(this post is mostly for my own future reference: so I can see what I thought now, without the distorting lens of memory. but you might care too)
So, we’ve vetoed the grand European dream, and they will go off without us. The papers, of course, personalise it, because they are rubbish and believe that none of their readers will pay any attention to stories about things rather than personalities. But while the Grauniad may try to frame it as David Cameron blocks EU treaty with veto (let alone “casting Britain adrift in Europe”) really this is our government, reflecting the will of parliament and, I think, the will of the people too. The FT, which is a real paper, does better.
Obviously, there is politics in all of this. so the Grauniad (left) can’t help but lead with a headline that implies this is all a disaster; and the Torygraph (right) that this was correct. Cast all that aside, and instead wonder what exactly was it that we vetoed? The G&T are far too busy politicking to bother tell us, and perhaps it isn’t even known – I get the impression this was more a mood-music kind of thing. The T says
Paris and Berlin are now expected to try to agree a treaty outside the EU that commits the eurozone members to new limits on their deficits, in an effort to restore financial markets’ confidence. As well as the 17 countries using the single currency, the nine other EU members could also sign up, making Britain the only member outside the “euro-plus” bloc.
which at least tells you what they’re going to do now, a bit. If this was (as billed) mostly a save-the-Euro meeting, then it isn’t clear to me why we were expected to join – we’re not in the Euro. Aside: when the Euro was being created, I wanted us to join. I’m less enthusiastic now, but still on balance I’d have liked us to join. In retrospect it is clear that what really needed to happen was for countries like Greece to not join – or at least, to not be allowed to lie about their national accounts. But the creation of the Euro was as much politics as economics – itself a bad thing – and so there was immense pressure to smooth over any problems. That was definitely Bad. But if Greece hadn’t been in, Italy wouldn’t have been either, which while economically good would have been politically very hard.
The real test of this, of course, will be the markets. There is a strange line from the Beeb, The reaction on the markets so far is not reassuring – but given the deal was agreed late friday night when the markets were shut, I don’t really understand that. And anyway the FT says After dropping in early trading, the FTSE Eurofirst 300… rallied to end the day 1.3 per cent higher, while the euro climbed the most against the US dollar in over a week… Italian and Spanish bond yields also fell sharply, as investors turned more positive towards the eurozone’s more embattled members but Germany’s 10-year bond yield climbed 13 basis points to 2.14 per cent. and it is hard to see that as bad.
PaulB has some nice stuff, trying to work out what really happened. Which all looks plausible. It looks like the real sticking point (other than unanimity would have lead to a new treaty which wouldn’t have passed) was the “Tobin tax”, but no-one is prepared to say so. Given the EU rules and structures, I doubt that tax makes sense. Timmy says so a lot, please read some of that before replying “of course it makes sense” without actually thinking about it. In particular, it really isn’t clear why Sarkozy was so violently anti-us.
So what exactly is the Plan for Europe? PaulB provises a link to something. Apparently We commit to establishing a new fiscal rule, containing the following elements: General government budgets shall be balanced or in surplus… which sounds a touch idealistic. We certainly can’t meet that, this year or next. Well, there is more, read it if you find such things interesting or comprehensible, but I suspect that the secret will be in the implementation. So I don’t know; I certainly haven’t read it all, and maybe the details aren’t fleshed out yet. PaulB’s guess The plan as it stands seems to be to calm down the bond markets with more or less believable promises of austerity, with the ESM – a slightly souped up EFSF – to contain any local difficulties seems believable – at least, as what they consider their Plan, I have no comment as to whether it is a workable plan. FWIW, even the Grauniads economic analysis says “Europe blunders into a blind, and dangerous, alley”.
What will happen? I don’t know. The people I read, who look competent (but hey, I can’t judge economic competence) think this isn’t enough, that the politicians can’t and won’t move fast enough. If I (from my position of ignorance) was proposing a plan (to save the Euro, not my Optimal Economic Plan), it would be: throw Greece out, which would be in their own best interests and would help terrify the likes of Italy into behaving. But now Italy has thrown Berlusoni out they have some hope, and some competence.
Addendum: looking more at the Grauniad, I find the moment when the nations of Europe came together to take a first step towards the long-cherished dream of political union – and as the moment when Britain began the long, lonely walk away. Maybe. But in that case Our Glorious Leader was correct to say no, because our parliament and (I think) our people do not share this long-cherished dream.
* Pix ripped off by searching Flickr for “stoat”, except for the one of me sculling, which is from the row-up to the Christmas Head
* The UK is as Isolated as Somebody Who Refused to Join the Titanic Just Before it Sailed.
* Charlemagne and Bagehot