FRACTURED EUROPE: THE QUESTIONS THEY DARE NOT ASK

BILL JAMIESON                NOVEMBER 8 2016

Central to the storm over Scotland’s relationship with Europe are questions of our well-being, stability and prosperity. But the debate in Scotland proceeds as if these questions are long settled – that greater integration with the EU has improved well-being, that the countries within it are stable and that integration has lifted prosperity.

Almost without exception the progressive Scottish commentariat has poured scorn on the UK referendum vote to leave, have howled in anguish at the prospect of invoking Article 50 and have barely concealed their delight at the ruling of the High Court judges last week that effectively provides the House of Commons and Lords with the means to frustrate and delay its activation.

The voters were stupid. Or they were duped. Or they didn’t understand what they were voting for.

Now you might have thought that, if ‘more Europe’ was such a good thing, it would have been a slam-dunk vote for Remain. But scepticism about the claimed benefits of membership have been on the rise for years.

And throughout the referendum campaign little evidence was presented on the well-being, stability and prosperity that the EU has brought – and particularly the strongest yet expression of integration: the European single currency.

It seems to have passed without notice that according to Eurostat, more than 20.7 million men and women in the EU-28 are out of work, some, 16.2 of these in the Euro-19 area. The EU-28 unemployment rate stands at 8.5 per cent and in the Euro area it is 10 per cent. The youth unemployment rate was 18.2 % in the EU-28 and 20.3 % in the euro area.

A successful economic model? A beacon, surely, for the UK to follow (unemployment at 4.9 per cent)?

As for economic growth, the Eurozone economy grew by just 0.3 per cent quarter on quarter in the three months to June, down from 0.6 per cent in the previous period.

And the miserable UK by comparison? The economy grew by 0.5 per cent quarter on quarter in the three months to September to be 2.8 per cent higher than a year earlier.

Despite a torrent of dire warnings and premonitions from anti Brexiteers, Markit/CIPS surveys on manufacturing, construction and services remain upbeat about prospects, as do the latest CBI surveys (the Distributive Trades Survey and the Industrial Trends Survey).

The Bank of England’s GDP growth forecasts for 2016 and, especially, 2017 were revised up, whilst there was some modest reduction for 2018.

So the champions of ‘Remain’ in Scotland – many of them on the Left and with a constantly proclaimed regard for the welfare of the poorer sections of society and the unemployed – would do well to ponder these statistics and in particular consider the latest intervention by one of the founding architects of the Euro project – hailed as the highest point yet in an integration drive to boost investment, prosperity and jobs.

Professor Otmar Issing, the European Central Bank’s first chief economist and widely acknowledged as the champion architect of monetary union, has given a damning assessment of the region, arguing that not incorporating an exit strategy was a mistake.

Speaking on the BBC’s Wake Up to Money yesterday, he said there was a “mistake in the construction of the whole arrangement” and that structural problems in the eurozone and dwindling public support in some countries were still major problems.

It was, he added, a “mistake in the construction of the whole arrangement that once a member, you remain a member for eternity”. Allowing a temporary exit would, for example, have helped Greece to reform its economy so that it could then return later in better financial health.

And he expressed concern at the European Central Bank because “it is the only game in town” and wields huge power. “This does not foster independence, but undermines it,” he said.

Now some of this may be familiar to ScotBuzz readers. As well that it should. Because three weeks ago we carried excerpts from his interview with Central Banking magazine in which he voiced similar criticisms. The ECB, he warned, was becoming dangerously over-extended and the whole euro project is unworkable in its current form.

“One day, the house of cards will collapse,” he warned. In a sweeping critique of EU economic policies and the European Commission in particular, he said the euro has been betrayed by politics, lamenting that the experiment went wrong from the beginning and has since degenerated into a fiscal free-for-all that once again masks the festering pathologies.

Strangely (or not as the case may be) Professor Issing’s remarks were not reported at the time by the BBC which has seldom tired of broadcasting gloomy warnings about the UK’s economic fate and downplay the pick-up in exports, employment and consumer spending (see above for comparisons of EU prosperity v. UK gloom) .

Instead, it gave prominence to a warning from the EY Item Club that the UK faces “a prolonged period of weakness” – but made no mention of Professor Issing’s critique.

Now at last it’s caught up with ScotBuzz!

“Realistically”, says Issing, “it will be a case of muddling through, struggling from one crisis to the next. It is difficult to forecast how long this will continue for, but it cannot go on endlessly”.

Prof Issing lambasted the European Commission as a creature of political forces that has given up trying to enforce the rules in any meaningful way. “The moral hazard is overwhelming,” he said.

The regime, says Issing, is almost certain to be tested again in the next global downturn, this time starting with higher levels of debt and unemployment, and greater political fatigue.

Issing decries the latest EU plan for a “fiscal entity”, fearing that such move would lead to a rogue plenipotentiary with unbridled powers over sensitive issues of national life, beyond democratic accountability.

Cloaking all of this has been obfuscation, political mendacity and endemic denial.

Such a system would erode the budgetary sovereignty of the member states and violate the principle of no taxation without representation, forgetting the lessons of the English Civil War and the American Revolution.

But these lessons, incredibly, have been overlooked by a Left establishment in Scotland, entrapped in some down-at-heel Parisian street café swapping bon mots with the skeletal remains of Jean Paul Sartre and Simone de Beauvoir. Nearby, jobless street urchins beg unnoticed for Euros while a whooping cavalcade of Marie Le Pen supporters sweeps all before it.

A Europe of well-being, stability and prosperity? It’s time Scotland’s Left Progressives moved on from the time-warp in which they are trapped, looked at the economic and political realities that are driving millions to mutinous despair and asked some searching questions of the well-heeled investment bankers and High Court judges with whom they are now bizarrely, shockingly aligned.

Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInPin on PinterestEmail this to someone

Feedback

  Comments: 1


  1. In addition , from a altruist left-wing position, the fact of high EU tariffs against Africa and the third world generally. is a scandal. The EU has an immoral position in stopping trade with the least developed countries quite apart from the inhibition of world markets relative to the UK. A more liberal trading regime with the rest of the world will in time compensate for any transient EU tariff issues!

Letters to the Editor