The CBI’s foolish games

Towards the end of the 1990s, during drinks after at a debate at Bath on joining the euro, Mr Idris Francis, a long-standing supporter of withdrawal from the EU, asked Kate Barker, the CBI’s chief economist at the time, why she had not produced any calculations on the effects of joining the euro. She replied, in front of several others, that, “There are so many effects subject to such wide margins of error that it is impossible to know what the consequences of joining would be.” But he then asked her “But do you and the CBI want to join anyway?” to which she replied “Yes.”

Mr Francis quoted this exchange at several later meetings. At one Labour-organised meeting in Bournemouth, he was threatened with eviction by a senior figure in the Britain in Europe campaign. He also received a letter from Kate Barker, objecting to him quoting her words, but at the same time she confirmed what she had said.

Kate Barker must now be regretting her foolish support for the Euro. The CBI was thankfully dissuaded from supporting it as far back as 1999, thanks to the Business for Sterling campaign group. However, it has certainly not changed its policy of supporting our membership of the EU, come what may.

The Vote.Leave campaign recently gained access to the leaked minutes of the CBI’s president’s committee in July 2015, where former Chairman Sir Michael Rake told the meeting, “It is important not to overplay our hand in the negotiations with Brussels, like Greece, and that [the] CBI should be strong in making the case for competitiveness within Europe”. The meeting was attended by Lord Maude, Minister for Trade and Investment, as well as other government officials.

It should be noted that this is the same Sir Mike Rake, who was the deputy chairman of Barclays Bank, which was fined £284.4 million by the Financial Conduct Authority over “brazen” currency rigging.

It seems from his comments that no lessons have been learnt by the CBI in the years following its misjudgement on the Single Currency. Indeed, it is frightening to think that the CBI will almost certainly end up supporting another leap in the dark as untried and as doomed to failure as the Euro – namely UK associate membership of an EU. This will place the UK permanently in the EU’s powerless second division while the First Division  – the Eurozone members  – call all the shots.

It is so obviously a bad solution ot the UK’s “problems” with the EU, but it is almost certainly what  David Cameron will be offering us in the forthcoming referendum, aided and abetted, no doubt, by the CIB. It is sad indeed that an organisation claiming to be “the voice of business” dopes nothing more than play silly games.

Neverendum!

The Bank Holiday has only just come and gone but already, developments are coming thick and fast with the forthcoming EU referendum.

First of all, the Electoral Commission has decided that the wording of the referendum question needs to be changed as it appeared to favour the supporters of staying in the EU. Voters will now be asked whether they want the UK to remain in the EU or leave the EU. In other words, the two campaigns won’t be the ‘Yes’ and ‘No’ campaigns but more likely the ‘Remain’ or ‘Leave’ campaigns. Whether this change, to which David Cameron has agreed, will benefit those of us wanting UK independence (whatever we are now going to call ourselves) remains to be seen. While there is an instinctive desire in many people to want to please by affirming the positive (in other words, to say ‘yes’ is seen as being obliging rather than awkward), ‘leave’ could still be associated with a step into the unknown with ‘remain’ as the safer option. This, of course, can be overcome if ‘leave’ is seen as embarking on an adventure – a gateway to a more promising future while ‘remain’ is equaterd to stagnation and decline. Incidentally, another reason for the change in wording is that the Electoral Commission believed that some people may not actually realise that we are in the EU in the first place and may have been confused by the original wording! After over 42 years, this seems a bit incredible, but you never know with some people.

Another concession which David Cameron may find himself forced to make concerns the so-called Purdah period before the referendum. A period of 28 days of government silence before a referendum has become the accepted norm, as it is seen as preventing Government intervention on the side which they want to win. Apparently, as many as 40 Conservative MPs may support a Labour amendment banning public spending during the referendum campaign. The Government’s argument is that such a restriction would prevent it from carrying out its regular business in Brussels for four weeks. This, however, has not convinced a number of Tory MPs nor, it seems, their Labour counterparts. One of the Tory MPs keen to see the Purdah period observed warned of the dangers of “Neverendum” – in other words, a vote to stay in being regarded as rigged and therefore not a valid result and not putting the issue to bed at all.

It is very apparent that Cameron is very, very desperate to ensure we stay in and will only allow a level playing field with great reluctance if at all. His master plan, it seems, is a spin-off from the desire among the leaders of the Eurozone countries (although not necessarily their populations) for closer political and economic union. Accepting – well, seemingly – that the UK will never adopt the Single Currency in the foreseeable future, we will be offered some form of associate membership, except it will called something else. It will be sold as the looser relationship with the EU that everyone desires, no doubt with an exemption from “ever closer union” thrown in as a sweetener. In reality, it will be an official second-class status within the EU and the worst of both worlds. We will be excluded from the EU’s “top table”, at which Mr Cameron insists we must have a seat, yet will still be subject to the full EU acquis, enforced by European Court of Justice. In practise it will be little more than taking the slow train to the same destination which the Eurozone leaders want to zoom towards in their TGVs. At the same time, we will still be locked out of the really important top tables, UNECE, the World Trade Organisation and other bodies where the EU is represented as a single entity. It is a vastly inferior option to the EEA/EFTA alternative which Mr Cameron, either through misleading briefings from his civil servants, sheer ignorance or plain pig-headedness refuses to consider and what is more, this route would accomplish the objectives he publicly professes a desire to achieve. No matter how well his arguments get shot down, as they surely will be, he just doesn’t want to go down in history as the UK’s Lee Kwan Yew, the man who reluctantly led his country to independence and prosperity. Still, if we play our cards well, he will have no choice and the Neverendum conundrum can finally be laid to rest for, given that the referendum will not be a fair fight, if we vote out, no one can claim the result was rigged.

Photo by shonk

The UK’s financial vulnerabilities as an EU member state

UK MEMBERSHIP OF THE EU.
TRADING ARRANGEMENTS ARE NOT SO IMPORTANT AS THE UK’S FINANCIAL WEAKNESS INCURRED BY EU MEMBERSHIP


We are often asked for the full presentation of all the financial aspects of the UK’s relationship with the EU and the EU referendum.

While trading arrangements are important,they have not been as decisive as balance sheet destabilisations throughout history.

This latest analysis by Futurus considers the diminution in UK assets because of its budgetary contributions and the UK’s increased liabilities and contingent liabilities due to EU membership.

Its conclusion points out that “While EEA states have no risk exposure to EU liabilities, the UK has enormous exposure. Moreover, it is, in part, one-sided with no corresponding EU risk exposure to the Bank of England. It is likely that further collapse in the finances of eurozone governments and banks will not attract open-ended EU entity support as in the period 2009-13 and resort will be made to bail-ins and haircuts on bondholders. However, prudent finance would be for the UK to leave the political and monetary structure of the EU and move to EEA status urgently.

To read the full report, click here

Britain and its influence on the world stage

CIB wishes to congratulate CIB member Michael Clark on his letter to The Times 

Sir, President Obama has said Britain must remain in the EU to provide confidence in the strength of the transatlantic union and its strategic partnership with the US. He also says we will lose influence on the world stage if we leave the EU. Can we really consider this as a logical analysis of the present position facing America’s closest partner?
Britain has already lost a major part its influence in Europe as only one among an EU membership of 28. The political EU has subsumed Britain’s sovereign power and influence way beyond the original Common Market that we joined forty years ago.
How can Britain, stripped of its constitutional integrity and weakened by the ever increasing vacuum in the Westminster Parliament, retain or even gain more influence by continued membership of the EU?  This organization is in crisis and can but move towards a federal United States of Europe in order to maintain the eurozone.
I submit that Britain at this time needs to stand back from and if necessary, leave the EU, this in order to save Europe from itself — something we have done more than once over the past eight centuries.
MICHAEL CLARK

Photo by Ethan Bloch

Greek crisis gives a boost to left-of-centre euroscpticisim

The Eurozone has survived its most serious crisis to date. While the formula of late-night sessions, high drama and final compromise, grist to the mill in so-called EU “summits” usually has an element of theatre about it, on this occasion, the Greeks came within spitting distance of the single currency exit door before agreement was finally reached on a third bailout for the stricken country amid some pretty angry scenes.

Some sort of deal always seemed more likely than “Grexit”. That is how the European Union works. Even more predictable was yesterday’s vote in the Greek parliament in support of austerity measures. There was plenty of huffing and puffing, plus a number of resignations – including that of the colourful finance minister Yanis Varoufakis who handed in his notice several days before the final Greek capitulation, but the outcome was never in doubt. Against his better judgement, Prime Minister Alexis Tsipras has signed up his country to a deal which goes against everything in Syriza’s election manifesto. He promised to end austerity; he has instead been forced to implement a harsher austerity package than his predecessors. The rejection of austerity by the Greek electorate in a referendum earlier this month counts for nothing.

Ignoring the will of the people when they vote the wrong way; reneging on your promises in order not to conflict with the desires of your fellow Europeans. This is all grist to the mill to the European project. Nevertheless, the protests die down after a while and things move on as normal. Or do they?

It is quite possible that in a few years’ time, the Greek crisis will just be a footnote in the history of the EU and that the project towards a federal superstate has continued on its merry way with only a few minor ripples on an otherwise smooth surface. Equally – and perhaps more likely – it is quite possible that the crises affecting the European project will become more intense, especially if the bailout fails to restore the Greek economy to growth. It may take a while before the whole edifice comes crashing down, but the humiliation of Greece has left a bitter taste in the mouth of many erstwhile supporters of the EU.

A search through the internet or the daily papers will yield comment galore on who are the real villains of the piece. The Germans, so say some, for insisting there can be no debt relief for Greece and imposing impossible terms on a nation that is, to all extents and purposes, bust. Others blame Syriza for promising the impossible in the mistaken belief that Germany would blink first rather than sacrifice the irreversibility of the single currency. Maybe it’s six to one and half a dozen to the other. Richard North pointed out in his blog out how Greece has been an incredibly corrupt country for decades. Less important than the finer points of the economic arguments, however, is perception. The EU is, after all, a political project to which economics are always subservient and the political damage to the EU project may be as great as the economic damage to Greece.

As far back as February, this blog predicted that the rise of Syriza might result in a growth of left-of-centre euroscepticism. This prediction has proved accurate. The perception of a concerted effort by the centre-right German Chancellor to crush Alexis Tsipras out of a desire to emasculate the left has generated a great deal of anger. A most interesting article in the Guardian by Owen Jones claims that as a result of the Greek debacle “Britain’s left is turning against the European Union, and fast.”

Jones quotes a few examples: “Everything good about the EU is in retreat; everything bad is on the rampage,” writes George Monbiot, explaining his about-turn. “All my life I’ve been pro-Europe,” says Caitlin Moran, “but seeing how Germany is treating Greece, I am finding it increasingly distasteful.” Nick Cohen believes the EU is being portrayed “with some truth, as a cruel, fanatical and stupid institution”. “How can the left support what is being done?” asks Suzanne Moore. “The European ‘Union’. Not in my name.” He then claims that there are senior Labour figures in Westminster and Holyrood privately moving to an “out” position too.

Ambrose Evans-Pritchard picks up on this theme in his column for the Daily Telegraph. Although no socialist himself, Mr Evans-Pritchard expresses considerable sympathy for these emerging left-of-centre eurosceptics, for what he calls the EU’s “scorched earth treatment” of Greece is totally opposed to everything socialism has historically stood for. A left-wing government – indeed, one of the most left-wing governments elected by popular mandate in Europe since the end of the Cold War – is being forced to implement a radical privatisation programme and to cut pensions and other benefits at the diktat of politicians of a different political hue in a different country. He points out that the historic social democratic parties of Europe have become so sold on the European project that it supersedes their loyalties to traditional socialism. There can be no better illustration of this than the action by Martin Schulz, the President of the European Parliament, to ignore an amendment which rejects one of the most controversial features of TTIP, the EU-US free trade agreement in a series of votes in the European Parliament. Schulz, by all accounts a thoroughly unpleasant man, is a member of the SPD, the German Social Democratic Party. The SPD, along with most other socialist parties in the EU, including the UK’s Labour Party, is a member of the PES (Party of European Socialists) group in the European Parliament, which will tolerate no eurosceptics among their MEPs. I can recall meeting a Parliamentary assistant from Malta during my time working in Brussels who told me how the Maltese Labour Party, which had opposed EU membership, had to change its tune quickly after the country voted to join the EU, with all its eurosceptics relegated to the sidelines so it could join the PES grouping.

And herein lies the irony of the PES sellout:- Right-of-centre free market withdrawalism is to all intents and purposes a UK phenomenon. Opposition to the EU has historically come largely from the Left. Indeed, in this country during the 1970s and 1980s, Euroscepticism was far more prevalent in the Labour Party than in the Conservatives. The late Tony Benn was a consistent and unbending supporter of withdrawal and the 1983 Labour Party election manifesto included a commitment to withdraw the UK from the EEC, as it then was. Supporters of the Free Market feel uncomfortable about the pressures exerted on the EU institutions by big business through the army of lobbyists. Socialists have no less reason to dislike the EU’s corporatism, but the mainstream social democratic parties have been at best muted in their criticisms. It is hardly surprising that recent years have seen the emergence of more radical parties like Syriza or Spain’s Podemos, which have challenged and in some cases, even superseded the mainstream social democratic parties. Furthermore, events in Greece are now causing these new parties to turn not only against Europe’s bankers and big multinationals but against the single currency too. Costas Lapavitsas, a Syriza MP said, “It is now perfectly clear that the only way out of this is to break free of monetary union.” According to the Greek media, Panagiotis Lafazanis, the energy minister and a member of one of the most far-left of the factions within Syriza, has publicly advocated bringing back the drachma. To many in Greece, the Euro is a symbol of their European identity and support for staying within the single currency remains astonishingly high given the damage its inflexibility has done to their economy. However, with the International Monetary Fund rightly casting doubt on whether the agreement negotiated in Brussels can ever lift Greece out of its debt trap, a further flare-up in Greese’s financial crisis looks very likely and when it happens, calls for Greece to quit the Eurozone may not be confined to a handful of peripheral Marxists.

To return to the UK, the re-emergence of left-of-centre Euroscepticism – and indeed, outright withdrawalism – comes at a time when the Labour Party is going through a period of soul-searching following its defeat in the General Election. None of the four leadership contenders are openly withdrawalist although the left winger Jeremy Corbyn could be called euro-critical. The late Bob Crow, general secretary of the RMT trade union, was a supporter of withdrawal and even launched a left-of-centre withdrawalist party No to EU – Yes to Democracy, which contested the European Parliamentary elections in 2010, winning 1% of the popular vote. While this was hardly an earth-shattering result, it is an indicator that left-of-centre withdrawalism has never totally died out in the UK. It has only been dormant. Greece’s “rescue package” appears to be the catalyst which is bringing it back to life. In his Guardian article, Owen Jones points out how a socialist agenda would now be impossible to implement because of the EU. Renationalisation of the railways and the Royal Mail would be impossible, he claims. Keynesian economics has been outlawed by the Lisbon Treaty and he fears that TTIP, if implemented, would lead to the permanent dismemberment of the NHS. An additional concern for Jones is the growing support for UKIP among the white working classes, which he feels can only be countered by a revival of left-of-centre withdrawalism. Whether this is possible within the Labour Party or whether we will see the formation of a British equivalent of Podemos or Syriza, but with a commitment to withdraw from the EU  remains to be seen. Certaionly something is happening, although quite how much momentum the withdrawalist left is going to build remains to be seen. We must, however, get used to hearing a lot more of a new term Jones has coined – Lexit – Left support for withdrawal. Indeed, even if our personal political allegiance does not lie with socialism, the more we hear of it in the run-up to the referendum, the better.

 

Photo by rvw

Making a drachma out of a crisis

A letter from our Chairman, Edward Spalton, to the Derby Telegraph

We would be suffering a similar fate to the people of Greece if our politicians had taken us into the euro as many of them wished. We were and still are lumbered with massive government and private indebtedness but have been able to dodge many of the ill-effects because we still have our own currency.

The so-called “bail-outs” are essentially transfers of unrepayable debt, owed originally to German and French banks but now transferred to the public sector. Whatever the result of yesterday’s referendum, the outlook for Greece is bleak.

They already have real austerity. In the Greek NHS, infant mortality has increased massively – up 40%. With the return of the drachma, there would be a prospect of fairly rapid eventual recovery but probably even more hardship in the short term. So it’s a hard choice.

The euro is a political project to create political union. To avoid more countries threatening to leave like Greece, the countries of the Eurozone will have to form themselves into a single, economic, monetary government – in effect becoming one country with a permanent majority of votes within the EU. Such a treaty will take around four years to conclude under EU rules, so could not come into force before 2020. It will make permanent and formal the UK’s existing status as a second-rate member, paying a first-class subscription.

To repatriate any powers from the EU to a member state requires treaty change. Mr Cameron appears to have dropped this demand. Harold Wilson dressed up some very minor administrative alterations as a fundamental renegotiation” in 1975. It was enough to win him his referendum. No doubt Mr Cameron will follow that example.By the second half of 2017, the UK will hold the presidency of the EU and be in charge of issuing all the press releases which follow EU meetings, giving much increased scope for media manipulation. This is the reason for the Government’s abolition of the “purdah” rule, which prohibits it from using its resources to influence the outcome of the referendumThe best he could hope for is that other member states and the EU Commission promise to take his concerns into account when they make their big treaty some time from 2020 onward. This is not a happy precedent. Mr Blair surrendered some of Mrs Thatcher’s rebate in exchange for a promise to reform agricultural policy. That reform never happened.

So Mr Cameron’s referendum is not really about giving people a choice but a manipulative ploy to lock us into the EU permanently in advance of major, impending, centralising change of which he must be well aware.