Open Europe’s latest research on the 100 most costly EU regulations

On 16th March, the Open Europe think tank published a new list of the 100 EU-derived regulations which were the costliest to the UK economy. Open Europe estimates that these EU laws cost the UK economy £33.3bn a year. This is more than the £27bn the UK Treasury expects to raise in revenue from Council Tax in the current (2014-15) financial year.

In at least a quarter of cases, the UK Government signed off on the regulation, despite the accompanying Impact Assessment explicitly concluding that the estimated costs outweigh the estimated benefits.

However, the study also claimed that leaving the EU and ‘becoming like Norway’ would mean that 93 out of these 100 costliest EU-derived regulations to the UK economy would remain in place at a cost of £31.4bn (94% of the current total cost),under the so-called EEA agreement.

The top five costliest EU-derived regulations are:-

1) The UK Renewable Energy Strategy – Recurring cost: £4.7bn a year
2) The CRD IV package – Recurring cost: £4.6bn a year
3) The Working Time Directive – Recurring cost: £4.2bn a year
4) The EU Climate and Energy Package – Recurring cost: £3.4bn a year
5) The Temporary Agency Workers Directive – Recurring cost: £2.1bn a year

The full ‘Top 100’ list can be accessed here .

Below are some thought from Robert Oulds, of the Bruges Group, on the Open Europe report.

Open Europe is as anti-EEA as they are pro-EU. They support the reform agenda, and saying in the EU. They consistently misrepresent the EEA as a transitional alternative.

Regarding these regulations, most would apply even if we were not part of the EEA. The Working Ttime Directive originates from the International Labour Organisation, not the EU. The vast majority of financial services legislation would also apply if we were outside of the EU. Indeed a recent analysis showed that if we were to honour international agreements and the decisions of bodies that the UK sits on then 41 of 42 financial services rules ‘forced’ on us by the EU would apply anyway, although not the potentially destructive “Tobin Tax” and the numerous EU agencies which do not apply to the EEA. .

Many of these regulations come from UN standard setting agencies designed to eliminate technical barriers to trade apart from the environmental regulation.

As for the EEA, while it is true that Iceland, Liechtenstein and Norway are obliged to implement some EU rules, these countries adopt 70 per cent fewer regulations than those imposed on EU member states. While neither Norwegian ministers nor parliamentarians can attend or vote in the meetings of the Council of Ministers, or in the European Parliament, they have the right not only to be consulted about EU rules but can also shape EU decisions at the start. Indeed, EEA representatives take part in more than 500 EU committees and expert groups. The management of the EEA agreement is also not top down from the European Union. The EFTA Surveillance Authority monitors whether or not free competition is being followed and that markets are open to business from EU members. Any contravention of the rules by a member state or company can be reported to the Court of Justice of the European Free Trade Association States, which has jurisdiction to interpret the EEA agreement. Unlike the EU’s ECJ, which can overrule and strike down national law, the EFTA Court can only state that a national law is incompatible with the EEA agreement. Resolution can only come from national institutions – not through the EEA and EFTA institutions. What is more, disputes are resolved at a political intergovernmental level, not by judges or bureaucrats in the Commission exercising their power in a supranational institution. Ultimately, for the EFTA/EEA states, it is for the national government to decide how a breach of the EEA agreement can best be remedied. In some cases Norway just chooses to rewrite its rules to make them appear to conform but in reality, nothing changes.

When EFTA countries choose to adopt EU rules, they do not do so as countries that have transferred the making of legislation to the EU, as Britain has. Nations such as Norway establish EEA-relevant rules at the national level. The legislation is not directly imposed from above by the EU. Furthermore, the EFTA states that have agreed to be part of the EEA can opt out of areas of EEA where they feel that legislation does not serve their national interest. Inside the EU, the UK does not have this right.

Implementation of those acts that are not vetoed or ignored are often delayed by Norway. The custom of the EFTA states being responsible for drafting the decision of the EEA Joint Committee often allows them to delay their implementation. The delaying of the translation of EEA-relevant decisions into Norwegian dialects is also regularly used to postpone implementation. Those EEA-relevant acts that are not delayed are often altered. The EFTA/EEA states demand that more than a third of the acts, and as many of 40 per cent of those which deal with services, are changed. This is not just an opportunity to tailor EEA rules to the EFTA states’ advantage; it is also in itself yet another source of delay: negotiations then ensue.

What is more, Norway has a rather nonchalant attitude to aligning its legislation with that of the EU. According to a draft report from the European Commission from 12th December 2012 found that Norway had refused to incorporate into their own law 427 EU legislative acts. In particular the Norwegian government publicly stated its refusal to incorporate the Third Postal Directive and will also not comply with the EU’s financial services agencies. This is certainly not fax democracy.

Norway could make even more use of the flexibility in the EEA agreement. IT does not do so because Norwegian politicians are thoroughly pro-EU and want to keep as close as is politically possible. They are still trying to persuade their population to join, although most Norwegians support EEA membership and are happy to be outside of the EU.

Whereas over 100,000 EU instructions apply to Britain, as of December 2010, only 4,179 EEA relevant acts have been incorporated and are still in force. These 4,179 EEA regulations should be retained, yet they can be modified by the UK. The vast majority of other EU rules can be reviewed when it is practical to do so. In excess of 80 per cent of EEA relevant policy areas fall within the remit of the international standard-setting agencies. Much of the EEA relevant law will be applied after Brexit, regardless of whether the UK retains its membership of the EEA. They are a vital part in the process of not only providing standards but also removing technical barriers to trade.

The European Commission itself acknowledges that, if the European Economic Area agreement is updated membership of it ‘would offer EEA EFTA countries a convenient “alternative EU Membership-status on an à la carte basis”.’

Mission Impossible

Donald Tusk, the former Prime Minister of Poland who took over from Herman van Rompuy as President of the European Council, didn’t mince his words. David Cameron’s hope of reopening the EU treaties to secure a bespoke relationship for the UK within the EU is virtually “mission impossible.” Mr Tusk said that he would offer the Prime Minister his support “because he is obviously pro-European” but stated that securing a consensus among all the member states would not be easy. “We need unanimity between 28 member states, in the European parliament, in 28 national parliaments in the process of ratification. To say that it is a Pandora’s Box is too little.”

Already, Cameron has been told that free movement of people is not negotiable. Concerns about immigration are one of the main reasons why many in the UK are unhappy about our present relationship with the EU. His chances of an opt-out from the phrase “ever closer union” don’t look that great either, even though it would only be a symbolic gesture.

Less than a week announcing that George Osborne is going to head up the UK’s negotiating team, it cannot have pleased Mr Cameron that a senior European politician has pointed to the difficulties he faces. He was pretty cock-a-hoop last week, saying that, while his legal advice was that treaty changes were needed he claimed “legal advice in the European Union is a strange beast” and was often surprisingly flexible. He went on to say that “I think this is the moment Britain stops sleepwalking towards the exit.”

This silly phrase has been used before – by Ed Miliband of all people. It is pretty meaningless as it implies that supporters of withdrawal want to make it happen without anyone realising what is going on. Far from it. We want to let people know how bad the EU is for us and for them to make an informed choice to leave. If the arguments can be presented clearly, the case for withdrawal is overwhelming. Mr Tusk’s intervention is an encouragement as it suggests that he doesn’t share David Cameron’s confidence that he can pull off Harold Wilson’s trick in 1975 and fob off the electorate with a “smoke and mirrors” renegotiation that actually repatriates nothing of any significance. Still, we must not jump the gun. There is firstly a matter of Cameron securing a victory over that man he famously called “weak, weak, weak”…….

Photo by Editor B

Another fence-sitter about to come out?

Along with Bill Cash, John Redwood MP has long been known as a fierce critic of the EU. However, the question of where they stood on the withdrawal issue has been a source of considerable debate. Recently, Bill Cash came off the fence as we reported last month when, at the Alternatives to EU Membership conference organised by David Campbell Bannerman MEP he said “There is no alternative except moving to exit.”

Mr Redwood, who recentlky addressed a near empty House of Commons appears to be inching close to a similar position. Here are a few extracts from what was an extremely well-delivered speech

“It used to be a fundamental principle of the House of Commons that no House of Commons properly elected could bind a successor House of Commons. That was a fundamental part of the British people’s liberties. They have to trust a House of Commons for up to five years to legislate and govern on their behalf. They can do so safe in the knowledge that if we—those in government—do not please, they can dismiss us at the following general election. They can elect a new group of people who can change all that they did not like about the laws and conduct of the Government whom they have just removed.”

“Our membership of the European Economic Community, now the Union, has increasingly damaged, undermined and overwhelmed that essential precept, which was the guarantee of our liberties as the British people. Now there are huge areas of work that are under European law and European control. Those parties that go out from this House into the general election and, for example, offer a better deal on energy, may well come back and discover that what they have offered is quite impossible under the strict and far-reaching rules on energy that now come from the European Union.”

“Yesterday, we did not have time to debate in the House the EU energy package. Within the proposals we were being asked to approve in the Commission’s work programme was a strategic framework for energy policy. In turn, that will spawn an enormous amount of detailed regulation and legislation, making energy a European competence almost completely. More or less anything that the main political parties say about what they wish to do on energy policy during the next five years will be possible only if it just happens that what they wish to do is legal under this massive amount of law and regulation. Much of it is in place already. More will come forward in ever-increasing volumes under the strategic framework and further legal policy. That is but one area.”

“A couple of other big concerns that will be much debated in the election are welfare and border and migration policy. Again, anything that parties say in our general election has to go through the European test. Will changes in benefits that parties wish to see be legal or possible under the European Union? May we not find that we are completely bound by predecessor Parliaments because they have signed up to legal requirements under European law that make it impossible for the House any longer to control our own welfare policy?”

“Yesterday, my right hon. Friend the Minister for Europe encouraged me with his optimism because he said that welfare remained a national UK matter, but there is plenty of evidence that it already is not in many respects. All sorts of policies have been looked at that I am told would fall foul of European law and regulation. It is quite obvious, again, looking at the European Union’s work programme, that it will intensify its activity in this area and make it even more difficult for a national Parliament to express the wish that it wants in its laws on welfare. The same is true of border controls, where we are signed up to the free movement of peoples. That is now being ever more generously interpreted as giving the EU carte blanche and substantial control over border and migration policy throughout the EU.”

“We need to pause over this. I remember the excellent words of my right hon. Friend the Prime Minister in his Bloomberg speech. The Bloomberg speech wisely said that the fount of political authority in any European member state, but certainly in the United Kingdom, rests from the national electorate through the national Parliament.That is still right. We see that in the recent conflicts and rows in a country such as Greece, which is under even more European control than we are by being part of the euro. The Prime Minister reasoned that this country needs to negotiate a new relationship with the EU that recognises that on really important things—I would have thought that welfare, borders and energy were really important things—if necessary, the national Parliament can assert and interpret the will of the British people. There should be some mechanism by which we can then do as we wish, reflecting the will of the people.”

“When I asked {Pat McFadden} whether, on a mighty issue that matters a great deal to the British people, there should be a right for us in this House to reflect their view and legislate accordingly. He said no, there should be no such right, and we have to follow all the rules of the European scheme.”

“We need to negotiate now…an arrangement…for us, the United Kingdom. We must be able to say that we are still a vibrant democracy. We need to be able to say that if something matters a great deal to the British people and if it has been approved in a general election, this House can take action even if it means disagreeing with the rules of the European Union. By all means, we can try to negotiate an arrangement case by case, but where we cannot do that, we need an override. We need the right to say, “This thing matters too much to our democracy.” If we do not have that very simple change, we no longer have in this country a successful and vibrant democracy that can guarantee stability and guarantee to deliver what the British people want.”

“I am pleased to have been part of the forces in this country that kept us out of the euro, which meant that we missed the worst—this country has a reasonable economic recovery that is completely unrelated to the continent, with its long recession and deep troubles in the southern territories—but as I see my country sucked into common policies on energy, borders, foreign affairs and welfare, I think that we might be sucked in too far and have exactly the same problems on those issues that the euro area is already experiencing on the central matter of economics.”

“I urge Ministers to take this seriously and to re-read the words of the Bloomberg speech. I urge the Opposition to join us, because they aspire to govern this country. One day they may come up with really popular policies and be elected on that basis, and what a tragedy it would be if they discovered that they could not enact those policies because they were illegal under European law. That could happen just as much to the Labour party as to the Conservative party.”

“If there is to be trust between politicians and the people, the national Parliament must be able to deliver when the people speak. We are in danger of that no longer being true.”

Photo by Martin Hesketh

Common sense prevails in Iceland

Last week, Iceland formally withdrew its EU membership application. Given the importance of fishing to Iceland’s economy it is hardly surprising that the EU’s Common Fisheries Policy has proved a major stumbling block. As with Norway, it has long been a principal factor in Icelandic lukewarmness to the EU, and when the country did start formal accession talks following the collapse of its banking sector, an agreement on the CFP was always going to be a challenge. Discussions never got beyond an EU demand for Iceland to reduce its mackerel catch and to abide by EU quotas. As one report put it, the EU gave Iceland an ultimatum: It’s us or the fish. Iceland chose the fish.

With the a centre-right anti-EU government in power since elections in 2013, these devfelopments have come as no surprise. Accession talks ceased two years ago, although there has been some opposition recently to the process being terminated without a referendum. However, those supporters of membership who took to the streets of Reykjavik  must surely recognise that they represent a shrinking minority. Opinion polls indicate that the sceptical Icelanders are becoming even more opposed to their country joining the EU.

Many of Iceland’s senior politicians strongly support their country’s independence. Gunnar Bragi Sveinsson, Iceland’s Foreign Minister, said that “Iceland’s interests are better served outside the European Union.” Iceland has an advantage over Switzerland and Norway in this area. In these countries, well-organised anti-EU movements have more or less ensured that any referendum on joining the EU would be defeated, but it would be over and against the wishes of quite a few senior politicians who would like their country to join. David Cameron is fond of quoting Norwegian politicians who moan about their country’s relationship with the EU, even though Richard North and Peter Troy were easily able to find Norwegian MPs who were far happier to be outside the EU when they produced their DVD The Norway Option.

There is a lesson for the UK here. If tiny Iceland, with its population of barely one third of a million people (less than the population of Gloucestershire, in other words), has the confidence that it can survive outside the EU, those politicians in the UK who paint such a bleak picture of our country’s prospects outside the EU must be challenged. Such negativity flies in the face of the reality of our northern neighbour’s self-confidence. If Iceland can prosper as a sovereign independent country, so can we.

Photo by JasonParis

The Scotland Referendum and the lessons for 2017

No, it was not a Referendum on Independence

Regardless of the result, Scotland would not have become independent as a result of the 2014 referendum. The Scottish people were being sold a false prospectus.

There are two reasons:
The first is that the nature of the 2014 referendum was misunderstood. It was purely consultative; it was an ‘expression of wish’ referendum not a referendum on any actual concrete, practical proposals for an independent Scotland, as there were none. There were, of course, plenty of aspirations. This misreading by the political class of the nature of different referendums cropped up repeatedly during the euro referendum that never was around the year 2000. At that time Tony Blair seems to have thought a referendum vote in the UK would decide British entry to the euro regardless of the EU treaties, rates
of entry, ERM membership, etc., etc. when agreement to entry required consent from other participants. Alex Salmond seems to have also thought that winning a referendum would be decisive. But a referendum is an instrument, it isn’t an aim or a plan. The final terms and the consent of other parties, especially the UK government, was not in Salmond’s control.

Indeed, the YES campaigners went to great lengths to keep the Scottish electorate from hearing contrary views or thinking about hard facts. One remembers the assault on Nigel Farage in Edinburgh. It was infantilising and patronising for the YES campaign to suggest that Scotland could break away from the rest of the UK without pain but would flourish in the EU. Nor did the Westminster parties treat the electorate as adults. Unlike the Spanish government, which stated the truth, that the independence of any part of the country was a matter for the whole country, the Westminster parties refused to allow any electoral participation in the rest of the UK, nor were English politicians encouraged to campaign in Scotland – apparently the logic was that the Scots would be ‘upset’.

Types of Referendum

Referendums fall generally into three categories. First, there are those that ask for confirmation of decisions already taken and implemented by the Executive (confirmatory). Among these would be classified the French referendums which confirmed the various governmental constitutions during the French Revolution – the changing regimes of the Directory, the Consulate and the Empire.
Hitler’s referendums, which covered such matters as the merging of the Offices of Reich President and Reich Chancellor after the death of Hindenburg, approval for the reoccupation of the Rhineland and leaving the League of Nations, also fell into this category.

A second type of referendum is the enabling type. This is where the general proposition is put to the people with the details to be filled in by the executive at a later date. Classic cases of this type were the referendums in the 1990s in Scotland, Wales and London. In these cases, the details were on subordinate matters, not essentials.

The third type is the seeking of popular consent (“consent”) to a fully worked, proposed law. A referendum of this type was conducted in Denmark in 1992, where the government sought approval of Denmark’s consent to the Treaty of Maastricht after making available a million copies of the treaty. A similar referendum was held in Denmark in 2000 on whether or not Denmark should join the single currency. In this case most of the facts were in the public’s hands. The treaty had been distributed, the rate at which Denmark would enter the euro and all the conditions were known and Denmark complied with the conditions for entry to the single currency, including being in the ERM for over two years. There were defects in the actual question, but the basis for the question was reasonable.

The basis of the “consent” referendum is generally acceptable, provided the public receive balanced information and each ‘side’ has equal resources. Some referendums have somewhat hybrid characteristics. The British referendum of 1975 fell partly in the “consent” category in that the Treaty of
Rome was available to the electorate, though not distributed. Nevertheless the matter in question, membership of the Common Market, had already been decided by Parliament and enacted previously so that it also had many elements of the “confirmatory” type. What has been objectionable is the pretence that the consent obtained in 1975 applied to all the various subsequent amending treaties that have turned the Common Market into the EC and now the EU with far greater powers than those given consent to by the British people in 1975.

Unique Referendum

Once the types of referendums are classified, it is easy to see that the Scotland referendum of 2014 was unique. It was a classic referendum of the enabling type where the electorate gives approval to a general proposition with the details later filled in by the Executive. What was unique in Scotland was that the details were to be filled in by agreement between the Executive and a regional government. Because of the necessity of negotiations, the Scotland referendum exhibited a further uniqueness, it could not be executed by a single Executive but fulfilment was dependent on the outcome of negotiation between two parties and, to some extent, outsiders such as the EU institutions.

It is negotiations that will matter An independent Scotland would come into being via a Scotland Act passed by the British Parliament which would define the terms of separation and would
have to command the support of a majority of MPs. Any negotiated terms would be very different from the narrative put forward by the YES side. These terms and negotiations thereon would be going on against a background of capital flight as the Scotland bargaining position was eroded.In fact, the separatists would be in a remarkably weak position, similar to Blair would have been over the euro, as explained at length in my book, ‘Why Mr. Blair will not win a Euro Referendum’. Having won a referendum, but having an unsatisfactory negotiation, what exactly would the Scottish separatists do then? There is a prevailing assumption that Scotland and the UK would agree a deal. This is highly unlikely. More likely is a complete deadlock in negotiations. There would be no pressure on the UK side to agree any deal at all, although obviously they would appear to be reasonable. Even if Scotland agreed to hand over the Faslane base in perpetuity, agreed it would not have sterling as its currency, took on its fair share of UK debt, agreed to migration controls, agreed a division of oil as a favourable basis to the rest of the UK, agreed to take on all liability for Scottish pensioners – and these are the minimum terms the rest of the UK should and would insist on – dealing with the question of EU membership is outside the UK’s powers, there are other parties involved.

Capital Flight

The second reason that Scotland will not become independent regardless of any  purported ‘yes’ vote is, of course, flight of English capital (followed by Scottish capital) from Scotland – regardless of whether or not there is a shared currency. Indeed, the question of a shared currency was a misleading issue. The real
issue was that English savers would not wish their assets to be in one country and their liabilities in another. In the same way, despite Germany and Portugal, sharing a currency, German savers, pensions and institutions keep their assets in Germany not in Portugal. Institutions and corporations would have a fiduciary duty to rectify a mismatch of assets of liabilities. Whether there was a shared currency or not would be irrelevant. And, of course, Scottish financial institutions are all heavily dependent on English capital. So, the Scottish financial sector would have to go into exile in England when English savers exercised their vote and there would be a massive transfer of English capital into England.

There was a previous independent ‘Scotland’

Another area which has never been considered by the YES Campaign or the Westminster parties is ‘people flight’. There has, of course, been a previous ‘Scotland’. It was Ireland becoming a dominion in 1922 and leaving the Union even if the political and financial background was different. Ireland then was a rural economy without any significant systemic role in the financial structure of the UK. It could detach itself from the UK with some damage to itself but of little relevance to the rest of the UK.
Two things happened demographically after 1922. Almost immediately there was an exodus of English born Irish residents or Protestant Irish born. This was followed by an ongoing exodus of Irish born people which lasted for 70 years up till the 1990s and has resumed again in 2008. Between 1926 and 1972 (that is, after the initial exodus of English born people) it is estimated that about one third of the potential Irish population between 1922 and 1972 was exported; that is to say, the number of Irish born and their descendants leaving after 1926, was 50% of the Irish population in 1972. If one adds in the pre-1926 exodus plus the further exodus after 1972, the figure was higher.

Why should Scotland be any different? The heavy welfare state planned by the SNP cannot be sustained without English financial support and will have to be drastically reduced. The economic losses when a political and economic union breaks up tend to be equal by definition on both sides, unless there are special factors. But the capacity of each side is vastly different. So what would be a relatively small loss
for the UK was a crushing loss for Ireland and would be a crushing loss for Scotland.

Indeed it is hard to say that Ireland ever became truly independent. Ninety years after 1922, the UK extended an emergency £7 billion loan to Ireland (£10,000 for every Irish family), this has recently been extended to 2042 (120 years after ‘independence’). While, no doubt the act of a good neighbour, it is
hard not to read some dependence into this. Indeed, if Scotland followed the path of Ireland, it would never become truly independent.

Emigration from Scotland

Moreover it is difficult to see why English born people would wish to stay permanently in Scotland, a country that specifically voted to separate itself from England. Of course, the UK could impose migration controls on Scotland, especially as the arrival of Scottish migrants would impose enormous infrastructure costs on the UK, as well as pushing down wages.

Conclusion

In short, the Separatists will fail because they do not have a clear aim, defining exactly what are the essentials of their independence proposition nor a clear plan, defining how to secure separation without massive self-harm to Scotland’s economy.
Their secret wish must be the sheer feebleness and lack of any foresight or planning by the UK government, which could agree separation terms which are damaging to the rest of the UK by taking on liabilities, both financial and other, to Scotland under the guise of ‘good relations’ and leave the Scottish state a permanent pensioner of the English taxpayer.
However, otherwise, once the capital exodus and the people exodus begin – and they would begin immediately after a YES vote – it is difficult to see how the Separatists could act other than by reneging on a YES vote.

The lesson for EU withdrawalists is clear. They must win the ‘enabling’ question, that is to say, an ‘expression of wish’, but must also have a clear aim and clear plan to be executed the day after the result.
Photo by Dave McLear

Germany v Greece – the next instalment

The EU, we are told, is a good thing because it has kept the peace in Europe over the past 70 years. It may be true that the nations of Western Europe have not been at war with one another since 1945 but, quite apart from the credit for peace truly belonging to NATO, the drive towards ever-closer union between the different member states has not by any means ended the tensions between them.

Two recent examples prove the point – one fairly trivial, the other far more serious. A minor tension recently erupted between France and Belgium over plans for a commemorative €2 coin marking the 200th anniversary of the Battle of Waterloo. The battlefield is a few miles from Brussels and the idea to mark this event originated with the Belgians. However, French sensitivities knocked the idea on the head on the grounds that glorifying a time of conflict ran counter to efforts to foster European unity. Ironically, last year France issued a €2 coin last year to mark the 70th anniversary of the Normandy landings. Maybe the real issue for the French is not so much European unity but the simple fact that at Waterloo, they lost!

Outside the Eurozone, the UK is not bound by the wishes of other countries and our £5 commemorative coin has already appeared. We actually had a choice of victories to commemorate, as this year also marks the 600th anniversary of the Battle of Agincourt. It also marks the 50th anniversary of the death of Winston Churchill. Anyone with a detailed knowledge of the UK rail network would know that Handborough, the nearest station to Bladon church, where Churchill wished to be buried, is easiest reached from London’s Paddington station, but Churchill insisted that his funeral train was to depart from Waterloo as the very name would irritate his long-time nemesis General de Gaulle.

On a more serious note, the war of words between Germany and Greece has intensified in the last few days. Firstly, the Greek finance Minister Yanis Varoufakis, accused his German counterpart, Wolfgang Schäuble, of calling him “naïve”, an accusation which Schäuble has emphatically denied. However, Greece’s Syriza-led government then poured fuel on the flames by raising the delicate matter of war reparations, seeking €341 billion from Germany to compensate for the behaviour of the Nazis during their occupation of Greece from 1941 to 1944. Germany has rejected these claims, saying the issue was dealt with in 1960, when a payment was made to the Greek government. Greece’s justice minister, Nikos Paraskevopoulos, then asserted that as Germany has refused to pay anything more, he is about to sign a court order allowing German property in Greece to be seized.

Where this is going to end up is anyone’s guess, but it looks like an amicable parting of the ways may be best for Greece and the Eurozone. Greece’s best chance of recovering from its financial woes is to follow Iceland’s example and default on its debts – a move which could only be accomplished outside the Eurozone. Greek public finances deteriorated during the four years the country was run by a government reasonably committed to the austerity programme demanded by its creditors. The country’s public debt to GDP ratio rose from 129.6% in 2010 to 174.9% between 2010 and 2014. Syriza wants to increase the tax-free allowance and spend more. The likelihood of any improvement in the public finances under the new government is therefore precisely zero. Indeed, Varoufakis has acknowledged the desperate plight his country faces. Greece is “the most bankrupt of any state,” he said, adding, “Clever people in Brussels, in Frankfurt and in Berlin knew back in May 2010 that Greece would never pay back its debts. But they acted as if Greece wasn’t bankrupt, as if it just didn’t have enough liquid funds.”

Statistics for January 2015 from the Greek finance ministry show that he is not exaggerating the plight his country faces. Income tax, which yielded €988 million in January 2014, brought in a paltry €519 million a year later, a drop of over 45% and barely half the €998 million target. VAT revenue also fell from €1,622 million to €1,329 million over the same period, whereas the target was an increase to €1,687 million. The fact that the Greek government managed to run a primary surplus for the month is an indication of the extent to which the austerity programme has forced it to scale back its public spending in order to satisfy its creditors. With public servants to pay and some substantial loan repayments due in a few months’ time, it is hard to see where the money is going to come from. In the past week a desperate search for cash has caused the Greek government to raid the bank deposits of pension funds while delaying payments to its creditors. It has even approached the Greek subsidiaries of multinational companies for short-term loans.

Things clearly are going to come to a head soon, especially as the Germans – both the government and the people at large – have no sympathy whatever for the problems of their fellow eurozone-member: “The Greek government is behaving as if everyone must dance to its tune. But there must be an end to this madness. Europe must not be made to look stupid,” said one German paper.

As a non-Eurozone member, we in the UK may feel that we are observing this tragedy as outsiders. However, Neil Woodford, the head of investment at Woodford Investment Management, a large firm in the City of London, believes that we cannot indefinitely continue to watch from the sidelines. “Ultimately, this country will have to make a choice about whether it is a fully signed-up member of a eurozone project or not,” he said. In other words, adopting the euro or withdrawal are the only long-term options. Whether we consider the curtailment of our freedoms to commemorate our victories over the French or our likely entanglement in the sport of spat going on between Greece and Germany at the moment, it’s pretty clear which would be the best alternative