Britain is now isolated as the only EU country to walk away from negotiations to rework the Lisbon treaty in order to save the euro. Simon Hix argues that David Cameron has chosen to take a disastrous course of action that imperils both the economic health and political sustainability of the UK.
At the EU summit in Brussels yesterday Britain lived up to its century old stereotype of “perfidious albion”; which Wikipedia describes as “a pejorative phrase used within the context of international relations and diplomacy to refer to acts of duplicity, treachery and hence infidelity (with respect to promises made to or alliances formed with other nation states) by monarchs or governments of Britain (or England) in their pursuit of self-interest and the requirements of realpolitik”.
When the rest of Europe needed a deal to save the Euro, the European economy, and the global financial system, Britain whined about some petty domestic interests. Remember, most of the financial regulations the rest of the EU are talking about were actually proposed by Britain to the G20 as a way of saving the global economy. And also remember that Britain already has a “financial transactions tax” in that stamp duty is already paid on most financial transactions in the UK. So, what exactly was Cameron trying to veto? I just don’t get it, and nor does anyone outside a few crazed Europhobes on the extreme right of the British Conservative party.
So, the result is beautiful isolation, as 23 EU states set up a fiscal union. This is inevitably a slippery slope to Britain’s exit from the EU and the single market – a major victory for Merkel and Sarkozy, who called Cameron’s bluff. The Czech Republic, Hungary, and Sweden will in all likelihood join the other 23 states. After all, Denmark – the only other state with an opt-out from the Euro – has already agreed. This is likely to lead within a year or two to a new treaty to replace the EU, amongst 27 states in Europe (the other 26 in the current plus Croatia). Forget the European Union, the new European agreement will be a “European Fiscal and Political Union” with only the UK, Switzerland, Iceland and Norway on the periphery – rather like Puerto Rico in relation to the United States.
If this happens – which in effect is Britain being kicked out of the EU and the single market – the consequences will not only be huge for the British economy (since over 50% of our trade is with the rest of the EU), there will be knock-on effects on British public finances, as markets turn their focus away from a more stable Eurozone to UK government debt (which is already worse than Greece), and even an effect on the sustainability of United Kingdom. Britain’s exit from Europe would be a huge boost for the campaign for Scottish independence. A majority in Scotland may well decide that it would prefer to be one state in a European federal union than be tied to a moribund and bankrupt administration in Westminster and Whitehall.
So, how stupid will Tory Eurosceptics look in 5 or 10 years time, with “Little England” outside Europe, a collapse in British exports – as a result of exclusion from the European continental market – a gradual shift in Europe’s major financial centre from London to Frankfurt, skyrocketing government debt as markets demand 5% interest on British government bonds, and an independent Scotland?
Please read our comments policy before posting
What utter nonsense. I would have expected better from you. You do yourself no credibility as a leading expert in your field. Were I a university procurement officer I would question buying any more of your books. There is so much wrong in the article that it is difficult to know where to begin.
What makes you think this is a victory for Sarkozy and Merkel? Apart from small-minded stereotypes and tabloid journalism, what makes you think that this is a victory for ‘Sarkozy and Merkel´? I can think of few better examples of a positive-sum game than shared prosperity. If my neighbour is rich, peaceful and happy – or at least, has no desire or incentive to make war upon me – I have surely the greater chance of so being myself. What does Germany (especially) have to gain as a large net contributor from an isolated Britain? And apart from that old history you make reference to by quoting Wikipedia (I would be surprised if you accepted such from even your first year undergraduate students), what does France gain by trying to play in zero sum terms with the country with which it has just signed a fifty year defence cooperation treaty?
It is possible that Mr. Sarkozy may be trying to play the ‘down with the Anglo-Saxons’ card to score a few cheap points ahead of the 2012 election. But the representatives and sherpas of the French state are far more subtle than that, and it is they who do the real work before the leaders fly in to Brussels and close of Schuman roundabout.
It is common in the jingoistic popular press to look forward to impending Armageddon. Journalists need to shift papers. A brief look at the press from five, ten or fifteen eyars ago will show ample examples of momentous breakthroughs and terrible crises in moments of EU history past. But how great a breakthrough was the creation of Solana’s position? How much of a real catastrophe were the French and Dutch no votes? How much of a lasting division was caused by the Iraq war? To what extent did Lisbon really change things?
It is facile to look ahead to the post-apocalyptic situation you describe to fascinate readers by appealing to animal instincts. As an acadmeic with no copy to shift, it chips away at your credibility.
Could do better Mr Hix
Maybe I am kidding myself but I like to think that there is a silent majority who have more trust in the principles fostered by the EU than the ups and downs of English political parties who are always influenced by big business and press barons.
The EU has always been about more than economics but my experience of working with people from other EU countries leads me to think that we shall lose an immeasurably valuable source of goodwill as we shall now be seen to have let down the EU at a time of crisis. This shall surely be costly.
More importantly Mr and Mrs Average who benefit little from the ‘city’ shall be at the mercy of English politicians who, influenced by the foreign owned press will remove much of the legislation that safeguards them at work and as consumers. It is not GDP that counts but whether most people who make a contribution can live a reasonably pleasant life with access to resources such as housing, health and education. The freedom to travel and be welcomed across Europe is also much valued by the English and is now at risk.
As this article says this is another nail in the coffin of the UK as the canny Scots shall surely opt for full EU membership and cooperation rather than joining us in isolation.
Cameron unfortunately had no choice as he could not have put the changes through parliament because of pressure from back benchers who are not disinterested as they wish to wield more power. Let’s hope the silent majority make their voices heard soon so we can fight off those who threaten our hard won freedoms.
From Italy. So it was not in Britains interest? Cheap, hu? There is nothing left than to congratulate you, and wish you good look on your way of your best interest. Believe me, we all don’t like, what is coming towards us. We have new taxes coming up every day. But we all know, that it is just right to do so. It is right to consolidate the states expenses and debts on the long term. You can go ahead playing with numbers and dates and percentages. That cannot put the “right thing to do” into wrong. Unless you have a better idea. The decision was to be taken now. If Mr. Cameron knows about the future, he better had shared his knowledge – if that wasn’t against Britains interest. So let’s wish you best luck. But see, 26 states do not understand and agree to that act. Of course it was much easier to say no. Yes means a lot of work coming up. Would you like a partner that does not support you, when it gets tough? It is Britain’s very right to do so, and we respect it. History will judge.
For context in 2010 GDP per capita:
Would many British citizens object if the UK ended up as poor as Switzerland, Norway or Iceland?
You state “which in effect is Britain being kicked out of the EU and the single market”, what percent of Switzerland, Norway and Iceland’s trade is with the EU?
You state “A majority in Scotland may well decide that it would prefer to be one state in a European federal union than be tied to a moribund and bankrupt administration in Westminster and Whitehall.”
According to the Bank of England the current implied nominal yield on 25 year UK government debt is 3.41%. Whereas Italy’s 10 year debt currently has a nominal yield of 6.56%. Given these relative interest rates, (which partially reflect the bond markets aggregated view on the solvency of Italy and the UK) it seems a little bit perverse to argue that Scotland might prefer to be a federal union with Europe because of fear of UK government debt levels.
You raise the specter of “skyrocketing government debt as markets demand 5% interest on British government bonds”. On the 23rd of January 2003, the markets priced a nominal yield of 5.06% on 20 year UK government bonds, I do not remember this being an issue at the time. Could you explain why “5% interest” on British government bonds should be feared?
Finally what do you believe the yield on UK government debt would currently be if the UK had adopted the euro?
is it 40% of the gilts maket now in the hands of the BoE/taxpayers through QE ? how would the yields look if those gilts were then sold onto the market?
Today’s announcement has led to much debate in Scotland about how it affects the SNP’s push towards independence, with Kenny Farquharson of Scotland on Sunday calling it ‘a gamechanger’.
Much of the recent unionist argument has been about how uncertainty about a Scottish independence referendum was damaging investment, but that uncertainty is as nothing compared to that which would be caused by an EU referendum.
The alternative vote referendum was carried out on a regional basis, so assuming an EU one was done in a similar way it might lead to a situation where England votes to leave, whilst the other countries of the UK vote to stay in, which would be very interesting.
I would rather see a few points shaved off GDP (it’s not all about money, folks) and have greater control over political decision-making. Europe was never “destined” for success, what’s surprising is it’s taken so long for the wheels to start to come off. Political and economic history on the continent is mostly totalitarian: liberal democracy has really only just taken root (speaking in the context of European history) and even now they look to bend back toward that origin. We will ultimately be better (and stronger) alone.