hms iron duke

hms iron duke

Monday, 5 November 2012

Angela and David: Time for an Amicable Divorce

Alphen, Netherlands. 5 November.  Tonight is Guy Fawkes or bonfire night when the good people of England commemorate the burning at the stake of the leader of a 1605 Catholic plot to burn down Parliament, which to many Britons seems merely an idea that was ahead of its time.  This week Chancellor Angela Merkel is due to visit London as part of a German charm offensive to persuade PR-Meister Cameron to support an increase in the EU budget - if there are three things that have brought the EU low it is British ‘vision’, French ‘pragmatism’and German ‘charm’.  What Cameron should be telling Merkel is that Britain will leave the EU unless Germany ends its drive towards further political union.
Cameron of course will not do that.  Rather, surrounded by his group-think, europhile officials (one must be europhile to get promoted in London) he will meekly apologise to Merkel for last week’s outbreak of parliamentary democracy and MP’s demand for a real cut in the EU budget. He will instead agree with the German Chancellor to delay any decision on the budget so long as he can keep the deal from the British people...and hope. 

That will be difficult because Britain’s departure from the EU is now nigh on inevitable, not least because the EU seems determined to accelerate Britain’s departure.  Last night it became clear that the EU’s European Investment Bank has loaned the Ford Motor Company some €100bn (some of it British money) to establish a factory in Turkey, a non-EU member, so that Ford can close a factory in Britain, an EU member.  Ford clearly sees no real problem with basing production outside the EU to sell into it.  Indeed, any attempt to impose trade sanctions on a departing Britain would be illegal under World Trade Organisation rules, which is precisely why Ford can use British money via the European Investment Bank to shift production from Southamption to Turkey. 

Germany is the prime architect of Britain’s pending departure from the EU because Berlin is intent on changing the rules of the EU game in its favour.  It is a crisis-driven power game the full extent of which will only become apparent after the September 2013 German federal elections when a newly re-elected Merkel will then and only then the German people the enormous political and financial cost of the Eurozone crisis. 

At that point today’s phoney war will end and Europe will come to dominate British politics in the run-up to the 2015 British general election.  Indeed, battle-lines are already being drawn with Deputy Prime Minister Nick Clegg and his “Little Britain” followers (which by the way includes much of the Labour Party and some in the Conservative Party) who believe one of the world’s leading economic and military powers could not survive outside the EU and the massive bulk of the British people who now believe Britain can and should go.

The facts speak for themselves.  Today the Centre for Economic and Business Reform said Britain will enjoy the strongest growth of any major European economy over the next two years.  The percentage of British trade going to the EU is dropping fast from near fifty percent to around forty percent with the rest of the EU selling some €55bn more of goods and services to Britain than Britain sells to the EU, which suggests the EU needs Britain far more than Britain needs the EU.  Indeed, the huge transfers of British taxpayers’ money the EU demands is little more than a tax on the British people for no demonstrable benefit and even less influence because the link between such transfers and boosting the single market has now been broken.  Instead the cost of regulation that Brussels imposes on Britain has become one of the main breaks on economic recovery.

The irony is that tensions between a globalising Britain and the Eurosphere would have been rising even in the absence of the crisis.  Britain's future will depend far more on growing world economies than a doomed-to-be sclerotic Eurozone. British trade with the emerging markets is growing year-on-year in double-digit figures. It is perhaps no coincidence that Cameron is today visiting the booming Gulf States which suggests the PR-Meister may have an alternative strategy up his sleeve (do not hold your breath).  There are some surprising boom areas in the British economy such as the establishment of English law as the legal framework for global contract law. 

Therefore, if Cameron has any political sense he will politely tell Chancellor Merkel the truth at this week’s meeting; there is no place for Britain in her vision for Europe and no amount of ‘charm’ can change that.  She is a sensible woman and will of course understand the implications and she will also see benefits from an amicable divorce that would separate Britain’s political destiny from resolution of the Eurozone crisis.  If not David Cameron might soon find that he too joins Guy Fawkes atop a political bonfire of his own making.

Julian Lindley-French

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