other is (never-ending) enlargement.
Unfair exception: If no unfair advantage was intended, why did Cameron require the introduction of a new national veto on a specific part of the internal market (financial services)?
How are special exceptions for Britain compatible with the 'level playing field' he asks for, the the very soul of the internal market, including competition rules and enforcement?
Wouldn't you expect president Sarkozy to bemoan the the lack of proper protection, sooner than the premier of free market and free trade Britain?
------------------------------------------------------------------------------------------------
Update 13 December 2011: In the European Parliament Commission president José Manuel Barroso said that one member state, the United Kingdom, 'asked for a specific protocol on financial services, which, as presented, was a risk to the integrity of the internal market. This made compromise impossible'.
This has been contested by the lobby group Open Europe on Twitter and with a link to their blog post on the matter:
Barroso has the advantage over Open Europe and me that he was there, and one leaked paper does not necessarily tell the whole story, but I think that added clarity would not go amiss, so I have tweeted:
Let us wait and see what we learn during the next days.
------------------------------------------------------------------------------------------------
Symbolically and at a practical level, David Cameron shot decades of UK credibility as a champion of the internal market to pieces. Apply the flexibility of a network to the single market, and what do you end up with?
'Some would call' was the formula, based on internal assessment.
Some would call this a disingenuous statement about an unprincipled blackmail operation gone wrong, despite the jingoistic hero's welcome indicative of the political climate in England.
Fall-out in Europe
The other EU members hoped that the UK would accept and ratify a treaty fix, which would have enabled the euro countries to enshrine their agreement on budget discipline, without affecting non-euro Britain. For the UK, simply to allow it to happen. Cameron chose to be unhelpful.
Some commentators have explained that Cameron had no choice, because he could not face the House with such a simple request. Besides being fairly self-indulgent, what does that tell us about the prime minister?
If sorting out the problems in the eurozone was Cameron's main wish (and most definitively in the interest of Britain and its banks), his actions made it harder to achieve.
He made even Britain's closest EU allies furious, and the looming political and legal problems they have to contend with in an intergovernmental setting are numerous. (This does not mean that the other leaders minus Britain achieved more than a tiny proportion of what is needed.)
Cameron returned without the safeguards he ostensibly was looking for. Internal market rules, including financial services, are still agreed at EU level, but after losing friends, influence and people, it is going to be harder for the United Kingdom to influence the outcome of future negotiations.
Fall-out at home
As I see it, Cameron launched his political blackmail operation to pacify his secessionist backbenchers. They have succeeded in turning the UK's sour EU relations toxic, scored a victory with the anti-EU mass market press and public opinion, revealed Cameron's dependence on them and devastated the Liberal Democrats. So the taste of blood will egg them on, instead of placating them.
Nick Clegg and the Liberal Democrats are in a terrible bind. It looks as if they would be all but annihilated in a new general election, but swallowing the latest grave humiliation until the end of the parliamentary term will only bring a stay of execution. Is it worth the pain to grin and bear?
Scotland got one more reason to contemplate independence.
Businesses generally and the financial industry are worried.
Bottom line?
If helping the eurozone and defending Britain's interests were the aims of Cameron, how do you assess the outcome?
Cameron in House of Commons
The BBC provides both a video report of the Cameron statement and the debate in the House of Commons and interviews, as well as a live blog dealing with the fall-out from the UK walk-out.
There are many interesting comments and a number of helpful links to further reading.
If your intellectual curiousity drives you, try to find the references to the needs of the European Union and EU citizens, or for constructive contributions from its member state Britain.
Then think about why national level polities with veto powers are perhaps not the best level or form to promote common European interests, which in my view are those of EU citizens.
Ralf Grahn
Having read the prime minister's statement, I wondered (on Twitter):
Would #Cameron statement stand 10 minutes of scrutiny by young solicitor's clerk first day on the job? #UKpolitics #euro
Cameron's public reasons
Cameron described his demands to the other EU members:
Those safeguards – on the single market and on financial services – were modest, reasonable and relevant.
We were not trying to create an unfair advantage for Britain.
Analysis
Irrelevant: First of all, Cameron's demands were not relevant to the issues at the European summit and these issues figured nowhere on the agenda.
Immodest and unreasonble: Springing totally irrelevant demands on the EU leaders, could Cameron even imagine that they would be accepted? Was this his 'good faith'?
How can he call proposals to roll back the internal market to decision-making based on unanimity, modest and reasonable?
Qualified majority voting replaced unanimity in 1966 in the common market, and without this step there would be no internal market today (imperfect as it is).
Loss of credibility: There are only two major EU policy areas, where the United Kingdom has been a visible driving force. One is the internal market, the other is (never-ending) enlargement.
Unfair exception: If no unfair advantage was intended, why did Cameron require the introduction of a new national veto on a specific part of the internal market (financial services)?
How are special exceptions for Britain compatible with the 'level playing field' he asks for, the the very soul of the internal market, including competition rules and enforcement?
Wouldn't you expect president Sarkozy to bemoan the the lack of proper protection, sooner than the premier of free market and free trade Britain?
------------------------------------------------------------------------------------------------
Update 13 December 2011: In the European Parliament Commission president José Manuel Barroso said that one member state, the United Kingdom, 'asked for a specific protocol on financial services, which, as presented, was a risk to the integrity of the internal market. This made compromise impossible'.
This has been contested by the lobby group Open Europe on Twitter and with a link to their blog post on the matter:
Read our latest blog post explaining why #Barroso was wrong to suggest Cameron's demands threatened the single market
Barroso has the advantage over Open Europe and me that he was there, and one leaked paper does not necessarily tell the whole story, but I think that added clarity would not go amiss, so I have tweeted:
@OpenEurope Hopefully #EUCommission #EUCouncil & member states open up what #Cameron sprang on #EUCO and how. bit.ly/uHG6Tn
Let us wait and see what we learn during the next days.
------------------------------------------------------------------------------------------------
Symbolically and at a practical level, David Cameron shot decades of UK credibility as a champion of the internal market to pieces. Apply the flexibility of a network to the single market, and what do you end up with?
'Some would call' was the formula, based on internal assessment.
Some would call this a disingenuous statement about an unprincipled blackmail operation gone wrong, despite the jingoistic hero's welcome indicative of the political climate in England.
Fall-out in Europe
The other EU members hoped that the UK would accept and ratify a treaty fix, which would have enabled the euro countries to enshrine their agreement on budget discipline, without affecting non-euro Britain. For the UK, simply to allow it to happen. Cameron chose to be unhelpful.
Some commentators have explained that Cameron had no choice, because he could not face the House with such a simple request. Besides being fairly self-indulgent, what does that tell us about the prime minister?
If sorting out the problems in the eurozone was Cameron's main wish (and most definitively in the interest of Britain and its banks), his actions made it harder to achieve.
He made even Britain's closest EU allies furious, and the looming political and legal problems they have to contend with in an intergovernmental setting are numerous. (This does not mean that the other leaders minus Britain achieved more than a tiny proportion of what is needed.)
Cameron returned without the safeguards he ostensibly was looking for. Internal market rules, including financial services, are still agreed at EU level, but after losing friends, influence and people, it is going to be harder for the United Kingdom to influence the outcome of future negotiations.
Fall-out at home
As I see it, Cameron launched his political blackmail operation to pacify his secessionist backbenchers. They have succeeded in turning the UK's sour EU relations toxic, scored a victory with the anti-EU mass market press and public opinion, revealed Cameron's dependence on them and devastated the Liberal Democrats. So the taste of blood will egg them on, instead of placating them.
Nick Clegg and the Liberal Democrats are in a terrible bind. It looks as if they would be all but annihilated in a new general election, but swallowing the latest grave humiliation until the end of the parliamentary term will only bring a stay of execution. Is it worth the pain to grin and bear?
Scotland got one more reason to contemplate independence.
Businesses generally and the financial industry are worried.
Bottom line?
If helping the eurozone and defending Britain's interests were the aims of Cameron, how do you assess the outcome?
Cameron in House of Commons
The BBC provides both a video report of the Cameron statement and the debate in the House of Commons and interviews, as well as a live blog dealing with the fall-out from the UK walk-out.
There are many interesting comments and a number of helpful links to further reading.
If your intellectual curiousity drives you, try to find the references to the needs of the European Union and EU citizens, or for constructive contributions from its member state Britain.
Then think about why national level polities with veto powers are perhaps not the best level or form to promote common European interests, which in my view are those of EU citizens.
Ralf Grahn
Monday, 12 December 2011
New resolve in euro crisis – Is it enough?
Despite up Eurs style unhelpfulness, twisted Tory priorities and possibly continuing sabotage from the UK government of David Cameron, the eurozone countries and the other EU members still have the main task in front of them.
For those too busy to read and interpret the official statements, the outcome of the European Council and the euro area statement have been simplified into this graph:
Economic governance in graphs (European Commission, Europe 2020)
Let me be clear about this: The summit(s) do not sort out the fundamental weaknesses of the euro currency (economic union).
The common European currency, the euro, needs a sovereign. In the Western political tradition of democracy and fundamental rights, this sovereign must be based on the citizens to be legitimate and accountable (democracy), equipped with robust structures and sufficient powers, as well as providing good governance and transparency.
The European leaders have refused to even broach the fundamental issues.
As a result of the British block to progress, the disciplinarian and intergovernmental ”fiscal compact” is harder to manage, but it also fails to address the need for the European Central Bank to act as a lender of last resort, of eurobonds to mutualise debt and of a real federal budget.
With glee, many enemies of European integration (in the UK) point to the failings and predict the rapid crash of the euro.
Given the consequences globally, I would not be as merry, but more important is how the steps taken will be interpreted by the markets and citizens in Europe and globally.
My interpretation is that the arrangement, contorted as it is, marks a step forward. There is now more resolve in the eurozone and in the European Union generally to advance. Despite looming downgrades of member states, the EU and European banks, the EU and the ECB may eventually progress in face of the strong headwinds.
The beginning recession is not going to make matters easier, but the leaders and citizens in Europe realise that we are in this together.
We do not know if it is going to be enough, but it is still more than nothing.
Since the resolve of Winston Churchill has been much in evidence lately, let me conclude with a quote (1942):
Ralf Grahn
For those too busy to read and interpret the official statements, the outcome of the European Council and the euro area statement have been simplified into this graph:
Economic governance in graphs (European Commission, Europe 2020)
Let me be clear about this: The summit(s) do not sort out the fundamental weaknesses of the euro currency (economic union).
The common European currency, the euro, needs a sovereign. In the Western political tradition of democracy and fundamental rights, this sovereign must be based on the citizens to be legitimate and accountable (democracy), equipped with robust structures and sufficient powers, as well as providing good governance and transparency.
The European leaders have refused to even broach the fundamental issues.
As a result of the British block to progress, the disciplinarian and intergovernmental ”fiscal compact” is harder to manage, but it also fails to address the need for the European Central Bank to act as a lender of last resort, of eurobonds to mutualise debt and of a real federal budget.
With glee, many enemies of European integration (in the UK) point to the failings and predict the rapid crash of the euro.
Given the consequences globally, I would not be as merry, but more important is how the steps taken will be interpreted by the markets and citizens in Europe and globally.
My interpretation is that the arrangement, contorted as it is, marks a step forward. There is now more resolve in the eurozone and in the European Union generally to advance. Despite looming downgrades of member states, the EU and European banks, the EU and the ECB may eventually progress in face of the strong headwinds.
The beginning recession is not going to make matters easier, but the leaders and citizens in Europe realise that we are in this together.
We do not know if it is going to be enough, but it is still more than nothing.
Since the resolve of Winston Churchill has been much in evidence lately, let me conclude with a quote (1942):
Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.
Ralf Grahn
EU: Economic crisis, Tory priorities and euro bully-boys (Updated)
Here is a thoughtful tweet from @Nosemonkey (J Clive Matthews) in London:
To the warlike atmosphere created by campaigning anti-EU media and secessionist Tory backbenchers and which has fed into popular images of a bulldogian Churchill defending Britain from nazi invasion, I add a tweet of my own:
Admittedly, it is speculation. At which stage would Churchill, who in 1946 proposed a United States of Europe built around France and Germany, but with Britain among its friends and sponsors, have taken the plunge to engage fully as a constructive member?
Perhaps it would have taken new generations not rooted in the Boer War and the imperial past to start playing a positive part as a key player in Europe. But the new generations found it hard to shrug off their tribal legacy, with David Cameron the bulldog biting 26 heads of state or government before withdrawing to the company of his secessionist backbenchers at Chequers for R&R [victory celebrations] (The Independent, Financial Times).
The bully-boys (The Sun) and blithering idiots (The Telegraph) on the Continent may be forgiven for thinking that their simple demand for a laissez-passer for a treaty fix among 27, but affecting only the willing, was a reasonable demand. They may have been misguided in thinking that the euro crisis and the global financial crisis, combined with worsening economic prospects globally, were weightier aims even for the future of the United Kingdom (Reuters), but they were taught a lesson about UK Tory priorities (Mail Online).
Naturally, there are some domestic quislings bickering against these new heights of unhelpfulness, but they only add to the festive spirit.
The Liberal Democrat leader and the coalition partner Nick Clegg has, belatedly, come out against Cameron's blocking move (The Telegraph). Alex Salmond, the first minister of Scotland, has accused Cameron of damaging Scottish interests (AFP Google News). British business leaders are troubled by the prospects of isolation in Europe (BBC News Business).
After slamming down criticism from Clegg (Huffington Post UK), foreign secretary William Hague is going to meet US secretary of state Hillary Clinton to discuss wisely chosen topics such as Syria and Iran, where there is still life in the 'special relationship' (The Guardian, question 6 out of 7 Britain is facing).
Let us end our exposé of the statecraft of unhelpfulness here.
Update 12 December 2011: We now have the PM's statement on what he did at the European Council, but IMHO neither the wording nor the reasoning stand much rigorous analysis. Cameron's 'good faith' negotiations did not sound attractive enough to entice deputy prime minister Nick Clegg to sit on the government bench in the House of Commons (BBC News UK politics).
Just wondering... (on Twitter)
Would #Cameron statement stand 10 minutes of scrutiny by young solicitor's clerk first day on the job? #UKpolitics #euro
Ralf Grahn
Question: Is there a single foreign leader that respects Cameron? Just wondering if the UK has any friends left anywhere...
To the warlike atmosphere created by campaigning anti-EU media and secessionist Tory backbenchers and which has fed into popular images of a bulldogian Churchill defending Britain from nazi invasion, I add a tweet of my own:
Churchill was still wedded to Empire, Commonwealth & Anglosphere but IMHO would today be smart enough to be European.
Admittedly, it is speculation. At which stage would Churchill, who in 1946 proposed a United States of Europe built around France and Germany, but with Britain among its friends and sponsors, have taken the plunge to engage fully as a constructive member?
Perhaps it would have taken new generations not rooted in the Boer War and the imperial past to start playing a positive part as a key player in Europe. But the new generations found it hard to shrug off their tribal legacy, with David Cameron the bulldog biting 26 heads of state or government before withdrawing to the company of his secessionist backbenchers at Chequers for R&R [victory celebrations] (The Independent, Financial Times).
The bully-boys (The Sun) and blithering idiots (The Telegraph) on the Continent may be forgiven for thinking that their simple demand for a laissez-passer for a treaty fix among 27, but affecting only the willing, was a reasonable demand. They may have been misguided in thinking that the euro crisis and the global financial crisis, combined with worsening economic prospects globally, were weightier aims even for the future of the United Kingdom (Reuters), but they were taught a lesson about UK Tory priorities (Mail Online).
Naturally, there are some domestic quislings bickering against these new heights of unhelpfulness, but they only add to the festive spirit.
The Liberal Democrat leader and the coalition partner Nick Clegg has, belatedly, come out against Cameron's blocking move (The Telegraph). Alex Salmond, the first minister of Scotland, has accused Cameron of damaging Scottish interests (AFP Google News). British business leaders are troubled by the prospects of isolation in Europe (BBC News Business).
After slamming down criticism from Clegg (Huffington Post UK), foreign secretary William Hague is going to meet US secretary of state Hillary Clinton to discuss wisely chosen topics such as Syria and Iran, where there is still life in the 'special relationship' (The Guardian, question 6 out of 7 Britain is facing).
Let us end our exposé of the statecraft of unhelpfulness here.
Update 12 December 2011: We now have the PM's statement on what he did at the European Council, but IMHO neither the wording nor the reasoning stand much rigorous analysis. Cameron's 'good faith' negotiations did not sound attractive enough to entice deputy prime minister Nick Clegg to sit on the government bench in the House of Commons (BBC News UK politics).
Just wondering... (on Twitter)
Would #Cameron statement stand 10 minutes of scrutiny by young solicitor's clerk first day on the job? #UKpolitics #euro
Ralf Grahn
Sunday, 11 December 2011
EU: I'm ”privately furious” at UK Coalition
We know that politics make strange bedfellows, but it becomes worrying when they reside in the same head.
At the European Council UK prime minister David Cameron struck at the root of decades of British EEC and EU involvement, by wanting to scrap the integrity of the internal market (the four freedoms, or free movement of goods, persons, services and capital).
The other Coalition leader, deputy prime minister Nick Clegg has first been in on the act, then defended Cameron's use of the veto and finally let anonymous sources make known that he is ”privately furious” over the failure when the tactics backfired.
How's that for credibility?
Ralf Grahn
At the European Council UK prime minister David Cameron struck at the root of decades of British EEC and EU involvement, by wanting to scrap the integrity of the internal market (the four freedoms, or free movement of goods, persons, services and capital).
The other Coalition leader, deputy prime minister Nick Clegg has first been in on the act, then defended Cameron's use of the veto and finally let anonymous sources make known that he is ”privately furious” over the failure when the tactics backfired.
How's that for credibility?
Ralf Grahn
David Cameron and EU Single Market
We know that politics make strange bedfellows, but it becomes worrying when they reside in the same head.
In March 2011, just ahead of the spring summit, nine national political leaders sent a joint letter on European growth to the president of the European Council Herman Van Rompuy and the president of the Commission José Manuel Barroso.
Together with the leaders of Denmark, Estonia, Finland, Latvia, Lithuania, the Netherlands, Poland and Sweden, UK prime minister David Cameron was seemingly still at that point for the integrity of the internal market and calling for forceful action to liberate the potential of the single market, with the increasingly important services markets on top:
Ralf Grahn
In March 2011, just ahead of the spring summit, nine national political leaders sent a joint letter on European growth to the president of the European Council Herman Van Rompuy and the president of the Commission José Manuel Barroso.
Together with the leaders of Denmark, Estonia, Finland, Latvia, Lithuania, the Netherlands, Poland and Sweden, UK prime minister David Cameron was seemingly still at that point for the integrity of the internal market and calling for forceful action to liberate the potential of the single market, with the increasingly important services markets on top:
First, we must deliver the full and untapped potential of the Single Market. The Single Market is Europe’s greatest economic achievement – the core foundation of the world’s largest economy encompassing 500 million consumers and €12 trillion of economic activity. But it is far from finished business.Striking at the root of decades of British EEC and EU involvement at the European Council last week stunned more than the 26 heads of state or government present.
Services now account for almost four fifths of our economy and yet there is much to be done to open up services markets on the scale that is needed. While significant efforts have been made to put in place the provisions of the Services Directive, many sectors still remain closed off by opaque, disproportionate and disparate regulation. Restrictive practices are rife. And implementation overall falls far short of what is needed to open up markets fairly to competition. So we must do for services markets what we have done for markets in goods – removing the restrictions that hinder access and competition, reducing the number of regulated professions, and making a firm commitment to implementation and enforcement, building on and extending the mutual evaluation process and publishing scorecards of national performance. Succeed and we could add €140 billion to the European economy. We welcome the commitment given by the Commission in its Annual Growth Survey to take action in this area and invite the Commission to report at the earliest opportunity on the steps needed to realise these gains.
Ralf Grahn
Saturday, 10 December 2011
European Council: UK's heroic obstructionism?
It was not much the other EU member states asked for, but UK prime minister David Cameron and deputy prime minister Nick Clegg were unwilling or unable to allow the eurozone to proceed with a treaty fix to strengthen economic coordination within the euro area.
A responsible member state government would have given a helping hand, by signing the agreement and its parliament would have nodded through ratification (a simple laissez-passer). End of story.
The United Kingdom, however, was mean-spirited and obstructionist, even if the agreement would not have altered its relationship with the EU, only given the willing member states the opportunity to advance.
Mass market media have elevated the prime minister to Churchillian proportions, totally forgetting that putting out fires in the eurozone (with Britain a close neighbour) and the global financial system is a civilian rescue operation completely different from defending your country from foreign invasion. Actually, it is in Britian's interest.
After this we have to wonder, are there any rational voices left? At least well wishes have a hollow ring, when accompanied by gratuitous acts of sabotage.
A blog roundup gives us some indications.
Blogs etc.
On Global Dashboard, Britain and Europe after the veto discusses various consequences for the United Kingdom in an instructive manner.
The Labour leader Ed Miliband mostly seems content to accuse prime minister Cameron of failure to defend the interests of Britain, its financial industry and export businesses, but he is extremely thin on what a Labour government would do.
Timothy Garton Ash sees the split between the vast majority (at least 23 countries) and Britain as a turning point in history, even if the eurozone has plenty of crises to come. Cameron has not served British long term interests, but Europe will be weakened too: David Cameron's 'no' is bad for Britain and for Europe.
At the end of the day it is always the kids who end up paying the price of a messy divorce, says Mojo Working.
The United Kingdom of Great Britain and Northern Ireland never saw itself as European, but the fiscal compact means a first step on the road towards greater unity, says Dadefinspeaking (in Spanish).
Jason O'Mahony portrays The British eurosceptic as a maligned victim, adding a lighter touch to the überserious discussion, but correctly accuses the unrepresentative UK political system of failure.
Éoin Clarke puts a different spin on the matter on Liberal Conspiracy by arguing in purely domestic terms why Cameron's No is a vote-winner.
I on Europe sees Britain isolating itself in a story with enough general background on European integration to fill in for instance US readers: Europe forges fiscal union, sees way out of crisis.
Michael Heaver, who among other things dislikes the EU, questions what exactly Cameron delivers, since no powers are repatriated.
Even the UK's usual allies in the American media were aghast, the Gulf Stream Blues blog chips in: 9 December 2011: The day Britain left Europe.
The European Union Law presents the main components of the new fiscal compact and the toxic role of the United Kingdom: What's Behind the New Eurozone Fiscal Stability Union?
The Independent has a list of quotes which show that people in or close to Cameron's government publicly support his rejection at the EU summit.
Kosmopolito discusses Cameron's diplomatic failure, since his demands had nothing to do with the issues on the agenda and nobody knew about his demands in advance. ”Moreover, Cameron has no allies whatsoever.” The post deals with many of the salient points.
If Cameron had signed the treaty offered, then the opposition and his own party would have launched a further attack on his leadership, says Tom Scholes-Fogg.
Noëlle Lenoir discusses Camerons No to the fiscal compact at the European Council and his withdrawal from the discussions about the alternative, an intergovernmental treaty. She takes note of different steps the United Kingdom and the Tories have taken towards the outer rim of Europe. On the other hand, chancellor Angela Merkel has imposed her will (including the limits on action) on the rest of the members (in French).
Ralf Grahn
A responsible member state government would have given a helping hand, by signing the agreement and its parliament would have nodded through ratification (a simple laissez-passer). End of story.
The United Kingdom, however, was mean-spirited and obstructionist, even if the agreement would not have altered its relationship with the EU, only given the willing member states the opportunity to advance.
Mass market media have elevated the prime minister to Churchillian proportions, totally forgetting that putting out fires in the eurozone (with Britain a close neighbour) and the global financial system is a civilian rescue operation completely different from defending your country from foreign invasion. Actually, it is in Britian's interest.
After this we have to wonder, are there any rational voices left? At least well wishes have a hollow ring, when accompanied by gratuitous acts of sabotage.
A blog roundup gives us some indications.
Blogs etc.
On Global Dashboard, Britain and Europe after the veto discusses various consequences for the United Kingdom in an instructive manner.
The Labour leader Ed Miliband mostly seems content to accuse prime minister Cameron of failure to defend the interests of Britain, its financial industry and export businesses, but he is extremely thin on what a Labour government would do.
Timothy Garton Ash sees the split between the vast majority (at least 23 countries) and Britain as a turning point in history, even if the eurozone has plenty of crises to come. Cameron has not served British long term interests, but Europe will be weakened too: David Cameron's 'no' is bad for Britain and for Europe.
At the end of the day it is always the kids who end up paying the price of a messy divorce, says Mojo Working.
The United Kingdom of Great Britain and Northern Ireland never saw itself as European, but the fiscal compact means a first step on the road towards greater unity, says Dadefinspeaking (in Spanish).
Jason O'Mahony portrays The British eurosceptic as a maligned victim, adding a lighter touch to the überserious discussion, but correctly accuses the unrepresentative UK political system of failure.
Éoin Clarke puts a different spin on the matter on Liberal Conspiracy by arguing in purely domestic terms why Cameron's No is a vote-winner.
I on Europe sees Britain isolating itself in a story with enough general background on European integration to fill in for instance US readers: Europe forges fiscal union, sees way out of crisis.
Michael Heaver, who among other things dislikes the EU, questions what exactly Cameron delivers, since no powers are repatriated.
Even the UK's usual allies in the American media were aghast, the Gulf Stream Blues blog chips in: 9 December 2011: The day Britain left Europe.
The European Union Law presents the main components of the new fiscal compact and the toxic role of the United Kingdom: What's Behind the New Eurozone Fiscal Stability Union?
The Independent has a list of quotes which show that people in or close to Cameron's government publicly support his rejection at the EU summit.
Kosmopolito discusses Cameron's diplomatic failure, since his demands had nothing to do with the issues on the agenda and nobody knew about his demands in advance. ”Moreover, Cameron has no allies whatsoever.” The post deals with many of the salient points.
If Cameron had signed the treaty offered, then the opposition and his own party would have launched a further attack on his leadership, says Tom Scholes-Fogg.
Noëlle Lenoir discusses Camerons No to the fiscal compact at the European Council and his withdrawal from the discussions about the alternative, an intergovernmental treaty. She takes note of different steps the United Kingdom and the Tories have taken towards the outer rim of Europe. On the other hand, chancellor Angela Merkel has imposed her will (including the limits on action) on the rest of the members (in French).
Ralf Grahn
UK flunked in Europe
If blocking an EU treaty fix between 27 members and complicating the euro rescue mission was not the finest hour of UK prime minister David Cameron and deputy prime minister Nick Clegg, what was it?
Sony Kapoor of Re-Define flunked both the European Council and UK government.
The NYT IHT discusses the pros and cons of UK government the wisdom with regard to the future of the City: In Rejecting Treaty, Cameron Is Isolated.
Spiegel Online International tries to make David Cameron's acting against a background of anti-EU sentiment comprehensible for European readers, while preparing them for the next British blockades: The Man Who Said No to Europe.
PlaceLux.EU tries alternative history writing by exploring: How Cameron's kamikaze act could have been prevented.
MarketWatch was fairly upbeat about the fiscal compact between the EU member states minus Britain, but cautious about the ECB stepping up to the huge task of calming sovereign bond markets: New EU deal leaves ECB nowhere to hide.
Before the number of fiscal compact participants shrinks back somewhat, The Guardian noted Britain's unprecedented loneliness in the European Union: UK isolation grows as three more countries reconsider eurozone treaty.
The Economist has covered the EU summit(s) from a number of angles, naturally keen to discuss domestic British issues. From Bagehot's notebook: The moment, behind closed doors, that David Cameron lost his EU argument last night.
Earlier in the day, Bagehot had written: Britain, not leaving but falling out of the EU. If you have ever had doubts about the Britishness of The Economist, read: 'we have started falling out'. Bagehot sees Cameron's No as an indication of his weakness within his own party, which led him to walk away empty-handed, but the blog post also offers a detailed discussion about different aspirations in the UK and Europe.
Charlemagne's notebook contributed with Europe's great divorce, right after the fateful all-nighter in Brussels.
Ralf Grahn
Sony Kapoor of Re-Define flunked both the European Council and UK government.
The NYT IHT discusses the pros and cons of UK government the wisdom with regard to the future of the City: In Rejecting Treaty, Cameron Is Isolated.
Spiegel Online International tries to make David Cameron's acting against a background of anti-EU sentiment comprehensible for European readers, while preparing them for the next British blockades: The Man Who Said No to Europe.
PlaceLux.EU tries alternative history writing by exploring: How Cameron's kamikaze act could have been prevented.
MarketWatch was fairly upbeat about the fiscal compact between the EU member states minus Britain, but cautious about the ECB stepping up to the huge task of calming sovereign bond markets: New EU deal leaves ECB nowhere to hide.
Before the number of fiscal compact participants shrinks back somewhat, The Guardian noted Britain's unprecedented loneliness in the European Union: UK isolation grows as three more countries reconsider eurozone treaty.
The Economist has covered the EU summit(s) from a number of angles, naturally keen to discuss domestic British issues. From Bagehot's notebook: The moment, behind closed doors, that David Cameron lost his EU argument last night.
Earlier in the day, Bagehot had written: Britain, not leaving but falling out of the EU. If you have ever had doubts about the Britishness of The Economist, read: 'we have started falling out'. Bagehot sees Cameron's No as an indication of his weakness within his own party, which led him to walk away empty-handed, but the blog post also offers a detailed discussion about different aspirations in the UK and Europe.
Charlemagne's notebook contributed with Europe's great divorce, right after the fateful all-nighter in Brussels.
Ralf Grahn
UK in Europe: This was their finest hour?
If John Bunyan described The Pilgrim's Progress towards the Celestial City, I have depicted the Cameron's regress from bystander through growing weakness to near-isolation in European affairs.
Rejoice, Rejoice
The surreal atmosphere in England is illustrated by EUbusiness: British eurosceptic press jubilant at EU treaty veto.
Here is a German roundup of the British press, by Sandra Fiene (ZDF).
(Let me add that there is nothing sceptic about eurosceptics, led by campaigning anti-EU media aiming at poisoning Britain's EU relatiosnhip until the day of UK secession. Thus, I only use the euphemism in direct quotes.)
These are the sentiments prime minister David Cameron and deputy prime minister Nick Clegg have decided to placate, instead of even allowing the fiscal compact to take shape within the EU framework.
This was their finest hour?
Thinking writers
Let me offer you a roundup of a few actors, thinkers and writers I respect, many of them British citizens (if the concept does not appear too alien) or residents. I won't refer to the contents much, but hope that you take time to read and think.
From free market Sweden, with its own difficulties to remain close to the EU core, foreign minister Carl Bildt - @carlbildt on Twitter – tweeted this:
Bildt linked to the blog post by Charles Grant, of the Centre for European Reform (CER): Britain on the edge of Europe.
On the CER blog, Simon Tilford mentions Britain only in passing, but his pessimistic assessment of the euro salvage operation is a reminder that Europe needs people outside the governments and institutions willing to discuss the big picture: EU summit: Enough to save the euro?
Just ahead of the fateful summit dinner, The European Citizen set out Britain's Bad Negotiating Position, questioning the repatriation strategy amidst potential euro meltdown (although the power to block financial regulation turned out to be the rabbit Cameron pulled out of his hat).
On the British Politics and Policy at LSE blog the headline by Simon Hix offered a shortcut to the conclusions: David Cameron's EU treaty veto is a disaster for Britain. But do read his reasoning.
Also on the LSE blog, Olaf Cramme saw David Cameron going to Brussels ill prepared and under domestic pressure: Cameron's pandering to euroscepticism and the illusionary 'national interest' is a failure of leadership and leaves Britain in a lose-lose situation.
Ralf Grahn
Rejoice, Rejoice
The surreal atmosphere in England is illustrated by EUbusiness: British eurosceptic press jubilant at EU treaty veto.
Here is a German roundup of the British press, by Sandra Fiene (ZDF).
(Let me add that there is nothing sceptic about eurosceptics, led by campaigning anti-EU media aiming at poisoning Britain's EU relatiosnhip until the day of UK secession. Thus, I only use the euphemism in direct quotes.)
These are the sentiments prime minister David Cameron and deputy prime minister Nick Clegg have decided to placate, instead of even allowing the fiscal compact to take shape within the EU framework.
This was their finest hour?
Thinking writers
Let me offer you a roundup of a few actors, thinkers and writers I respect, many of them British citizens (if the concept does not appear too alien) or residents. I won't refer to the contents much, but hope that you take time to read and think.
From free market Sweden, with its own difficulties to remain close to the EU core, foreign minister Carl Bildt - @carlbildt on Twitter – tweeted this:
A very pessimistic analysis by a very competent observer on the consequences of marginalizing oneself in Europe.
Bildt linked to the blog post by Charles Grant, of the Centre for European Reform (CER): Britain on the edge of Europe.
On the CER blog, Simon Tilford mentions Britain only in passing, but his pessimistic assessment of the euro salvage operation is a reminder that Europe needs people outside the governments and institutions willing to discuss the big picture: EU summit: Enough to save the euro?
Just ahead of the fateful summit dinner, The European Citizen set out Britain's Bad Negotiating Position, questioning the repatriation strategy amidst potential euro meltdown (although the power to block financial regulation turned out to be the rabbit Cameron pulled out of his hat).
On the British Politics and Policy at LSE blog the headline by Simon Hix offered a shortcut to the conclusions: David Cameron's EU treaty veto is a disaster for Britain. But do read his reasoning.
Also on the LSE blog, Olaf Cramme saw David Cameron going to Brussels ill prepared and under domestic pressure: Cameron's pandering to euroscepticism and the illusionary 'national interest' is a failure of leadership and leaves Britain in a lose-lose situation.
Ralf Grahn
European Council: centrifugal Cameron
Hopefully the political leaders, their teams, the EU officials and the journalists on duty during the European Council 8 and 9 December 2011 get some well deserved rest.
Soon enough they are going to be confronted with an astonishing number of political and legal questions needing to be sorted out.
First we have to look at what the summit(s) produced.
European Council conclusions
The traditonal conclusions are available in all the 23 official EU languages; the English version:
European Council 9 December 2011 conclusions (EUCO 139/11; 7 pages)
If you take a closer look, you notice that just over two text pages are dedicated to general economic policy issues, with many references to the Euro Plus Pact. The rest of the conclusions deal with energy, enlargement and some other topics.
For the second time in a short while, the meeting in the EU27 framework reminds us of the plain sliced bread roll of a hamburger, but without the beef or garnish.
This is not that far from the hastily called meeting where the EU heads of state or government were informed about the preparations for the Euro Summit later the same day, 26 (to 27) October 2011.
Now the ”bouches inutiles” of those unproductive in the defence during ancient sieges left the formal European Council conclusions gutted: the sliced roll.
To the extent that there is beef and garnish, they belong to the defenders of the euro, in the euro area statement in the official languages; in English (revised version):
Statement by the euro area heads of state or government; 9 December 2011
Centripetal forces
By Friday morning the 17 eurozone were joined by the same six non-euro countries which had earlier adopted the Euro Plus Pact in order to stay as close to the core as possible.
When prime minister David Cameron rejected regular treaty reform (without permanent powers for the United Kingdom to block financial regulation), the Czech Republic, Hungary and Sweden realised that they were on course towards marginalisation.
Despite their governments, parliaments and public opinions being cool towards deeper integration, deliberate loss of influence is not an attractive option. Difficult domestic discussion await, but they wanted to secure the option to join the new fiscal compact and to participate in fleshing out the details.
The euro area statement was revised accordingly, and the last sentence now reads like this:
Potentially there could be 26 participants in the new fiscal compact, leaving Britain alone. It is more probable that the six non-euro members of the Euro Plus Pact are willing to take the next step together with the eurozone 17: Bulgaria, Denmark, Latvia, Lithuania, Poland and Romania.
For the Czech Republic, Hungary and Sweden the fiscal compact (and, I imagine, belatedly joining the Euro Plus Pact) would mean reorientation, against the grain of their previous policies. However, few national leaders embrace loss of influence, if they can avoid it.
The eurozone chaos has done little to sweeten the deal. Less than 10 per cent of the Swedes support euro adoption, down by around 40 percentage points in two years.
United Kingdom
Let us still call a 27-1 European Union a theoretical outcome, but prime minister David Cameron's centrifugal strategy has brought something close to it into the realm of reality.
By falling on his sword to please his backbenchers, he did not become more fit to defend the one square mile of Britain he ostentatiously cares about. On the contrary, the UK's goodwill deficit grew considerably, so the government is less useful for the City in the future.
I wonder why deputy prime minister Nick Clegg signed up to the strategic disaster.
Cameron's reaction leaves the door open for reprisals to prevent the rest of the EU member states from using the institutions and facilities of the European Union:
As I said, there is an astonishing number of political and legal questions to sort out after the European summit(s), without Cameron including active sabotage in his well wishes to the countries joining the fiscal compact.
Soon enough the participants will find the difficulties all by themselves.
Ralf Grahn
Soon enough they are going to be confronted with an astonishing number of political and legal questions needing to be sorted out.
First we have to look at what the summit(s) produced.
European Council conclusions
The traditonal conclusions are available in all the 23 official EU languages; the English version:
European Council 9 December 2011 conclusions (EUCO 139/11; 7 pages)
If you take a closer look, you notice that just over two text pages are dedicated to general economic policy issues, with many references to the Euro Plus Pact. The rest of the conclusions deal with energy, enlargement and some other topics.
For the second time in a short while, the meeting in the EU27 framework reminds us of the plain sliced bread roll of a hamburger, but without the beef or garnish.
This is not that far from the hastily called meeting where the EU heads of state or government were informed about the preparations for the Euro Summit later the same day, 26 (to 27) October 2011.
Now the ”bouches inutiles” of those unproductive in the defence during ancient sieges left the formal European Council conclusions gutted: the sliced roll.
To the extent that there is beef and garnish, they belong to the defenders of the euro, in the euro area statement in the official languages; in English (revised version):
Statement by the euro area heads of state or government; 9 December 2011
Centripetal forces
By Friday morning the 17 eurozone were joined by the same six non-euro countries which had earlier adopted the Euro Plus Pact in order to stay as close to the core as possible.
When prime minister David Cameron rejected regular treaty reform (without permanent powers for the United Kingdom to block financial regulation), the Czech Republic, Hungary and Sweden realised that they were on course towards marginalisation.
Despite their governments, parliaments and public opinions being cool towards deeper integration, deliberate loss of influence is not an attractive option. Difficult domestic discussion await, but they wanted to secure the option to join the new fiscal compact and to participate in fleshing out the details.
The euro area statement was revised accordingly, and the last sentence now reads like this:
The Heads of State or Government of Bulgaria, Czech Republic, Denmark, Hungary, Latvia, Lithuania, Poland, Romania and Sweden indicated the possibility to take part in this process after consulting their Parliaments where appropriate.
Potentially there could be 26 participants in the new fiscal compact, leaving Britain alone. It is more probable that the six non-euro members of the Euro Plus Pact are willing to take the next step together with the eurozone 17: Bulgaria, Denmark, Latvia, Lithuania, Poland and Romania.
For the Czech Republic, Hungary and Sweden the fiscal compact (and, I imagine, belatedly joining the Euro Plus Pact) would mean reorientation, against the grain of their previous policies. However, few national leaders embrace loss of influence, if they can avoid it.
The eurozone chaos has done little to sweeten the deal. Less than 10 per cent of the Swedes support euro adoption, down by around 40 percentage points in two years.
United Kingdom
Let us still call a 27-1 European Union a theoretical outcome, but prime minister David Cameron's centrifugal strategy has brought something close to it into the realm of reality.
By falling on his sword to please his backbenchers, he did not become more fit to defend the one square mile of Britain he ostentatiously cares about. On the contrary, the UK's goodwill deficit grew considerably, so the government is less useful for the City in the future.
I wonder why deputy prime minister Nick Clegg signed up to the strategic disaster.
Cameron's reaction leaves the door open for reprisals to prevent the rest of the EU member states from using the institutions and facilities of the European Union:
When we can’t be given those safeguards in the treaty, it is better this is done by intergovernmental arrangements, outside the treaty and outside the institutions of the European Union. That is what will happen, and that is what is in Britain’s national interests.
As I said, there is an astonishing number of political and legal questions to sort out after the European summit(s), without Cameron including active sabotage in his well wishes to the countries joining the fiscal compact.
Soon enough the participants will find the difficulties all by themselves.
Ralf Grahn
Friday, 9 December 2011
Cameron in European Council: Weak, weaker... (Updated)
Without democratic government and sufficient powers at the European Union or eurozone level, the national leaders have been forced to proceed further on the road of intergovernmentalism, although credible and sustainable solutions need durable and legitimate foundations.
While we wait for the conclusions from the European Council, this is how the leaders of the euro area countries and other EU member states have tried to manoeuvre despite these self-imposed structural weaknesses: Statement by the euro area heads of state or government (9 December 2011; 7 pages).
United Kingdom
If Britain has been a constant gardener of weakening its position in the European Union, prime minister Cavid Cameron managed to drive the wedge further in, by alienating almost all the rest of the participants, by demanding escape clauses for British financial services from internal market rules.
With the global financial system in danger, Nero would have been proud of Cameron's priorities.
Let us look at some early reactions after the EUCO all-nighter, especially with regard to the United Kingdom.
Financial services are, as we know, part and parcel of the internal market. What remains of UK goodwill capital to press for future concessions among the 27? Le Monde quotes the French president Nicolas Sarkozy on Britain's ”unacceptable” demands regarding financial regulation, the absence of which Sarkozy sees as a root cause of the current problems.
On Fundación Civil, the headline of Mario Conde says that the English have become ”anti-system” in the European Union, but he also notes that the fiscal compact is all discipline (Merkel), but no eurobonds or new tasks for the ECB (in Spanish).
According to David Cameron, the agreement between the EU countries is not in Britain's interest, so he hopes that the EU institutions will protect British interests and he wishes the rest of the union well in their endeavours to safeguard the euro.
How many Europeans do you think, by now hope that Cameron arranges an exit referendum?
***
Update 9 December 2011: The euro area statement has been revised, tentatively bringing the participants to 26 (all but UK). Here is the web page with the statement in all EU languages.
Ralf Grahn
While we wait for the conclusions from the European Council, this is how the leaders of the euro area countries and other EU member states have tried to manoeuvre despite these self-imposed structural weaknesses: Statement by the euro area heads of state or government (9 December 2011; 7 pages).
United Kingdom
If Britain has been a constant gardener of weakening its position in the European Union, prime minister Cavid Cameron managed to drive the wedge further in, by alienating almost all the rest of the participants, by demanding escape clauses for British financial services from internal market rules.
With the global financial system in danger, Nero would have been proud of Cameron's priorities.
Let us look at some early reactions after the EUCO all-nighter, especially with regard to the United Kingdom.
Financial services are, as we know, part and parcel of the internal market. What remains of UK goodwill capital to press for future concessions among the 27? Le Monde quotes the French president Nicolas Sarkozy on Britain's ”unacceptable” demands regarding financial regulation, the absence of which Sarkozy sees as a root cause of the current problems.
On Fundación Civil, the headline of Mario Conde says that the English have become ”anti-system” in the European Union, but he also notes that the fiscal compact is all discipline (Merkel), but no eurobonds or new tasks for the ECB (in Spanish).
According to David Cameron, the agreement between the EU countries is not in Britain's interest, so he hopes that the EU institutions will protect British interests and he wishes the rest of the union well in their endeavours to safeguard the euro.
How many Europeans do you think, by now hope that Cameron arranges an exit referendum?
***
Update 9 December 2011: The euro area statement has been revised, tentatively bringing the participants to 26 (all but UK). Here is the web page with the statement in all EU languages.
Ralf Grahn
New ”fiscal compact” for eurozone (2 x updated)
How can anyone defend (or even call for more) intergovernmental solutions to common problems at the European level, or even tolerate the EU our leaders and their predecessors have built?
With democratic government and sufficient powers the European Union, the eurozone and we would not be in this impotent mess.
Well, upon leaving Mario Draghi, the president of the European Central Bank (ECB) called it a very good outcome for the euro area countries, although the deal has to be fleshed out in the coming days.
The European Council dinner finally broke up and after 5 o'clock Friday morning (local time) the announced press conference of European Council and Euro Summit president Herman Van Rompuy and Commission president José Manuel Barroso took place.
Update 9 December 2011: Herman Van Rompuy's written statement has now been posted, and it offers more detail.
Update 2, 9 December 2011: Statement by the euro area heads of state or government (9 December 2011; 7 pages). This is the paper to read, both for actions and blank spaces.
A ”new fiscal compact” is the novel Sesame between 17 eurozone members and six others, an intergovernmental agreement between 23 member states (perhaps more).
Self-imposed structural weaknesses force the leaders to continue on the road of intergovernmentalism, although credible and sustainable solutions need durable and legitimate foundations.
The United Kingdom is clearly a problem, not a part of the solution, as shown by the Financial Times report on prime minister David Cameron's demands for Britain to be able to be excepted from regulation of a crucial part of the internal market, financial services.
Thus, Cameron wants to undermine the integrity of the internal market.
Ralf Grahn
With democratic government and sufficient powers the European Union, the eurozone and we would not be in this impotent mess.
Well, upon leaving Mario Draghi, the president of the European Central Bank (ECB) called it a very good outcome for the euro area countries, although the deal has to be fleshed out in the coming days.
The European Council dinner finally broke up and after 5 o'clock Friday morning (local time) the announced press conference of European Council and Euro Summit president Herman Van Rompuy and Commission president José Manuel Barroso took place.
Update 9 December 2011: Herman Van Rompuy's written statement has now been posted, and it offers more detail.
Update 2, 9 December 2011: Statement by the euro area heads of state or government (9 December 2011; 7 pages). This is the paper to read, both for actions and blank spaces.
A ”new fiscal compact” is the novel Sesame between 17 eurozone members and six others, an intergovernmental agreement between 23 member states (perhaps more).
Self-imposed structural weaknesses force the leaders to continue on the road of intergovernmentalism, although credible and sustainable solutions need durable and legitimate foundations.
The United Kingdom is clearly a problem, not a part of the solution, as shown by the Financial Times report on prime minister David Cameron's demands for Britain to be able to be excepted from regulation of a crucial part of the internal market, financial services.
Thus, Cameron wants to undermine the integrity of the internal market.
Ralf Grahn
Sunday, 4 December 2011
Euro: Waiting for Merkozy
Heads of government (or state) in most European capitals may think about Samuel Beckett, as they wait for Merkozy.
At least publicly their common president of the European Council and the Euro Summits, Herman Van Rompuy, has not published proposals to overcome the euro crisis.
More than anything, we seem to experience a cacaphony of silence from the national capitals and Brussels.
Franco-German positions
Monday, 5 December 2011 at 13:30, the French president Nicolas Sarkozy receives the German chancellor Angela Merkel for a working lunch at the Elysee Palace.
What, if anything, are they going to bring to the table?
Friday, 2 December 2011 the German Parliament (Bundestag) heard and debated the government policy statement presented by chancellor Angela Merkel (Regierungserklärung durch die Bundeskanzlerin zum Europäischen Rat am 9. Dezember 2011 in Brüssel).
The Toulon election rally speech by the French president Nicolas Sarkozy and the government statement by Merkel have been widely reported and commented. Here are a few attempts to compare the two messages, ahead of the meeting between Sarkozy and Merkel in Paris tomorrow, 5 December 2011.
Charlemagne published two blog posts on the common euro problem, but two differing visions (part I and a more detailed comparison in part II).
On the Coulisses de Bruxelles blog, Jean Quatremer discussed similarities and differences. The European Council may continue until Sunday.
Le Figaro offers another synthesis of the Franco-German views.
Bystanders
In addition to David Cameron and Herman Van Rompuy the list of bystanders ahead of the European Council (#EUCO on Twitter) 8 to 9 December 2011 seems long, with few exceptions to date.
One of the few government sources I have stumbled across is the Swedish foreign minister and euroblogger Carl Bildt, whose message is more Europe, but not more Europes. Splitting Europe into new groups is not the way forward.
Ahead of the General Affairs Council (GAC) 5 December 2011 the Swedish government is positive about the need for improved budgetary discipline, but reserved about the need for treaty changes. The customary annotated agenda offers some background, but no concrete proposals.
The Swedes may be happy to be outside the eurozone right now, as The Economist reports, but how realistic is Bildt's hope to evade the consequences of being a euro outsider by reaching effective decisions unanimously and then ratifying them in 27 EU member states?
The government of Finland refers to president Herman Van Rompuy's proposals on ways to strengthen the economic union, improve fiscal discipline and deepen the euro area's integration. The debate will concentrate on the possibility of limited Treaty changes or corresponding arrangements. The President’s proposals are based on the mandate he was given in the October meeting.
This text and one about the General Affairs Council are written as if Van Rompuy's proposals existed (and only the public was kept in the dark).
The Irish Independent sees prime minister Enda Kenny capitulating to Merkel on budget rules, anticipating that the European Central Bank would build a ”firewall” to give eurozone governments time to repair their finances. Another national referendum looms on the horizon. Here Van Rompuy is said to be preparing his proposals, with national (Irish) officials participating in the process.
***
The markets and EU citizens need democratic and sufficient powers, good governance and transparency to the European level from Merkozy.
The governments, too, are waiting for Merkozy, but with varying apprehensions and reservations, based on their national agendas.
Ralf Grahn
At least publicly their common president of the European Council and the Euro Summits, Herman Van Rompuy, has not published proposals to overcome the euro crisis.
More than anything, we seem to experience a cacaphony of silence from the national capitals and Brussels.
Franco-German positions
Monday, 5 December 2011 at 13:30, the French president Nicolas Sarkozy receives the German chancellor Angela Merkel for a working lunch at the Elysee Palace.
What, if anything, are they going to bring to the table?
Friday, 2 December 2011 the German Parliament (Bundestag) heard and debated the government policy statement presented by chancellor Angela Merkel (Regierungserklärung durch die Bundeskanzlerin zum Europäischen Rat am 9. Dezember 2011 in Brüssel).
The Toulon election rally speech by the French president Nicolas Sarkozy and the government statement by Merkel have been widely reported and commented. Here are a few attempts to compare the two messages, ahead of the meeting between Sarkozy and Merkel in Paris tomorrow, 5 December 2011.
Charlemagne published two blog posts on the common euro problem, but two differing visions (part I and a more detailed comparison in part II).
On the Coulisses de Bruxelles blog, Jean Quatremer discussed similarities and differences. The European Council may continue until Sunday.
Le Figaro offers another synthesis of the Franco-German views.
Bystanders
In addition to David Cameron and Herman Van Rompuy the list of bystanders ahead of the European Council (#EUCO on Twitter) 8 to 9 December 2011 seems long, with few exceptions to date.
One of the few government sources I have stumbled across is the Swedish foreign minister and euroblogger Carl Bildt, whose message is more Europe, but not more Europes. Splitting Europe into new groups is not the way forward.
Ahead of the General Affairs Council (GAC) 5 December 2011 the Swedish government is positive about the need for improved budgetary discipline, but reserved about the need for treaty changes. The customary annotated agenda offers some background, but no concrete proposals.
The Swedes may be happy to be outside the eurozone right now, as The Economist reports, but how realistic is Bildt's hope to evade the consequences of being a euro outsider by reaching effective decisions unanimously and then ratifying them in 27 EU member states?
The government of Finland refers to president Herman Van Rompuy's proposals on ways to strengthen the economic union, improve fiscal discipline and deepen the euro area's integration. The debate will concentrate on the possibility of limited Treaty changes or corresponding arrangements. The President’s proposals are based on the mandate he was given in the October meeting.
This text and one about the General Affairs Council are written as if Van Rompuy's proposals existed (and only the public was kept in the dark).
The Irish Independent sees prime minister Enda Kenny capitulating to Merkel on budget rules, anticipating that the European Central Bank would build a ”firewall” to give eurozone governments time to repair their finances. Another national referendum looms on the horizon. Here Van Rompuy is said to be preparing his proposals, with national (Irish) officials participating in the process.
***
The markets and EU citizens need democratic and sufficient powers, good governance and transparency to the European level from Merkozy.
The governments, too, are waiting for Merkozy, but with varying apprehensions and reservations, based on their national agendas.
Ralf Grahn
EU and euro crisis: Internal weaknesses and unanimity
Some countries are born weak, some achieve weakness and some have weakness thrust upon them. The United Kingdom joined the EEC (later EU) late and grudgingly, after its EFTA strategy failed. Britain has worked hard to drag the course of European integration down to its own level, reluctantly agreeing to further steps while opting out of essential policy areas and core groups. Representing a member state seen as playing as much against as for its team, prime minister David Cameron is and has thrust himself into the position of being an obstacle, a nuisance or an irrelevance.
However, weakness is not confined to Britain. The European level is a shining example. The less than robust and democratic structures of the European Union and the eurozone are root causes of the worsening euro crisis. Given the structural weaknesses, calls for more or better leadership often have a hollow ring.
Yesterday we looked at the eurozone ”institutions” with regard to economic policy; informal gatherings with the Euro Summit as the icing on a cake of impotence.
A few days ahead of the European Council, there is no public proposal from president Herman Van Rompuy (who is also the president of the Euro Summits, and has been mandated to propose solutions). An apt illustration of the state of EU and eurozone level power, governance and transparency.
Through the feebleness of the European level, common solutions become hostages of national perspectives and power struggles, since fundamental remedies need unanimity among the EU members or participating states.
Never underestimate internal weaknesses as an explaining factor in intergovernmental Europe.
However chancellor Angela Merkel and president Nicolas Sarkozy patch up their mutual differences on Monday in Paris, the next ”comprehensive solution” requiring unanimity will be met by 25 other national lists of caveats at the European Council 8 to 9 December 2011 (somewhat fewer if the serious talks are restricted to the euro area members or a core within the core).
Does this have the look of credible structures and convincing solutions to the euro crisis, based on democracy at the right level?
Ralf Grahn
However, weakness is not confined to Britain. The European level is a shining example. The less than robust and democratic structures of the European Union and the eurozone are root causes of the worsening euro crisis. Given the structural weaknesses, calls for more or better leadership often have a hollow ring.
Yesterday we looked at the eurozone ”institutions” with regard to economic policy; informal gatherings with the Euro Summit as the icing on a cake of impotence.
A few days ahead of the European Council, there is no public proposal from president Herman Van Rompuy (who is also the president of the Euro Summits, and has been mandated to propose solutions). An apt illustration of the state of EU and eurozone level power, governance and transparency.
Through the feebleness of the European level, common solutions become hostages of national perspectives and power struggles, since fundamental remedies need unanimity among the EU members or participating states.
Never underestimate internal weaknesses as an explaining factor in intergovernmental Europe.
However chancellor Angela Merkel and president Nicolas Sarkozy patch up their mutual differences on Monday in Paris, the next ”comprehensive solution” requiring unanimity will be met by 25 other national lists of caveats at the European Council 8 to 9 December 2011 (somewhat fewer if the serious talks are restricted to the euro area members or a core within the core).
Does this have the look of credible structures and convincing solutions to the euro crisis, based on democracy at the right level?
Ralf Grahn
Saturday, 3 December 2011
Eurozone: Cameron can watch and hope
UK prime minister David Cameron is not in an enviable position. If the euro crashes, the troubled British economy would take a severe turn for the worse. The United Kingdom has to hope that the leaders of the eurozone finally get their act together next week.
This means deeper integration among the 17 euro area countries, or at least a core within the core, since the UK itself is among the reasons why significant progress among 27 EU member states is a utopian vision.
The kind of protectionist eurozone the French president Nicolas Sarkozy has in mind would undermine European economic integration based on open external and internal markets, common competition rules, free movement and Schengen, but Britain has placed itself off-side.
Caught by UK opt-outs and constant obstructionism, the new-fangled referendum lock, secessionists in his own party, campaigning anti-EU media and hostile public sentiment, Cameron is in a position of weakness. He can only offer the well-meaning advice of a bystander, after lunch at the Elysee Palace in Paris (BBC News):
Eurozone institutions?
What are these eurozone institutions (within and alongside the institutions of the European Union)?
With regard to economic policy we have the informal Euro Group enshrined at treaty level, i.e. president Jean-Claude Juncker and the finance ministers of the 17 eurozone members. Formal decisions have to be taken by the EU institutions (Council) or intergovernmentally.
The eurozone war chest, struggling to find sponsors to provide leverage, is the European Financial Stability Facility (EFSF), a company registered in Luxembourg. The temporary EFSF should be supplanted by the permanent European Stability Mechanism (ESM).
The European Council 23 October 2011 and the Euro summit 26 (27) October 2011 have now instituted the Euro Summits as a regular feature, with Herman Van Rompuy as the first president. This is the cabal the French president wants to turn into the ”government” in his own image for eurozone convergence, including tighter rules on work and tax.
According to the EU Treaties, monetary policy is conducted by the European Central Bank (ECB), restricted by its inflation-fighting mandate and limited scope of action compared to lenders of last resort.
The eurozone needs deeper integration and ground-breaking action, but David Cameron can mostly watch and hope.
Ralf Grahn
This means deeper integration among the 17 euro area countries, or at least a core within the core, since the UK itself is among the reasons why significant progress among 27 EU member states is a utopian vision.
The kind of protectionist eurozone the French president Nicolas Sarkozy has in mind would undermine European economic integration based on open external and internal markets, common competition rules, free movement and Schengen, but Britain has placed itself off-side.
Caught by UK opt-outs and constant obstructionism, the new-fangled referendum lock, secessionists in his own party, campaigning anti-EU media and hostile public sentiment, Cameron is in a position of weakness. He can only offer the well-meaning advice of a bystander, after lunch at the Elysee Palace in Paris (BBC News):
"In the end, what that is about is convincing the markets that the institutions of the eurozone will defend and promote and protect the currency with everything they've got," he said.
Eurozone institutions?
What are these eurozone institutions (within and alongside the institutions of the European Union)?
With regard to economic policy we have the informal Euro Group enshrined at treaty level, i.e. president Jean-Claude Juncker and the finance ministers of the 17 eurozone members. Formal decisions have to be taken by the EU institutions (Council) or intergovernmentally.
The eurozone war chest, struggling to find sponsors to provide leverage, is the European Financial Stability Facility (EFSF), a company registered in Luxembourg. The temporary EFSF should be supplanted by the permanent European Stability Mechanism (ESM).
The European Council 23 October 2011 and the Euro summit 26 (27) October 2011 have now instituted the Euro Summits as a regular feature, with Herman Van Rompuy as the first president. This is the cabal the French president wants to turn into the ”government” in his own image for eurozone convergence, including tighter rules on work and tax.
According to the EU Treaties, monetary policy is conducted by the European Central Bank (ECB), restricted by its inflation-fighting mandate and limited scope of action compared to lenders of last resort.
The eurozone needs deeper integration and ground-breaking action, but David Cameron can mostly watch and hope.
Ralf Grahn
Saturday, 19 November 2011
Merkel and Cameron on EU and euro
Thursday, the German chancellor Angela Merkel met the new prime minister of Denmark, Helle Thorning-Schmidt. Friday brought the UK prime minister David Cameron to Berlin for talks about the European Union, the eurozone crisis and bilateral issues.
David Cameron
Merkel started the press conference by emphasising the common interest of Germany and the United Kingdom to make the European Union competitive. Both countries want the internal market to succeed. The EU budget for 2012 should acknowledge the domestic consolidation efforts by keeping in line with inflation, but nothing more.
A strong eurozone is in Britain's interest. Stricter rules and enforcement require limited treaty change among the members of the eurozone, according to Merkel.
Prime minister David Cameron underlined the common aims concerning the internal market, budget discipline and the EU budget. A sustainable euro is in everyone's interest, although differences remain regarding crisis measures.
Merkel and Cameron are united on a global financial transaction tax (FTT), but not on a European one.
Cameron replied to the Bild magazine headline about what the UK is (still) doing in Europe, by stressing his country's positive role for competitiveness and productivity.
The institutions of the eurozone need to defend the currency and to take all the necessary measures, according to Cameron.
The United Kingdom remains outside the Euro Group of 17 countries, the euro summits, the ECB and the Euro Plus Pact joining 23 EU members (see EUCO paragraphs 11-12 and Annex I), but it is hard to guess how Cameron's friendly advice was received deep down by his step-by-step host.
CDU positions
Previously we have looked at some differences between Germany and Britain in European politics: the CDU party conference, European values, British Europe as an alternative, Ireland as a risk to needed treaty reform, the euro area and the EU, as well as CDU's next steps to overcome the euro crisis.
Ralf Grahn
David Cameron
Merkel started the press conference by emphasising the common interest of Germany and the United Kingdom to make the European Union competitive. Both countries want the internal market to succeed. The EU budget for 2012 should acknowledge the domestic consolidation efforts by keeping in line with inflation, but nothing more.
A strong eurozone is in Britain's interest. Stricter rules and enforcement require limited treaty change among the members of the eurozone, according to Merkel.
Prime minister David Cameron underlined the common aims concerning the internal market, budget discipline and the EU budget. A sustainable euro is in everyone's interest, although differences remain regarding crisis measures.
Merkel and Cameron are united on a global financial transaction tax (FTT), but not on a European one.
Cameron replied to the Bild magazine headline about what the UK is (still) doing in Europe, by stressing his country's positive role for competitiveness and productivity.
The institutions of the eurozone need to defend the currency and to take all the necessary measures, according to Cameron.
The United Kingdom remains outside the Euro Group of 17 countries, the euro summits, the ECB and the Euro Plus Pact joining 23 EU members (see EUCO paragraphs 11-12 and Annex I), but it is hard to guess how Cameron's friendly advice was received deep down by his step-by-step host.
CDU positions
Previously we have looked at some differences between Germany and Britain in European politics: the CDU party conference, European values, British Europe as an alternative, Ireland as a risk to needed treaty reform, the euro area and the EU, as well as CDU's next steps to overcome the euro crisis.
Ralf Grahn
Thursday, 17 November 2011
Ireland's Enda Kenny bane of euro?
Tomorrow, Friday 18 November 2011 (see calendar), prime minister David Cameron has an opportunity to impress chancellor Merkel in Berlin with his vision of British Europe.
More serious for the prospects of the eurozone were the statements from Enda Kenny, the prime minister of Ireland, at the press conference 16 November 2011, following talks with chancellor Merkel. Kenny thanked Germany for its help in saving the Irish economy, but he saw no chances for treaty reform.
The conflict between national referendum politics and the need for democracy, sufficient powers and leadership to meet at the European level may well earn Ireland and Enda Kenny a place in the end-of-history books, despite Kenny's confession that to unravel the euro is to unravel the EU.
For Ireland as an individual eurozone country, the painful reforms are starting to bear fruit, but what if the euro area implodes and – if we believe Kenny – the European Union?
Perhaps an Irish referendum could show the way out after the crash?
Ralf Grahn
More serious for the prospects of the eurozone were the statements from Enda Kenny, the prime minister of Ireland, at the press conference 16 November 2011, following talks with chancellor Merkel. Kenny thanked Germany for its help in saving the Irish economy, but he saw no chances for treaty reform.
The conflict between national referendum politics and the need for democracy, sufficient powers and leadership to meet at the European level may well earn Ireland and Enda Kenny a place in the end-of-history books, despite Kenny's confession that to unravel the euro is to unravel the EU.
For Ireland as an individual eurozone country, the painful reforms are starting to bear fruit, but what if the euro area implodes and – if we believe Kenny – the European Union?
Perhaps an Irish referendum could show the way out after the crash?
Ralf Grahn
British or European Europe?
What makes the leading government party of the biggest eurozone and EU member state tick? Despite too little, too late, Germany participates fully in all the policy areas of the European Union. For Germany, the symbols of the EU express a feeling of community in Europe.
Compare the conference of the Christian Democratic Union CDU in Leipzig – Für Europa. Für Deutschland – with the steady stream of war-like propaganda from anti-EU media and campaigners in the United Kingdom, negative public opinion, the open hostility among the political class and the efforts of successive UK governments to play as little as possible for the team, while demanding most in return.
The previous British prime ministers Tony Blair and Gordon Brown pretended that the UK was at the heart of Europe, while standing on the brake and devising opt-outs. According to David Cameron ”we sceptics have a vital point”.
Compare the European values of the CDU (and Germany) with the sovereignty cum narrow national interest discourse streaming from Westminster.
The euroblogger Jon Worth called on Labour to embrace more constructive EU politics than those expressed by the shadow foreign secretary Douglas Alexander. He also proposed that UK politicians should drop the indiscriminate and narrow-minded use of the 'national interest' in relation to the European Union.
For those who think that prime minister David Cameron showed great restraint and wisdom by calling for the EU to be turned into a flexible network of nation states promoting open markets, Kosmopolit wrote a long blog post on the problems of the UK's approach to the EU. Long term all the EU member states (except Britain and Denmark) are bound to join the eurozone, so where are Cameron's long term allies?
Timothy Garton Ash asks Cameron to present his vision for Europe, if he has one. At this moment Cameron's British Europe is purest waffle. Chancellor Angela Merkel's German vision for political union in Europe is still only part right, but let the European leaders choose between these alternative routes forward.
Ralf Grahn
Compare the conference of the Christian Democratic Union CDU in Leipzig – Für Europa. Für Deutschland – with the steady stream of war-like propaganda from anti-EU media and campaigners in the United Kingdom, negative public opinion, the open hostility among the political class and the efforts of successive UK governments to play as little as possible for the team, while demanding most in return.
The previous British prime ministers Tony Blair and Gordon Brown pretended that the UK was at the heart of Europe, while standing on the brake and devising opt-outs. According to David Cameron ”we sceptics have a vital point”.
Compare the European values of the CDU (and Germany) with the sovereignty cum narrow national interest discourse streaming from Westminster.
The euroblogger Jon Worth called on Labour to embrace more constructive EU politics than those expressed by the shadow foreign secretary Douglas Alexander. He also proposed that UK politicians should drop the indiscriminate and narrow-minded use of the 'national interest' in relation to the European Union.
For those who think that prime minister David Cameron showed great restraint and wisdom by calling for the EU to be turned into a flexible network of nation states promoting open markets, Kosmopolit wrote a long blog post on the problems of the UK's approach to the EU. Long term all the EU member states (except Britain and Denmark) are bound to join the eurozone, so where are Cameron's long term allies?
Timothy Garton Ash asks Cameron to present his vision for Europe, if he has one. At this moment Cameron's British Europe is purest waffle. Chancellor Angela Merkel's German vision for political union in Europe is still only part right, but let the European leaders choose between these alternative routes forward.
Ralf Grahn
Monday, 7 June 2010
EU: Convergence programme and budget cuts United Kingdom
Britain’s prime minister David Cameron is a busy man. He met Herman Van Rompuy, a man the politically illiterate crew in Downing Street brand as the “EU President”, when in fact he is the president of the European Council (without a vote). They also refer to the “EU Council”, when they clearly mean the upcoming meeting of the European Council 17 June 2010, where Cameron sits together with the other heads of state or government from the EU member states. (Luckily, the press release was short; only two obvious misnomers.)
Today, Cameron also spoke on the economy, preparing the ground for budget cuts:
The cuts will be specified in an emergency budget in two weeks.
Cameron referred to the G20 meeting as an endorsement for the UK plans, but references to the European Union were mostly confined to the terrifying example of Greece.
Convergence report
Despite the UK’s soloist streak, it is a member of the European Union. The Commission monitors Britain’s economy and the Council issues opinions, as for other member states. The latest opinion of the Council of the European Union has been published in the Official Journal of the European Union (OJEU):
COUNCIL OPINION on the updated convergence programme of the United Kingdom, 2009/2010-2014/2015: published OJEU 4.6.2010 C 146/18
Economic situation
On 26 April 2010 the EU Council examined the updated convergence programme of the United Kingdom, which covers the period 2009/2010 to 2014/2015. The Council began its assessment with a brief description of the economic situation:
Council recommendation
After a detailed discussion, and in the light of the recommendation under Article 126(7) TFEU of 2 December 2009, the Council of the European Union invited the United Kingdom to:
The gloomy prospects prime minister David Cameron referred to today can hardly have come as a surprise, after the new coalition government took office. The 26 April 2010 assessments by the Council and its recommendations to the member states were public knowledge, although it took the EU more than a month to publish them in the OJEU.
Until the promised budget cuts take effect, the UK’s government borrowing pace is breath-taking. Luckily, the sky-rocketing debt level was fairly low before the financial and economic crisis.
The latest UK House of Commons Library research paper (10/39) Economic Indicators June 2010 contains valuable information about the real economy, finance and UK public finances.
Convergence reports 2010
Because of their opt-outs, Denmark and the United Kingdom are the two loners among the EU’s non-euro member states. Therefore, they are not examined in the convergence reports 2010.
Still, for a European perspective and comparison with the nine other EU member states still outside the euro area, you can study the convergence reports published by the European Central Bank and the European Commission:
European Central Bank: Convergence Report May 2010 (273 pages)
European Commission: Convergence Report 2010 (Prepared in accordance with Article 140(1) of the Treaty); Brussels, 12.5.2010 COM(2010) 238 final (30 pages)
Commission staff working document accompanying the Convergence Report 2010; Brussels, 12.5.2010 SEC(2010) 598 final (197 pages)
Naturally, Britain takes part in the Ecofin Council (and other Council configurations), but it does not participate in the unofficial Euro Group, which met today in Luxembourg.
Ralf Grahn
Today, Cameron also spoke on the economy, preparing the ground for budget cuts:
This year – at least according to the previous government’s forecasts – [the budget deficit] is set to be over 11 per cent of GDP. Today, our national debt stands at £770 billion.
Within just five years it is set to nearly double, to £1.4 trillion.
The cuts will be specified in an emergency budget in two weeks.
Cameron referred to the G20 meeting as an endorsement for the UK plans, but references to the European Union were mostly confined to the terrifying example of Greece.
Convergence report
Despite the UK’s soloist streak, it is a member of the European Union. The Commission monitors Britain’s economy and the Council issues opinions, as for other member states. The latest opinion of the Council of the European Union has been published in the Official Journal of the European Union (OJEU):
COUNCIL OPINION on the updated convergence programme of the United Kingdom, 2009/2010-2014/2015: published OJEU 4.6.2010 C 146/18
Economic situation
On 26 April 2010 the EU Council examined the updated convergence programme of the United Kingdom, which covers the period 2009/2010 to 2014/2015. The Council began its assessment with a brief description of the economic situation:
The economic and financial crisis, which began in 2007 after several years of strong growth, saw UK economic output fall cumulatively by around 6 %, with modest recovery starting to appear in the final quarter of 2009. The crisis was preceded and partly aggravated by a period of progressive increases in leverage of the household and financial sectors, such that a dependence on net capital inflows was large and persistent. In response to the unfolding crisis, the Bank of England responded with an aggressive programme of interest rate reductions, liquidity support for the banking sector and, from March 2009, quantitative easing. The government also intervened extensively to stabilise the financial system, including by major equity injections, deposit guarantees and the provision of liability insurance. In line with the EERP [European Economic Recovery Plan], the government implemented a sizeable fiscal stimulus, which in combination with the operation of automatic stabilisers and the effects on revenue of falls in asset prices contributed to a major deterioration in public finances. The weakening of the sustainability of UK public finances was aggravated by the fact that the primary balance was already in substantial structural deficit in the period leading up to the crisis, leading to the general government headline deficit soon going well above the 3 % of GDP reference value as the crisis unfolded. Accordingly, the United Kingdom was made subject to an excessive deficit procedure on 8 July 2008 and on 2 December 2009 the Council issued the latest recommendations in accordance with Article 126(7) of the Treaty on the Functioning of the European Union (TFEU) to correct the deficit by 2014/2015. The main challenges for the UK economy over the next years are to stabilise the public finances in the context of ongoing efforts by the household sector to reduce outstanding gearing; to achieve adequate levels of credit provision from a still fragile financial system, with many credit providers having reduced their lending capacity; and to underpin a shift of production towards greater tradeable output so as to permanently improve its external balance.
Council recommendation
After a detailed discussion, and in the light of the recommendation under Article 126(7) TFEU of 2 December 2009, the Council of the European Union invited the United Kingdom to:
(i) avoid any further measures contributing to the deterioration of public finances in 2010/2011 and in the event of weaker economic growth than foreseen in the programme contain the government deficit in 2010/2011 to at most that forecast in the January 2010 programme in case risks related to the fact that the macroeconomic scenario of the programme is more favourable than the scenario underpinning the Article 126(7) recommendation materialise;
(ii) target a more ambitious reduction of the government deficit to less than the 3 % of GDP Treaty reference value by 2014/2015 at the latest, including by strengthening the planned pace of fiscal effort from 2011/2012 onwards in line with the Council recommendation under Article 126(7), and seize any further opportunities, including from better-than-expected economic and market conditions, to accelerate the reduction of the gross debt ratio towards the 60 % of GDP reference value, thereby also improving the long-term sustainability of public finances;
(iii) publish in 2010 the detailed departmental spending limits underlying the overall expenditure projections for at least the three-year period beyond 2010/2011;
(iv) implement the expenditure efficiency savings identified in the Operational Efficiency Programme (OEP) and in other value for money initiatives.
The United Kingdom is also invited to improve compliance with the data requirements of the code of conduct.
The United Kingdom is also invited to submit in time for the assessment of the effective action under the Excessive Deficit Procedure an addendum to the programme to report on progress made in the implementation of the Council recommendation under Article 126(7) of 2 December 2009 and to outline in some detail the consolidation strategy that will be necessary to progress towards the correction of the excessive deficit. The Council reiterates its invitation that all subsequent updates should also provide a chapter with this information as long as a Member State remains subject to an excessive deficit procedure.
The gloomy prospects prime minister David Cameron referred to today can hardly have come as a surprise, after the new coalition government took office. The 26 April 2010 assessments by the Council and its recommendations to the member states were public knowledge, although it took the EU more than a month to publish them in the OJEU.
Until the promised budget cuts take effect, the UK’s government borrowing pace is breath-taking. Luckily, the sky-rocketing debt level was fairly low before the financial and economic crisis.
The latest UK House of Commons Library research paper (10/39) Economic Indicators June 2010 contains valuable information about the real economy, finance and UK public finances.
Convergence reports 2010
Because of their opt-outs, Denmark and the United Kingdom are the two loners among the EU’s non-euro member states. Therefore, they are not examined in the convergence reports 2010.
Still, for a European perspective and comparison with the nine other EU member states still outside the euro area, you can study the convergence reports published by the European Central Bank and the European Commission:
European Central Bank: Convergence Report May 2010 (273 pages)
European Commission: Convergence Report 2010 (Prepared in accordance with Article 140(1) of the Treaty); Brussels, 12.5.2010 COM(2010) 238 final (30 pages)
Commission staff working document accompanying the Convergence Report 2010; Brussels, 12.5.2010 SEC(2010) 598 final (197 pages)
Naturally, Britain takes part in the Ecofin Council (and other Council configurations), but it does not participate in the unofficial Euro Group, which met today in Luxembourg.
Ralf Grahn
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