The euro crisis has turned into a fatal disaster

Tradingfloor.com Lars Seier Christensen , co-founder & CEO, Saxo Bank A/S Filed in Lars Seier Christensen Denmark, 09 May 2013 at 13:09    In his keynote speech at this week’s #FXDebates event in London, Lars Seier Christensen, the co-founder and co-chief executive of Saxo Bank, said the euro crisis had turned into a fatal disaster with huge consequences for the members involved.

“I have rarely, in my 25 years career in foreign exchange, witnessed an equally turbulent and fascinating time,” he told the audience.

Here is the speech in full:

Talking points

Thank you for inviting me to open the second FXDebates event.

I am quite excited by the FXDebates initiative, so let me start by telling you a little bit about the initiative.

Last year, Saxo Bank joined forces with Bloomberg and published a series of articles for an e-book covering the latest trends in the Foreign Exchange market. In March, this turned into the first FXDebates event and I am delighted to open the second FXDebates on a rather daunting subject, the euro crisis.

I’m particular proud of our co-operation with Bloomberg as they have been champions in pushing ‘thought leadership’ to a new level with their editorial strategy. I would also like to extend our thanks to CityAM for their support of todays event.

Thought leadership is not just another buzz word. Thought leadership is rather an honest and rational approach to outperform in a rapidly changing digital economy.

It’s about business leaders recognizing the opportunities enabled by new megatrends in the market. Those in my view center around technology, of course, but also a significant shift in investor perception. Investors are looking for transparency, independent information and to enable their self empowerment and independence of thinking, where before they would rely more on traditional sources in the banks.

That is bad news for old, outdated private banking models relying heavily on client trust, but it is good news for financial institutions deploying technology, information sources and communication channels intelligently and innovatively, involving and engaging investors much more actively in the decision making process.

With the FXDebates, Saxo Bank, a specialist in online trading and investment, and our esteemed guests get an opportunity to highlight our and their intent to better educate traders and prepare them in the best possible way for the dynamic world of foreign exchange. The understanding of the importance of foreign exchange and the use of the market, both as an asset class in itself, and as a crucial overlay to other assets classes remains surprisingly limited, even among many professional participants.

Understanding fully the impact of currencies on our world and our investments is more necessary and relevant than ever. Used extensively as centrals tool in defining international trade policies and growth initiatives, investors need to fully grasp the implications on their portfolios. And of course, most importantly, the euro crisis has turned into a fatal disaster with huge consequences for the members involved. I have rarely, in my 25 years career in foreign exchange, witnessed an equally turbulent and fascinating time.

And as this is the main subject of our debate today, let us turn to the situation in the Eurozone.

Frankly, it is a complete mess. And it is a mess that gets worse and worse every day. Only not in Brussels. There we hear an endless litany of promises of recovery in six months time, always in six months time, we hear the Euro is safe, and that if just we all hand over more responsibility to our Masters in Brussels, everything will be just fine.

Nothing could be further from the truth. We have just been through the bailout of the fifth Euro zone country, and both Slovenia and Malta are queuing up to be next. When, not IF, the Troika arrive in these two countries, it will create to an absurd situation where nearly half of the Eurozone countries have been broken by their adoption of the common currency, the same EURO they joined with such high hopes for the future.

Now these are small countries, and can be treated as such… just look what happened to Cyprus. I would suggest to Malta, Slovenia and other bailout candidates that they hang on for dear life until after the German election. After Cyprus, we now know what happens if you get in the way of a German leader seeking reelection.

What is it that is going so wrong in the Eurozone? I think we all know very well by now. The Euro is a political construct, and it simply has no sound economic or fiscal foundation. Unless that is put in place, the Euro will be doomed eventually.

The political capital invested in Euro is gigantic, so the will to keep it alive for absolutely as long as humanly possible, should never be underestimated. Every tool in the box – and I seriously mean EVERY single tool in the box- will be tried, before the unelected, unaccountable people in Bruxelles capitulate to reality. But doomed it is, the Euro, be in no doubt about it.

Actually, a lot of people knew this already when the Euro was introduced. Saxo Bank’s chief economist, Steen Jakobsen, that did work related to the Delors commission back in the nineties, has often told me that the dangers playing out now, were openly discussed at the time. But the political pressure to move forward back then was relentless, and the momentum in the EU seemed so strong, that it was expected by many that the foundation could be put in place after the house was built.

Not so. Because during the first decade of the Euro, it became clear that the suggested benefits from the Euro never materialised. There was no strengthening of Europes clout in the world, there was no discipline among the members, there were serious issues beginning to show for the weaker countries that could not keep up with Germany when it came to competitiveness and productivity. There was no way to manage the economy without controlling your own short term interest rates. There was no way to devaluate your currency to create renewed equilibrium and ability to compete. There was no long term beneficial impact on long term interest rates, as the big winners from the Eurozone, Germany could and would not sell to their citizens that they should underwrite a common Eurobond, or make large transfer payments to the weaker countries forever.

And now, there is no way that the European populations are willing to move forward with the necessary further integration. Not that they get asked directly a lot,as almost all decisions are made by their parliaments or in Bruxelles behind closed doors, because no one dares to ask their populations via a referendum – they know the answer would be a resounding NO! And a NO it should rightly be, because Europe is not, and will never be, the United States. Our cultures, our economies, our populations are far too diverse to ever integrate efficiently and happily in a forced union.
Instead, integration is brought in via the back door, via contributions to the bailout mechanism, by corruption of the ECBs balance sheet, by the banking union that would destroy the credibility of even sound banks if fully implemented, by passing treaty changes quickly and uninformed via the parliaments, claiming that representational democracy justifies that. Well, it doesn’t. A parliament that gives up national sovereignty knowing full well that their population would reject it, are committing treason, in my view.

But one thing is politics, another is economics, although it gets harder and harder to tell the two apart.

Anyone with a rational view of the world now sees the currency collaboration as a historic failure that can lead to even further fatal consequences for Europe and the continent’s competitiveness vis-à-vis the rest of the world.

In my view, there are a number of things that are very clear. The Eurozone will eventually break up. It could happen in a multitude of different ways.

The weaker countries could leave. If this process was managed in an orderly fashion, it could be done at lower costs than the current and future bailouts, and it would quickly set the exiting countries back on a recovery course.

Germany could leave. As the sole beneficiary of the Eurozone until now, this is not likely to happen anytime soon, but as the bills begin to pile up even higher, that may all of a sudden seems an attractive solution to the German citizens. Of course, this would mean a much higher German exchange rate, but with the pressure off for a while, it would reduce the urgency of the crisis for the remaining 16 countries, that would experience a growth boost from a significantly, but not catastrophically lower Euro rate.

A multi-currency zone could evolve, with countries with more similar economic conditions and objective could group together and achieve more appropriate currency levels.

But all of these scenarios would require rationality returning to Bruxelles. It could be certainly be achieved with less chaos and less economic mayhem than what otherwise awaits the Eurozone.

This could even secure attractive outcome of an EU returning to focus on a common market, reducing trade friction between the economies, and benefit from the big diversity of different competences across Europe – we have the benefit of both highly educated workforces and low cost industrial workers, more than 500m consumers, and the benefit of competing tax and social welfare systems.

Again, I repeat, all of this requires rationality to return to the Eurozone. And frankly, this does not seem to be on the cards, unfortunately.

If rationality does not return, what can we expect…

In my view, recession will continue for years, and even turn into depression. Forget about recovery in six months, it will always be six months from now.

Euro denominated assets will remain unattractive, and downright dangerous, to hold for years to come.

Bond yields will rise substantially, in all the 17 countries as the unsustainability of the situation becomes ever clearer.

Bruxelles will claim ever more power, and use it ever more poorly. The financial sector will be drowned in self defeating regulation, taxes and cross border responsibility for failing banks, that will eventually destroy also the healthy banks.

Cyprus WAS a template. Expect not only bail ins, which if defined clearly ahead of time could be part of the solution, but also outright confiscatory wealth taxes, disguised as solidarity payments. The governments of Europe need money, and the private sector has it. It is as simple as that. Be very paranoid.

Expect latent surprises in the Eurozone minefield. The Cyprus chaos has ensured this. A normal private depositor that has worked hard to save up for his family, will not move his account to Switzerland or Singapore. But what will he do when his country is having a bailout over the weekend? I would say the mattress will look a safer place than his bank over that weekend. So bank runs could start instantaneously.

Of course, the answer to bank runs is capital restrictions. Expect a lot more of that, always introduces as short term and temporary, but very hard to remove once in place. Iceland is in its 5th year of “temporary” capital restriction – just for your reference.

There are a lot of things to worry and think about if you are a citizen or investor in the Eurozone.

So all the more reason to welcome the the second FXDebates event about the euro crisis. I for one look forward to hearing what our panel has to say.

This crisis will not pass. This is reality for investors and traders around the world and that’s why this is an important forum.

A crisis is also an opportunity as it creates conditions for change. Hopefully a change towards more transparency, reform but also intellectual honesty. This forum should be a stepping stone towards better understanding based on openness, intellectual capacity and two organizations with a firm belief in that voicing and exposing opinions is key, particularly in time of crisis.

FX and the debate of currencies is very much both part of the solution and the problem of Europe today.

Lord Stoddart on the Eurozone

Lord Stoddart of Swindon: Britain is not a member of the eurozone. We have decided to keep our own currency. There is no prospect of our joining the eurozone. So why on earth does our Prime Minister keep lecturing the eurozone as to how it should carry on, including whether it should have a banking union? Since we are not part of it, it is nothing to do with us, and we should keep out of it.

The second point I want to raise has already been raised-that is, the position in relation to Angela Merkel, the German Chancellor, who seems to be throwing her weight about increasingly these days. The Prime Minister does not have to satisfy Angela Merkel; he has to satisfy the people of this country, and the people of this country, we understand, will suffer austerity for the next 10 years, which means that they cannot afford to pay any more than the £10.3 billion that we already pay into EU coffers. I hope that the Prime Minister realises that he is not answerable to the EU for taxation and our contributions. He is responsible to the British people, who show increasingly that they are not very happy about remaining in the European Union, and who will be even unhappier if they are asked to pay even more towards it.

Lord Strathclyde: My Lords, that is the point that I was trying to make to the noble Lord, Lord Grenfell. I have every sympathy with the view given by the noble Lord, Lord Stoddart. It is entirely correct that, although we believe that the economy is heading for a state of recovery and long-term growth, many budgets are being cut in Britain, and we are not in the business of seeing them being increased in Europe, where British taxpayers will have to foot the bill. But that is a discussion that will take place, first between the Prime Minister and Mrs Merkel and then, later on, in the Council of Ministers.

As for the noble Lord’s question as to why we are interested in the banking union, self-evidently financial services and financial matters are incredibly important to the United Kingdom-it is one of our key interests-and to the City of London. It is entirely right that we should take note of what is happening in the zone where nearly 40% of our exports go. One of the many reasons why this economy has suffered in recent years is because of the uncertainty in the eurozone, which we believe needed to be resolved-and one way in which to do that is through the banking union.

Crisis in the Zone

Everyone will be familiar with the euro crisis and the possible departure of Greece and other countries from the monetary union. The crisis has many sub-plots – political, economic and financial – but even a well-informed reader might be forgiven for not following the curious tale of the TARGET2 (Trans European Automated Real Time Gross Settlement Express Transfer) balances.

It has attracted little attention in the UK press but it has emblazoned all over the German media. The story begins with the birth of monetary union and involves a fundamental lack of transparent accounting which has fuelled complexity and distrust throughout the entire system.

Within a currency area, payments between participants are ultimately settled by their banks in ‘central bank money’. This means that the payer will instruct its bank to transfer money to the recipient’s bank. The respective banks will reflect their settlements via their accounts with the central bank. A central bank will monitor balances with individual banks and may set limits. In addition, it will usually ask for any claims it may have on a bank to be collateralised by, for example, government debt.

Within the euro area, there are seventeen national central banks (NCBs) and the European Central Bank (ECB), collectively called the euro system. These separate organisations have to function in effect, as a single, central bank and the role of TARGET2 is to bind them together.

If a depositor transfers money from a Greek Bank to a German Bank, ultimately the transfer will show up as a claim by the Bundesbank against the National Bank of Greece. These balances between NCBs are not cleared down or settled by the transfer of foreign exchange or gold, nor are they collateralised. Incredibly, there is no cap on how large they can get.

When the euro was set up, the claims were bilateral between NCBs. However, as the pre-euro national payment systems have been replaced by TARGET and now TARGET2, the ECB has stepped in as a clearing house. Intra-Eurosystem balances are now automatically aggregated and, at the end of the day, netted out throughout the euro system, leaving each NCB with a single bilateral position vis-a-vis the ECB. As a result some NCBs have a TARGET2 claim and others are TARGET 2 liability vis-a-vis the ECB.

Lack of Accountability

Does any of this matter? Before the crisis, the balances between the NCBs were not significant at January 2007. The banks funded them through the interbank market privately. However, following the crisis, these private sources of funding dried up and the banks in sovereign states of the periphery (the PIIGS – Portugal, Ireland, Italy, Greece, Spain) could only raise funds via the TARGET2 system. The TARGET2 balances began to rise after 2007 but this was not noticed because of the opaque accounting treatment adopted by the ECB. Any normal bank or company shows the money owed to it in its current assets and money owed by it in its current liabilities so you get a full picture of what is due in and what is owed. But the ECB is not a normal bank. It NETTED OFF the liabilities against the assets so it showed a mere €49.4 billion owed to it by member states.

However in 2011 two enterprising economists, Hans-Werner Sinn and Timo Wollmershauser, found a way of sourcing the full data from the IMF databank and were able to present the full picture.

As of April 2012, the debtor NCBs have BORROWED over €850bn from the rest of the system , €650bn of which is owed by the PIIGS. This is principally funded by Germany (€463bn) and the Netherlands (€152bn) and little Luxemburg ((€109bn. Worryingly, these negative balances have arisen despite public money inflows such as European Union International Monetary Funds loans, which eventually end up in the banking systems. These balances represent massive transfers of wealth – Germany’s balance represents 20% of its annual GDP. This transfer happened without any political accountability or democratic process – just through the automatic function of the monetary union. It is worth comparing this complete absence of political process with the attention and scrutiny associated with the European financial stability facility (EFSF), which was recently increased to €780bn.

Who Knew?

In the absence of standard accounting practices, or at least disclosure by the ECB, nobody knew what was happening. The ECB responded that the TARGET2 system was working as it was intended to, and cannot be capped since a euro must be worth the same in all parts of the currency area, and freely transferable as well. Some official voices have even suggested that the size of these balances is only a problem if the public know about them.

The debate, indeed outcry, in Germany about these balances shows that the full implications of monetary union were not properly understood by the vast majority of citizens, even though there were references to the possibility of this type of event in academic literature.

Concern is particularly high now because if Greece were to leave the monetary union, it would not be in a position to repay the €100bn odd Euros that its NCB owes the rest of the euro system. Of course, the whole edifice was set up without any limitations on TARGET2 balances, wholly on the basis that no country would ever leave the euro. Although this remains the official position of the ECB, in practice politicians speak openly of this as a possibility.

If the ECB were to suffer from an NCB not meeting its obligations on TARGET2, a Greek exit would wipe out the entire capital of the ECB which has capital and reserves of approximately €31bn, rendering it insolvent. This would require the other NCBs, which collectively own the ECB, to contribute additional capital to it but 12 of the 17 NCBs are already heavily indebted to the ECB and are certainly not in any position to contribute more capital.

The absence of proper accounting for these balances deprived the public of visibility on the balance of payments crisis developing within the euro zone after the credit crunch and has the potential to bring down the ECB and national central banks of member countries with it.

Intra Eurosystem Assets (€billion)

Austria                -34.6 Belguim             -52.8 Cyprus                  -7.9 France                -79.6 Greece             -104.8 Ireland              -142.4 Italy                   -191.4 Malta                     -0.4 Portugal             -60.9 Slovakia             -13.6 Spain               -150.8 Total                 -842.0
Intra Eurosystem Liabilities (€ billion)

Estonia                1.0 Finland              66.0 Germany         463.3 Luxembourg   109.5 Netherlands   152.8 Total                 792.6
Adapted from an article which was published in Accountancy magazine

Decline of the eurozone

It is said by the three main political parties that the UK must remain in the EU because it is our major trading partner and hence vital to our prosperity.

Professor Tim Congdon CBE, with the help of figures from the International Monetary Fund (IMF) database (see below) explains: The numbers are immensely helpful because they extend over a 25-year period and so help in identifying trends. They start in 1991, when the Maastricht Treaty was being negotiated and the euro was conceived, and end with forecasts for 2016. (The analysis is slightly incomplete, because it ignores some of the smaller countries, but apart from Poland and Sweden none of these 10 countries is of much importance).

In 1981 the eurozone output represented 21.8% of the world output. Their problem was and remains, that the excessive taxation and heavy regulation inflicted on them by the EU has held them back. The figures show that the eurozone’s share of the world output has plunged by a third – from 21.8% in 1991 to 14.3% in 2011.

It is entirely plausible that out grandchildren will live in a world where the eurozone produces only 6 or 7 per cent of world output. In other words, in their world the nations that today have neither EU membership nor the euro as their currency will outweigh the eurozone by well over ten to one.

Eurozone as a percentage share of world output per year

1991 21.821 2000 18.349 2009 15.015
1992 20.172 2001 18.300 2010 14.556
1993 19.610 2002 17.968 2011 14.253
1994 19.485 2003 17.482 2012 13.861
1995 19.290 2004 16.989 2013 13.478
1996 18.887 2005 16.541 2014 13.100
1997 18.606 2006 16.235 2015 12.722
1998 18.659 2007 15.881 2016 12.350
1999 18.535 2008 15.534

First appeared in EuroFacts, 22nd June 2012

Lord Stoddart gives ‘eurozealots,’ who still want Britain to join the euro, some home truths

During a debate in the House of Lords on ‘Recent Developments’ in the EU (16.2.12), the independent Labour peer and former Campaign for an Independent Brtian chairman, Lord Stoddart of Swindon has made a major speech in which he challenged “eurozealots,” including the Deputy Prime Minister, who continue to call for Britain to join the euro and told them some home truths about the current state of the EU. He also outlined the threat and the cost to Britain from the Solvency II capital rules and the proposal to make mortgages in default after 90 days in arrears.

Lord Stoddart said: “…. the Solvency II capital rules, which I believe are now being agreed, will cost the British financial industry £600 billion, according to JP Morgan. They will cause massive damage to the United Kingdom’s pensions industry and will virtually kill off the last vestiges of final salary schemes. That will hurt ordinary British people. We should take note of that.

“Then there is the proposal to make mortgages in default after 90 days in arrears, which conflicts with the Government’s own policy of helping people, quite rightly, to hang onto their homes when they are in financial difficulty. Then there is the demand for another £9 billion to meet the additional commitments in the present financial round, which will cost the United Kingdom £1 billion. That is extra to the £10.3 billion that we have already committed and money that we do not have.”

Lord Stoddart was also scathing about the EU’s treatment of Greece: “The treatment and humiliation of Greece by the EU is alarming, disgraceful and completely undemocratic. Furthermore, the Greeks have had the right to govern themselves taken away and the leaders of the Government are unelected Prime Ministers. The political parties now have to guarantee that they will put into place measures that will hurt ordinary Greeks in a manner that is totally unacceptable in anything other than a third world country.”

He expressed his surprise and amazement that “in spite of everything that has happened” “eurozealots”, such as the Deputy Prime Minister, still want to “get rid of the pound” and “join the euro.” Lord Stoddart said: “I find that quite incredible.”

The full text of Lord Stoddart’s speech is as follows:
My Lords, I am very pleased to be following the noble Lord, Lord Flight, and I am sure that the House enjoyed his very lively speech. I was also glad that he corrected the trade figures from 50 per cent to 40 per cent. Some people seem to believe that we did not trade with Europe before we joined the Common Market in 1973. But of course before 1973 we had very good trading relationships with Europe and made a profit on many of our exports; including cars, incidentally.

It is difficult to know where to start in a speech about the European Union because of the chaos that reigns in the Union, particularly in the eurozone. As usual, there have been some disparaging comments about those of us who are called Eurosceptics. I would remind those people that the Eurosceptics warned of the dangers of joining or having a single currency. We were told that if we did not join, we would be sidelined. We would miss the train and we would miss the boat. Indeed, people like me were called unpatriotic because we believed that it would be inimical to British interests to join the single currency.

We have been vindicated by events. We are not pleased about that, but we have been vindicated. We believe that the euro currency in the eurozone would not be good for this country even if it might be good for other countries. What surprises and amazes me-and we have heard it again this afternoon-is that the eurozealots who want to get rid of the pound still believe that the United Kingdom should join the euro. In spite of everything that has happened, they believe that we should still join. Even the Deputy Prime Minister believes that. I find that quite incredible.

The eurozone has proved that a single currency cannot work without fiscal and political union. A lot of people have pointed that out this afternoon.

This debate is about developments in the European Union. So far we have heard about great issues, but all sorts of things are going on all the time in the European Union, many of which affect ordinary people in this country. For example, the Solvency II capital rules, which I believe are now being agreed, will cost the British financial industry £600 billion, according to JP Morgan. They will cause massive damage to the United Kingdom’s pensions industry and will virtually kill off the last vestiges of final salary schemes. That will hurt ordinary British people. We should take note of that.

Then there is the proposal to make mortgages in default after 90 days in arrears, which conflicts with the Government’s own policy of helping people, quite rightly, to hang onto their homes when they are in financial difficulty. Then there is the demand for another £9 billion to meet the additional commitments in the present financial round, which will cost the United Kingdom £1 billion. That is extra to the £10.3 billion that we have already committed and money that we do not have. We will have to borrow £1 billion more. Only on Tuesday, the EU Commission announced that 12 member states, including the United Kingdom, are suffering from severe economic imbalances leading to economic shocks and that they will be placed under stringent observation so that they do not compromise the stability of the EU.

That dictatorial language and action is now commonplace in the EU. The treatment and humiliation of Greece by the EU is alarming, disgraceful and completely undemocratic. Furthermore, the Greeks have had the right to govern themselves taken away and the leaders of the Government are unelected Prime Ministers. The political parties now have to guarantee that they will put into place measures that will hurt ordinary Greeks in a manner that is totally unacceptable in anything other than a third world country. That is in advance of what will be done.

Some of us predicted that eventually there would be fighting in the streets in the European Union or Common Market. We now have it. We have fighting in the streets not only in Greece but in other countries as well-

As usual, a crisis situation is being used to transfer more power to the EU institutions. The fiscal agreement was made between countries other than the United Kingdom and the Czech Republic. It may be intergovernmental at this stage. However, all experience has shown that inter-governmentalism eventually collapses and becomes an EU competence. That happened following the Single European Act, the Maastricht treaty, the Amsterdam Treaty, the Nice Treaty and the Lisbon treaty, all of which transferred more powers from nation states to the institutions of the European Union.

However, even this does not go far enough for the European top dogs. Frau Merkel, for example, was recently reported in the German newspaper Handelsblatt as saying that step by step, European politics is merging with domestic politics. She called for closer political integration, with members ceding further powers to the European Commission, which ought to be the real government of Europe, with the Council of Ministers operating as a second chamber and adding strength to a European Parliament. That is the vision of people such as the Germans, which is also supported by the current President of France. The noble Lord, Lord Howell, does not agree with that. He is calling for a completely different sort of Europe-but Germany and France in particular are determined to go very much further than the noble Lord outlined in his speech. Of course it is not only the leaders of individual states who are doing this. Mr Barroso was this week telling the Chinese that the EU will become a fully-fledged political union after the financial crisis. I hope that the Government will tell these people that that is not the vision that the United Kingdom has for the European Union; and, indeed, that the British people will not tolerate that. They want to continue to be governed by their own elected representatives and by institutions that have been built up and been successful over many hundreds of years.

How much longer can the Euro survive? And, if the Euro collapses, what will happen to the European Union?

By Andy Smith

While America and much of the English-speaking world struggling to climb out of recession, the EU is still in the depths of economic gloom. The crisis is deepest in Eurozone countries such as Greece and Ireland which, due to the failures of the Single Currency, have had to turn to their EU neighbours for a financial rescue package.

In fact it was cash-strapped Britain that had to bail out the Republic of Ireland and prevent the Irish economy from crashing completely. With virtually all European governments having to make draconian cuts in public services, and with unemployment rising dramatically across the Eurozone, protests have often turned into full-blown riots.

One size fits all

None of this should be a surprise to anyone. The problem with the Euro is that it is a “one size fits all” solution that puts economic control in the hands of the EU. There is no scope for flexibility to suit the circumstances of different countries. Single currencies only work in single states. The political leadership of the EU has already taken us a long way down the road to a “United States of Europe” with its Maastricht and Lisbon treaties – but the Eurofederalists’ dream of a single, totalitarian EU State, is just out of their reach. And will continue to be while the Eurozone – the ultimate expression of European “unity” – flounders.

In the meantime, the economic problems grow. And the crisis is not confined to the poorest Eurozone countries. The more efficient economies, such as Germany, are being dragged into it. And even Britain, in the EU but still outside the Eurozone, is affected. Having spent millions of pounds on a rescue package for Ireland, we will soon be asked to help shore up the near-bankrupt economies of Portugal and Spain too. What’s more, around half of our exports currently go to countries in the Eurozone, and if the economies of the Eurozone decline further, so too will Britain.

Not immune

So, despite making the right decision to keep out of the Single Currency, we are not immune to the Eurozone’s developing economic crisis. This is totally unsustainable. But the political leadership of the EU – including our supposedly Eurosceptic Prime Minister David Cameron – will do everything they can to keep the Eurozone afloat and keep the EU together. Their answer is to try to increase Brussels’ powers and accelerate the process of “convergence” and unification. This is in spite of Prime Minister Cameron’s pledge to block any power-grabs by the EU without a referendum.

So much for politicians’ promises!

What then are the inevitable consequences for the Eurozone – and the EU? Soaring unemployment, widespread business failures, and unavoidable political crisis throughout Europe…

There is, however, an alternative for Britain. Withdrawal from the EU would enable us to escape the crisis, save billions of pounds of taxpayers’ money that is currently poured into the bottomless pit of the EU, and regain the trading opportunities in the Commonwealth and the English-speaking world that have been largely closed to us since we joined the “Common Market” in 1973. Britain has been an outwardlooking trading nation for hundreds of years. But this began to change in the 1970s when we entered the Common Market – and turned out backs on the Commonwealth. Today, it is the straitjacket of the EU that prevents us from taking advantage of our longstanding relationship with countries such as Canada, Australia and New Zealand. The Eurofederalists dismiss groups like the Campaign for an Independent Britain – opponents of the EU – as “Little Englanders”, implying that we have no interest in the world outside the British Isles. In reality, the federalists are the insular ones – Little Europeans – whose worldview is narrow and whose minds are closed.

What CIB wants is for Britain to opt out of the failing EU and instead become a major independent trading nation once more, in charge of our laws, government and trade. The choice facing Britain is simple: stay in the EU and go down with the sinking ship of the Eurozone, or sail away to a brighter, more prosperous future