Europe and the Financial Times Analysis

I recently read an e-book, Britain and the EU: In or Out? It was a series of articles by past and present journalist of the Financial Times (FT). Needless to say, but I will, themap-eu-member-countries-14142535[1] FT supports the UK remaining a member of the EU. Big business supports the UK being in Europe. The American government wants the UK in. All the main political parties; Conservative, Labour and Liberal want Britain to stay in. With such an array of backers should the little people shrivel up and scurry behind their couches, leaving the big decisions to the big boys. The answer would be a definitive no, non, nein.

The primary reason for the wealth of support is big business and their insatiable drive to make profit. And yes, I do appreciate that business is the mainstay of the world’s economy, and we are, at this juncture in time, reliant on business for our general well-being. However, this does not mean that I should therefore follow their diktat or line up behind their every command. After all they caused this mess.

One of the articles makes it clear that the majority of the electorate in the UK would vote to exit the EU. It would be fair to say that in many countries within the EU, i.e. Spain, France, Italy, Netherlands and others the vote to opt out would be very strong. People are genuinely angry at their individual plight and that of their community. Obviously their anger has multiplied since the recession began in 2008. However, even before the banking collapse there was widespread disgruntlement with the euro.

thHCBKO3M8It is easy to understand the gripe that people hold about the recession. Unemployment has rocketed in many countries, e.g. 8% to 26% in Spain and to 28% in Greece. Youth unemployment is above 50% in both countries. The recession is hurting the working class throughout Europe. It is the workers who have had to shoulder the bulk of the cost. Thus the least able to manage are the worst affected. The ordinary Joes’ are the most innocent of all the actors in this debacle; the bankers, big business and politicians cannot plead any innocence.

Stats: Ha-Joon Chang Economics: The User’s Guide

This is a problem with capitalism, there are no restraints on the big boys, and they smash the sphere in pursuit of ever greater profit. There’s no morality. And when thethKF8B2C69 bubble bursts, the ordinary Joes’, with little option, are left to pick up the pieces and then sweep the floor. Welcome to the EU that the FT support and recommend.

When Britain held its referendum in 1975 and voted to remain in the EEC, the FT journalist wrote that the decision had, “banished the issue from the centre of British politics”. The journalist David Watt went on to say, “that the issue will no longer provide the main channel into which almost every other grievance and dispute in British politics flows”. Well the FT got that spectacularly wrong.

In 2004 Philip Stephens blamed the xenophobia of the tabloid press for the distrust of the Brits towards the EU. This raises a number of questions:

  • So the people have no experience of their own, they need to be led?
  • Were the papers following the diktat of the proprietor/ editor of the paper?
  • Why would the newspapers hold such views?
  • The electorate are thick?
  • Is there any point having democracy? Just ask the papers!

Stephens then goes on to blame a historical longing, a romanticized view of the past, a hankering for the good old days. Once again the people are clueless, have no view on the future and hold a contorted vision of the past. Being thick in this context is an understatement. Yet, many in their thousands x10 spend their holidays in France as well as the sunspots. Many, many thousands have decamped to France on a permanent basis.

Another quote suggests that the politicians of the EU are happy with the present set up, “European partners are comfortable with the politics of give-and-take”. However, by January 2013 the paper reports, “Ms Merkel also fears that Mr Cameron’s plan to unpick existing policies could create a free-for-all, with France and other protectionist minded countries trying to undo the rules governing the single market”. Ms Merkel also opined, i.e. that if the UK does opt out of Europe it might “tilt the EU in favour of the less economically liberal southern European bloc”. Not a lot of give-and –take there then!

It would seem from the voice given to Ms Merkel that Britain’s decision is critical to the very future of the EU. The statements also lead to an interpretation that there are inherent weaknesses that the EU cannot contain in the long term. From an economic perspective structural change is a must if the euro is to survive and the EU itself.

A further nail in the coffin, “British business and the financial sector concentrated in the City of London are deeply divided on the issue of membership”. Add to that gloomy picture that foreign investors are split and that 50% of small to medium businesses want renegotiation. And while Europe used to account for 40% of global trade that is now down to 25%. There may be more and a broader base of markets elsewhere.

There is no detailed analysis by the FT of the EU to illustrate the good points or expose the weaknesses. It can only be assumed that the FT couldn’t find enough positives to outweigh the negatives. Instead the FT adopted a parental attitude toward the British electorate based on assumptions about xenophobia and historic doddering.

Nonetheless, in February 2013 they reported that a Harris poll showed 70% of the electorate point to immigration and Justice as key elements in their distrust of the EU. It is a pity that the FT analysis ended in March 2013 otherwise they could have reported on the spectacular rise of Ukip as the protest party in the UK and one that could fundamentally change the landscape of British politics.

  1. Why did the FT not examine in any detail the anxiety of the Brits?

Emphasis is placed on the fact that America wants us to remain in the EU. My automatic response would be, so what. The US doesn’t need us as a trading port as they invest 32% in Europe and just 10.5% in Britain. Geoff Dyer Jan: 2013.

Obviously, the UK is seen as a valuable puppet for the American government to manipulate when dealing with the other powers in Europe. Britain’s voice allows the Americans to be heard, especially on free trade, NATO and securing the old Russian satellites a welcome to the EU bloc.

While the FT is unequivocal in its support for continued membership, their e-book convinced me otherwise. The fears of Angela Merkel over the possible self- interest blocs. The revelation concerning the tax sweetheart deals by Luxemburg and other States. Whether Jean-Claude Juncker can remain as a credible leader within the EU? The iron grip that Germany holds over the coffers of European Central Bank and, its refusal to allow quantitative easing for fear of a debt burden. Is Germany trying to force France and Italy into structural change? The worry expressed by Michel Barnier European Commissioner until Nov: 1st over “the rise of protectionism in many countries in Europe”. (Hannak Kuchler Feb: 2013)

Meanwhile the economy of the Eurozone is moving at a ‘snail’s pace’ Reuters 14/11/14 Italy the 3rd largest economy is still in recession, Germany and France are stagnating and while Spain and Greece are healing they have done so at a heavy cost. Both Spain and Greece have made structural changes including severe wage cuts. The UK has made wage cuts, and has a soaring debt which the government has decided can be paid in part by selling off the family silver (Ted Heath) – Eurostar. Is there a remedy for backward thinking?

Unless France and Italy follow the lead given by Spain and Greece and make structural changes the outlook is quite bleak for the Eurozone. Germany too has a shadow in terms of a large investment gap which some economists suggest will block the light of regrowth.

It is quite clear that the EU has been riven with self-interest at its very heart, since its inception. The recession has merely uncovered the basic instinct of the member states, the sticking plaster has been torn off exposing the sore to the elements and how each seek their own remedy. Perhaps the member states should pay heed to Charles Handy:

“Self-interest, unbalanced, can only lead to a jungle in which any victory will mean destroying those on whom our own survival will ultimately depend”. The Empty Raincoat p81

There can be no equalization of economies within Europe. The richer nations cannot subsidize their weaker neighbours without it affecting their own economy. For six (6) years Europe has been in the doldrums and the short term future is shrouded by dark clouds.

The EU must be reformed if it is to survive. At present it is a money spending machine; th94GYEJXKit’s like having an ATM doling out wads of dosh to anyone at the press of a button. Many economists talk of the need for structural change to pull our economies out of the current recession the EU must be the starting point.

To argue that, ‘you must be in it to reform it’ is baseless. This is the frightened call of the zealots who cannot visualise an alternative. The UK has been a member for over forty (40) years and things have only got worse. Listening to political fools is akin to being left alone in a nursery class with 40 kids. Help! Not quite the babbling brook envisaged.