News Analysis: Trouble in the zone
WORKERS, JULY 2010 ISSUE
The chaos in the eurozone continues, with the European Commission issuing instructions left, right and centre. Increasingly, these edicts from the beleaguered bureaucrats in Brussels are being ignored or simply overtaken by events. The euro, the so-called currency of the future, is in headlong retreat.
The Commission’s latest finger-wagging has been directed at Cyprus, Denmark and Finland. On 15 June Economic and Monetary Affairs Commissioner Olli Rehn recommended the opening of “excessive deficit procedures” against these countries. And Denmark isn’t even in the euro, having, like Britain, negotiated an exemption.
Now all the talk is of France and Germany pushing for a “two-tier” euro – a new euro for the stronger economies and the devalued old one for the rest. That would avoid the embarrassment of kicking countries out of the euro, but only on a technicality.
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All of this highlights the ignorance and stupidity of the likes of Lib Dem leader Nick Clegg. He’s the one who said in 2001, “If we remain outside the euro, we will simply continue to subside into a position of relative poverty and inefficiency compared to our more prosperous European neighbours.” Two years later he pontificated: “The single currency, far from being an agent of continental style corporatism, is probably the greatest export vehicle of Anglo-Saxon economics. The euro has done more to enforce budgetary discipline, to promote privatisation and force through labour and product market liberalisation in the rest of Europe than any number of exhortations from the IMF, the OECD, or the editors of The Economist.”
The crisis did not shake him. Only last year he said, “The euro may well come to be regarded in the coming years as part of the answer to saving the City from permanent decline. It was easy to dismiss the fledgling euro as a ‘toilet currency’ before we realised our own economic growth was built on sand.” And, “The strict rules attached to the euro could emerge as one of the best ways to persuade the markets that we will put Humpty Dumpty back together again, put the public finances in order.”
But by 7 April this year, he was admitting, in preparation for linking up with the Tories, “I don’t think the euro is for now. … I accept that Eurozone interest rates over the last few years would have been wrong for Britain.”
Yes, wrong for Britain, wrong for the nations of Europe, wrong for the world.