Euro Crisis

The Euro crisis... threat or opportunity?

 

The Euro always was primarily a political project; rich on vision and ambition; poor on regulation and discipline. Experience with Greece and others has shown that, in a single currency, the actions of one member country impact upon all the others. Monetary union means interdependence among its member states and, as we now know, that won't work without clear leadership and strong regulation.

 

To give that leadership and to administer those rules there can only be one finance minister, not 17. There must be one central banking authority which must have powers to sanction members who break the rules. It must set a common interest rate, it must have a central reserve fund; and the member states will have to accept harmonised tax rates and social legislation.

 

In other words, the Eurozone countries must surrender fiscal sovereignty to the central bank. That would not be lawful under the current treaty and, therefore, to create those powers the member states would have to change the EU treaty.

 

The United Kingdom is not in the Euro (nor do we wish to be). However, because our economies are very much interlinked, (for example 40% of our trade is with those 17 Euro countries) we do have a vested interest in the success of the Euro. David Cameron wisely has indicated that we would support the proposed changes. But our support would come at a price!

 

For the UK economy to recover and to restore jobs and growth we need urgently to increase our competitveness. However, European legislation such as the Working Time Directive, the Charter of Fundamental Rights and social regulations are very damaging to the UK's prospects. Furthermore, the EU's proposals for a financial transaction tax would hit the City of London harder than all the rest of Europe put together. These are burdens we cannot afford. If the Euro countries wish to damage their competitiveness.... that's their choice. We must negotiate to opt out of the most damaging regulations and to restore those powers to the UK. We want less Europe not more, and we are not alone. Sweden and other non-Euro countries echo that call.

 

A treaty change offers the United Kingdome the best opportunity of a lifetime to redefine our relationship with the European Union and, at the same time, it would go a long way in resolving the crisis in the Eurozone. For that objective, David Cameron has my full encouragement and support.

 

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