De Gaulle and a possible “Norway Option” in 1963?

Many Independence Campaigners will remember Reg Simmerson. He was untiring in his campaigning and very well informed in his frequent letters to the press

Here is one of his letters to the editor of the Sunday Telegraph, dated 29 August 1990

“Dear Sir,

Although I agree with most things written by Peregrine Worsthorne it appears necessary to pick him up on one point.

De Gaulle was certainly not “insulting” when he vetoed Britain’s application to join the EEC in 1963; in fact he made a suggestion which coincides almost exactly with that of Reginald Maudling a few years before and also coincided exactly with the offer accepted by the other EFTA countries when Britain and Denmark joined the EEC in 1973.

The suggestion was that each EFTA country should have free trade in manufactured goods with the EEC, that each EFTA country should be able to fix its own tariffs with third countries and that the Common Agricultural Policy should not apply to EFTA countries.

The arrangement would have been ideal for Britain as we could have continued with our cheap food policy whereas we are now paying three or four times world prices for food which is produced by nauseous, intensive farming methods; we should not have needed to subsidise food mountains or sales of food to Russia at give-away prices.

No, de Gaulle did not insult us but Harold MacMillan and Ted Heath asserted that we had been insulted because they wanted to get into the politics of the EEC and, although de Gaulle’s proposal would have been ideal economically, the arrangement did not satisfy the ambitions of those two extremely ambitious British politicians.

The two British politicians therefore asserted that de Gaulle was offering Britain associated status just like that of some French ex-colony when, in fact, he was offering something very different indeed.

No one managed to make an effective challenge to their assertion at the time so they got away with it; the cost to Britain has been immense in trade with the rest of the world; we should have been able to import cheap, wholesome food from Canada, Australia etc. and sell them our manufactured goods; we should not have paid huge sums of money to the EEC; North Sea Oil would have made us rich.

What a pity that such an opportunity was thrown away but let us get one thing straight; de Gaulle certainly did not insult us; MacMillan’s and Heath’s assertions caused the trouble.

Sincerely,

R.E.G. Simmerson BSc (Econ) FCA “

FIGHTER FOR BRITAIN’S FREEDOM – Letters to the Press 1971 -98 by Reg Simmerson
A selection from some 600 letters, edited by Martin Page, is available (Price £5 including postage) from Sovereignty Publications, Worcester Park, Surrey KT4 7HZ

The futility of renegotiation

What we were fobbed off with 39 years ago? Harold Wilson pledge to renegotiate Britain’s membership of the EEC when he won the second of two general elections held in 1974. A deal was secured at the Head of Government meeting in Dublin on 11th March 1975 which, in Wilson’s words, “substantially though not completely achieved” the renegotiation objectives.

We were allowed to exempt foods from VAT, to strike a better deal with imports from the Commonwealth while securing a reduction in our contribution to the EU budget. We “also maintained our freedom to pursue our own policies on taxation and on industry, and to develop Scotland and Wales and the Regions where unemployment is high” according to the leaflet sent out by the Government. No earth-shattering concessions here; after all, we are still some way from a common EU taxation policy 39 years later, but with the “in” campaign far better funded than the “out” and considerable ignorance on the part of the electorate as to the true nature of the EU project, these changes were sufficient to secure a 2 to 1 majority in favour of staying in,

No one can expect that a few cosmetic tweaks to our relationship with the EU will secure a two-thirds majority to remain within the EU in 2017. Far more of us are now aware of what the EU is about and we don’t like it. Given the choice between remaining in the EU on present terms and withdrawing, an opinion poll carried out by Opinium or the Observer newspaper last month suggests that 48% of voters would choose to leave while only 37% would wish to remain. However, poll after poll indicates that the balance would swing in favour of continued membership if we could renegotiate our relationship. However, these polls rarely, if ever, go into detail as to exactly what should be renegotiated.

It is becoming increasingly apparent that any renegotiations involving a significant return of powers to our parliament are not going to happen. Jean-Claude Juncker, the incoming Commission President, made it clear in a speech to the European Parliament that any hopes of ending the free movement of people would be doomed to failure. In January 2014, a group of 94 Conservative MPs signed a letter stating that national parliaments should to be given the power unilaterally to veto EU regulations that are felt to be unhelpful. William Hague, Foreign Secretary at the time, said that such hopes were “unrealistic”. This point was underscored recently by Manfred Weber, the new leader of the centre-right EPP faction in the European Parliament, who said that, “For us this, is non-negotiable. We cannot sell Europe’s soul… If we grant each national parliament a veto right, Europe would come to a virtual standstill.”

When it comes to Justice and Home Affairs, there is little sign that a future Conservative government is even going to try to repatriate powers. While some Conservative MPs are arguing for UK withdrawal from the European Convention of Human Rights, this is a smokescreen. The ECHR is not linked to the EU but to the Council of Europe. Furthermore, if the EU becomes a signatory to the ECHR in its own right, the member states – including, of course the UK – will de facto have to abide by it. What is far more worrying is the opting back in to 33 measures enshrined in the Lisbon Treaty, including the European Arrest Warrant. Theresa May is quite happy to allow UK citizens to be extradited to countries with a far less robust system of justice than the UK and is considering further measures including signing us up to a Europe-wide DNA database.

On top of all this, the confrontation between David Cameron and other EU leaders over Juncker’s appointment has severely diluted the very limited reserves of goodwill left towards our country in Brussels. While there have been some conciliatory remarks by other perceived “reformers” like Sweden’s Prime Minister Fredrik Reinfeldt, it would require the support of a majority of Heads of State to allow a special relationship for the UK within the EU and the recent leaked tapes of conversations between senior ministerial figures in the Polish government illustrate just how hard it will be to secure such a majority. Then there is the European Parliament, where the main centre-right and socialist groups have closed ranks to ensure their Eurosceptic colleagues are kept at bay. The arch-federalist Martin Schulz has been reappointed President of the European Parliament, a man who is no friend of this country and whose past form suggests he will prove a formidable obstacle to any serious return of sovereignty to the UK.

Following his debates with UKIP’s leader Nigel Farage in which he came off second best, Nick Clegg admitted that he had been foolish to say that in ten years’ time, the EU would be “about the same” but for once, he was telling the truth. There will be no substantive renegotiation. The long march to ever-closer unity will carry on regardless. Wolfgang Schäuble, the German Finance minister claimed that we in the UK “don’t actually want that much. {we} want some flexibility” but his definition of “not that much” or indeed David Cameron’s may prove rather wide of the aspirations of the UK electorate. Ultimately, we have only two choices – staying on board shouting from the sidelines as the doom-laden EU edges ever closer to the rocks or leaving the fools to their folly.

The Euro – Dividing Europe, destroying lives

John Harrison
A Speech by John Harrison FCA, FCCA, Honorary Treasurer of The Campaign for an Independent Britain in Derby, 11th July 2014

Introduction

The European project was always a political project. The economic side was the cover for gradually creating a single European state. On one of the rare occasions when he spoke the truth about it, Sir Edward Heath said “The project was and is political. The means were and are economic”. People were deliberately misled by the deceitful use of the term “The Common Market” into thinking that we were entering a simple trade agreement.

I’d like to refer to a couple of passages that I found when reading Stanley Knight’s “History of the Great European War” which is a contemporary account as the title suggests of the First World War, which I thought was appropriate in this year, the centenary of the outbreak of the war. In the first volume Knight describes “Pan-Germanisation” He says:

“The expression Pan-Germanisation is equivalent to All-Germanisation or Germany Everywhere. It is the title of, and also well summarises, a movement in Germany which is at once a doctrine, a policy, and a faith. One might almost term it a Political Religion.”

He describes how economic growth in Germany gave rise for the necessity for it to extend its boundaries and that it should acquire adequate seaports. Knight describes the German plans to take into its territory Denmark, Holland, parts of France, the Austro-Hungarian Empire, the Balkans and Turkey. He goes on to say that Germany sees Britain as its greatest and most formidable obstacle and describes how Britain has defended the weaker European States from those who would consume them into a single European State.

I’d like to read another section from page 45 of the First Volume:

“Apart from war, therefore, the only means available to a State to attain its ends is by diplomatic efforts, such, for example, that of ‘peaceful penetration’; and what is that but the ordinary case of the stronger nation taking advantage of the weaker, of might resolving itself into right? The stronger State constructs and develops the railways, public works and natural resources of the weaker State, peoples that State’s territories with its commercial and other agents and eventually with its police and even its soldiers, lends money to the smaller State and to its traders, takes more than adequate security and waits and perhaps works for default, and then, like the most unscrupulous of moneylenders, seizes and occupies the territories of the weaker State as the result of its ‘peaceful penetration’ operations.”

As Winston Churchill quoted “Those who fail to learn from history are doomed to repeat it
Now I’m not suggesting what we are seeing in Europe is merely Pan-Germanisation. Indeed it might be better termed Pan-Europeanisation as Germany is allied to others but I do see it as disheartening that the United Kingdom that defended the smaller European states in the past is now an active member of the project.

Monetary Policy

The 18 countries of the Eurozone have agreed to co-ordinate their affairs increasingly into a single, economic government which has a permanent majority of votes in the EU. If the euro survives those 18 Eurozone countries will be able to dictate the policy of the whole EU to the 10 states which still retain their own currencies.

They have agreed to abolish what little remaining democracy they have as individual states in order to try to save the Euro currency. Britain is now a permanent, second class member of the EU and can be outvoted at any time on any economic issue and indeed any other issue.

When the Euro was launched, there was a supposedly unbreakable rule that no Euro country would ever be made responsible for the debts of another.  However due to the imminent collapse of the Euro the European Stability Mechanism, (ESM) was set up the Euro countries agreed irrevocably and unconditionally to pay any capital demanded of an unlimited account within seven days of it being asked, and the ESM also has power to borrow unlimited sums from others in the names of its members, who have the legal responsibility to repay the loans.

Those ESM treaty gives the institution (of the same name) “full legal capacity to institute legal proceedings” but:

“The property, funding and assets of the ESM shall, wherever located and by whomsoever held, be immune from search, requisition, confiscation, expropriation or any other form of seizure, taking or foreclosure by executive, judicial, administrative or legislative action. The archives of the ESM and all documents belonging to the ESM or held by it, shall be inviolable.

The Members or former Members of the Board of Governors and of the Board of Directors and any other persons who work or have worked for or in connection with the ESM shall not disclose information that is subject to professional secrecy. They shall be required, even after their duties have ceased, not to disclose information of the kind covered by the obligation of professional secrecy.

In the interest of the ESM, the Chairperson of the Board of Governors, Governors, alternate Governors, Directors, alternate Directors, as well as the Managing Director and other staff members shall be immune from legal proceedings with respect to acts performed by them in their official capacity and shall enjoy inviolability in respect of their official papers and documents.”

So it is a law which can never be changed. It is literally a super-state agency above the law and, whilst we are not in the Eurozone, that same anti-democratic government is part of our government whilst we remain in the EU. We have no prospects of having a vote or even a say in its decision making. Indeed as its meetings are held in secret and its members sworn to secrecy we have no means of discovering the nature of its deliberations.

Fiscal Policy

The attempted creation of a single economic government amongst Eurozone members with the active support of HM Government and the impending change in EU voting procedures will give that Eurozone group permanent outright control of all major EU decisions, provide the backdrop against which the independence struggle and any referendum campaign will take place.

A tax on financial transactions is mooted. This is expanded from the original idea of the Tobin tax which applied only to spot currency deals. As 70% of the EU’s financial transactions take place in London this particular policy will affect the UK much more than other EU countries.

If the euro recovers, then regardless of opt outs and derogations, Eurozone countries will have the power to impose this tax which is particularly directed at London. A British government committed to staying within the EU would have no choice but to accept it.

In practice it would be an added dealing cost which would be passed on to buyers of shares, bonds and currencies such as the pension funds that you rely on to provide your income in retirement. It would also discriminate against currency transfers between Eurozone and non-Eurozone countries within the EU, giving extra financial pressure for joining the euro.

The EU has long aimed to acquire rights of tax raising without the need to go through the parliamentary processes for contributions from member states. This is called “own resources” and already exists to some extent in customs duties on goods entering the EU from non-EU countries. With the reduction of customs tariffs worldwide as a result of WTO agreements, this is not as fruitful a source of funding as it used to be so the EU is looking to this ‘Tobin tax’ so that it can raise money from member states, in this case the UK, without the possibility of democratically elected governments having the power to vote against it.

Exchange Rates

By locking incompatible economies onto the same currency, the existence of the euro is making worse a mess which already existed. It began in the Seventies at about the time Britain joined the EEC and was triggered by President Nixon’s decision to take the US dollar off the gold standard.

Under the Bretton Woods system which stabilised the post war currency system, the major currencies were pegged within a small range of variation to the dollar, which was pegged to gold. Every so often, adjustments were made. Britain had to devalue on several occasions because of balance of payments difficulties.

Incidentally, one of the objectives of the Bretton Woods agreement was to give Germany and Japan favourable terms to enable them to rebuild following the devastation to their economies caused by the Second World War. Under the Marshall Plan substantial loans were made available to the European allies to help them rebuild their shattered industries and it would not have been politically acceptable to provide the same resources to Germany and Japan.

Instead they were given exchange rates which were fixed at a level below which the true level would have been in order to create favourable economic circumstances to facilitate their recovery.
After the Bretton Woods agreement ended Germany has had the policy of doing everything that it can to peg the value its currency to the level of the other EU countries, its main trading partners, with the objective of maintaining the trading advantage that the Bretton Woods agreement gave to Germany. This has been pursued ever since with total disregard for the disaster that it inflicts upon other countries.

Some of you will remember the ‘snake’ which was the first attempt to co-ordinate the values of the European currencies. The value of any currency was only allowed to vary by limited amounts within the average values of all of the currencies. This failed, of course for reasons that I will come to later, neat to the end of this speech.Then we had the infamous Exchange Rate Mechanism which was to be the forerunner of the single currency which failed for the same reason. Now we have the Euro which itself is doomed to fail and is causing untold misery in southern Europe, but still maintains Germany’s trading advantage over its neighbours and indeed the rest of the world.

The Monetary Mess

When the dollar came off the gold standard it was decided that currency exchange rates would “float” and go up and down against each other according to market circumstances. Freed from the restrictions of the Bretton Woods system, British and other governments relaxed controls on credit, allowing the banks to become the de facto issuers of currency.

The privately owned banks used to have the right to issue bank notes. The government realised that printing bank notes can lead to inflation so it passed the Bank Charter Act of 1844 which prohibited them from doing that and gave the sole power to the Bank of England to issue bank notes.

That worked fine until the advent of computers when banks became empowered to issue currency again. The liquidity ratios allowed them to lend £8 for every £1 they held in deposits. So if you deposited £1 in your account, they could lend me £8. I could then pay that to you to buy your vastly inflated produce and you pay it into your account. They have now got another £8 on which they can lend me £64 and so it goes on. This is how the banks have built up bigger assets/liabilities on their balance sheets than entire GDP of the countries in which they are domiciled.

Governments have been happy to turn a blind eye to this ballooning catastrophe because – guess who borrows the most money? Got it in one! The governments themselves! That is why Gordon Brown was so desperate to get the banks lending again in 2008.

But shouldn’t this vast increase in money supply have increased inflation over the last twenty years? Of course it should have, but the monetary effect was negated by the massive importation of cheap goods from the Far East. In other words China postponed the impending doom approaching the Western world. Though is now starting to manifest itself in rapidly rising house prices.

But back to the banks. What happens when the loans they made go sour? Well, first point, due to a change in accounting regulations they only have to report bad debts when insolvency proceedings commence – unlike the rest of us who have to write off as soon as we suspect the debt is bad. So the banks can and do keep bad debts on their balance sheets. Ultimately, of course, those companies go under. As the average lending ratios are now 33:1 instead of the 8:1 I mentioned earlier, it only requires bad debts of 3% of their total assets to wipe out their capital entirely, and most banks are in that situation.

So what happens then? First, the loss is sustained by the bank’s shareholders, then they borrow on the inter-bank market and lastly the government’s unwritten guarantee comes into play to protect the nation’s savers as ours did with Northern Rock, Royal Bank of Scotland et al. So the banks got into trouble because they had lent too much, largely to governments, and under Gordon Brown’s “Save the World” strategy, the governments took all the debt back onto their own balance sheets.Now you have the problem where the sovereign states are buckling under the amount of debt they are carrying. So the solution is for the European Central Bank to create £2,000 billion of extra cash to bail out the governments.

But wait a minute! Who are the unwritten guarantors these new £2,000 billion of debts? Well, actually they are those very same sovereign governments which are insolvent anyway. It will probably have the same effect as throwing a tanker load of petrol onto a fire to try to dowse it. Stand well back, if you can!

The Divisive Effect on the People of Europe

The euro has done terrible things to the economies of Europe. Portugal, Italy, Ireland, Greece and Spain (PIIGS) have seen their economies ruined – particularly Greece where there is utter misery.
The EU believes that a one size economy fits all but that can’t possibly be true in any region unless it is what Bernard Connelly describes as an Optimal Currency Area. This is an area which, inter alia, has free movement of people and capital, interest rates which are equally relevant for all and an external exchange rate which is equally beneficial or harmful to everybody in the currency area.
Language and cultural differences restrict the free movement of people and while individual States are responsible for their own sovereign debt (which unofficially includes their banks’ debts) there will never be total free movement of capital because of the risk of bad debt faced by the lenders.

It is certainly the case that a common interest rate cannot be good for all, neither can a common exchange rate. They have to be set for the benefit of the largest economy in the region and it would be stupid to do anything else. So Ireland, which needed to increase interest rates to curb increasing house prices had to halve their interest rates instead which eventually caused economic disaster.
When a country gets into severe financial difficulty it will approach the IMF for a loan and agree policies to get itself out of difficulty. These usually include reducing the fiscal deficit by increasing taxes and cutting spending, reducing interest rates to stimulate its economy, and devaluing its currency to make its exports more attractive. Together these three steps soon show improvement.

The PIIGS need a reduced exchange rate to promote their trade but they are stuck with the same rate as Germany, who incidentally, carries out a lot of its trade with other EU countries so having a permanently fixed exchange rate works very well for it.

Their interest rate is set by the European Central Bank so they cannot vary that. The only economic tool they gave left is fiscal policy, increasing taxes and cutting state spending, often known as ‘austerity’.
Greece is in a much worse position today than it was in 2010 when these austerity measures were adopted. The public debt grew as a percentage of GDP from148% to 175% in 2013 (paradoxically, as government spending counts as part of GDP, reducing government spending increases the percentage of debt to GDP)- the very thing they are trying to reduce.

Unemployment in Greece rose from 15.3% to 27.3% and over 60% of young people are unemployed. Suicides increased by 45%. Poverty is on the increase. One in three Greeks now lives below the poverty line and some people are actually going hungry. Spain has more than one in four people unemployed and 70% of young people unemployed.

Because the Greek National Health Service has been plundered of funds, many drugs are not available and health care standards have dropped enormously. The mortality rate of young children has risen by 40% as part of the ‘austerity’ intended maintain the integrity of the euro currency. It is quite true to say that Greek babies are dying now because of the need to cut public spending to save the euro.

Greece has no chance of ever recovering whilst within the Euro and even if it did, the people would find that every profitable business and public utility will have been sold off to foreigners in a vain attempt to pay off the so-called “bail out” funds which are being piled onto their indebtedness.

Where you have a deficit on your income account it has to be met from your capital account – reducing savings, increasing borrowings or selling off assets. This what our government describes as ‘inward foreign investment’ which they say is a good thing. In reality it is the sale of water and energy utilities, high value houses and businesses to foreigners to raise the money to pay for our trading deficit with the EU. More of the Orwellian double speak used to hide the truth.

Remember what I said right at the beginning about the methods used under pan-Germanisation.

Why the Euro Currency doesn’t work and can’t work

Before deciding whether the UK should join the Euro, the then Chancellor of the Exchequer, Gordon Brown, drew up five economic tests which the UK must pass before joining. They were economic harmonisation, flexibility and the effects on investment, financial services and growth and jobs

However, the tests were superfluous. They ignored the one defining test that was of far greater significance than all the rest put together – the one thing that doomed the Euro to failure from the start.
That was the growth of Unit Labour Costs throughout the Eurozone. Without that being the same everywhere, high levels of unemployment were bound to occur and that is what we are seeing in Portugal, Italy, Greece and Spain already.

Let me explain what I mean about Unit Labour Costs. Simply put, it is the labour cost of producing one item of something. Let us say in a very simple economy you employ me to produce glass tumblers. You pay me £10 per hour and I produce ten tumblers per hour. The unit labour cost is £1 per tumbler.
In another country, let’s say they produce salt cellars. There they pay the workers 10 euros per hour and produce 10 salt cellars per hour. The unit labour cost of one salt cellar is 1 euro.
So in this simple example, the terms of trade are equal and £1 equals 1 euro.
If my wages were increased to £11 per hour and my output remained at 10 tumblers per hour, the unit labour cost is now £1.10 each. If our neighbours increased their wages to 11 euros per hour and their output to 11 salt cellars, their unit cost remained at 1 euro per unit.

The terms of trade are now against us. More £s leave our banks than the euros that are coming in because we now sell less of our product.

Under the laws of supply and demand, the exchange rate of our currency would fall by 10% bringing the terms of trade back into balance and the trade carries on as before.
This is how countries like ours for decades have been able to increase the wages to our workers faster than their output has increased. The £ fell from a value of about $4 to the £ in the 1950s to about $1.70 now.

Unit labour cost is a calculated from the wages paid and productivity, but productivity itself, among other things, is dependent on the amount of capital investment in each worker – and of climate. Capital, because if you have been given a new machine and I am producing solely by hand, you will produce a lot more than I would. Climate because it is much easier to work in the fairly temperate North of Europe than it is in the hot South, where it is often too hot to work in the afternoon.

For a single currency area to work, unit labour costs have to increase at the same rate in each country all of the time – but that is impossible.

Assuming that the European Commission can do nothing to change the climate, though it does seem to be trying very hard to do so, I’ll concentrate on capital.

The amount of capital invested per worker would have to be the same in every country and increase at the same rate so there would have to be an ABSOLUTELY MASSIVE transfer of capital from the industrialised Northern countries to the most impoverished Southern and Eastern ones.

It had never occurred to me until now that the European Commission would deal with this in an altogether different way- moving large numbers of people from South to North and East to West.
So what will be the effect of unit labour prices rising faster in some countries than in others? Quite simply it will be loss of exports and jobs in the poorer performing ones, which is what we have seen in recent years.
Unemployment rises, the government’s tax receipts fall because there are fewer people in work. Welfare spending goes up because there are more unemployed people and – all of a sudden – the government has to borrow large sums of money to keep going and, in its turn, eventually faces bankruptcy.

The solution to the problem for an independent state, as Argentina did a few years ago, is to default on its debts, reduce interest rates and devalue its currency. These three things were done together and the economy goes through a dramatic recovery. Unfortunately these solutions are not available to the countries in the Eurozone.
Instead the European Commission has imposed austerity measures on the Southern European states, putting up taxes and reducing government spending which actually makes the situation worse by creating more unemployment.

Incredibly, to try to bring labour costs down, they are actually reducing the wages paid to workers. Even, if by some miracle, this reduction in wages brought them back to parity with Northern Europe, it would be a fleeting solution only, as in the very next day unit labour costs would change by different amounts in different countries and we would be back on the same path to disaster again.

If Portugal, Italy, Greece and Spain had kept their own currencies, they would have been able to devalue them over the years, allowing them to remain solvent. Instead the EU’s great vanity project, the Euro, has been imposed on them and maintained at extraordinary costs to their own peoples.

It is a truism that the glue that holds together democracy in a country in which people with diametrically opposite is the certain fact that if I don’t like the way you are running the country and I can persuade enough of my fellow citizens that your way is wrong and my way is right we can vote you out of office and impose policies that are more agreeable to us.

But once you take away the peoples’ power to change their way of government through the ballot box they will eventually resort to non-democratic means to achieve the same ends.

It always brings a lump to my throat when I hear the Swiss sing Edelweiss on the French “La Marseillaise”. Europeans want to be free. The Euro has taken their freedom away.

Lessons from Singapore

While David Cameron’s cabinet reshuffle has resulted a a foreign secretary who is somewhat more eurosceptic than his predecessor, it is still very unlikely that, in the event of a Conservative victory in next year’s General Election, the Prime Minister will advocate withdrawal from the EU in any referendum. No doubt any minor concessions will be touted as a major victory and we will be encouraged to vote to stay in.

But supposed we don’t?

The history of a nation which reluctantly gained independence from a federation almost 50 years ago offers us great encouragement. Singapore joined the Federation of Malaysia in 1963. Its leaders felt at the time that the historical and economic ties between Singapore and the former British colony of Malaya were too strong for them to continue as separate nations. They had campaigned vigorously for a merger, but having achieved their goal, the union only lasted two years. Following tensions between Singapore and the other Malay states over economic issues and violent clashes between ethnic Malays and ethnic Chinese in Singapore itself, Singapore was expelled from the Malaysian Federation in 1965. Singapore’s Prime Minister, Lee Kuan Yew was devastated. “For me, it is a moment of anguish”, he said. “All my life, my whole adult life, I have believed in merger and unity of the two territories.” However, since 1965 Singapore has never looked back. It has comprehensively out-performed Malaysia, with an economy which has grown by an average of 9% per annum. By 1990, it had become the second wealthiest nation in Asia after Japan.

If tiny Singapore can not only survive as an independent nation but out-perform its larger neighbour, surely the UK, which is one of the world’s ten largest economies, is well-equipped to do likewise.

Lord Who??

Never heard of him. Who is he? This would have been most people’s reaction to the news that David Cameron has nominated Lord Jonathan Hill as the next UK Commissioner. In other member states, candidates include former foreign ministers, finance ministers and even prime ministers – figures very much in the public eye. For the second time in a row, we are sending a nonentity, for Lord Hill is following in the footsteps of the equally obscure Baroness Ashton. Still, it does represent a change of policy from the days when the post of European Commissioner was seen as a dumping ground – a way of removing embarrassing failures like Neil Kinnock or Peter Mandelson from the domestic political scene.

Of course, it was always going to be too much to hope that, following his stand against Jean-Claude Juncker, David Cameron was going to pick a committed eurosceptic for the post. How about Lord Lawson? He is, after all, in the same party as the Prime Minister and he would have had great fun with the energy portfolio. Sadly, even allowing for his advancing years, he probably wouldn’t have wanted the job anyway. The eurosceptic former environment secretary Owen Patterson was tipped in some sections of the media as being in the frame. Unfortunately, having been sacked from the cabinet, he was never going to be in with a chance.

Coming down to earth, much as one would have wished for a eurosceptic to put the cat among the pigeons in the Commission, it was never going to happen. Even if David Cameron had wanted to do so, the European Parliament has the power of veto and having blocked Italy’s nominee Rocco Buttiglione 10 years ago merely for his support for traditional marriage, the likelihood of a convinced eurosceptic surviving a mauling from the federalist rottweilers in the EPP and socialist groups would have been precisely zero. Furthermore, could a eurosceptic take the Commissioner’s oath with a clear conscience? Could anyone who supports the sovereignty of the nation state say “I do solemnly undertake: to be completely independent in the performance of my duties, in the general interest of the Communities; in the performance of these duties, neither to seek nor to take instructions from any government or from any other body”?

So we were inevitably going to end up sending a europhile to Brussels. I say “we” but, of course, we, the electorate, never had a say. We never chose this man and unquestionable wouldn’t have chosen him if we had a choice. The whole procedure for selecting Commissioners epitomises the democratic deficit at the heart of the EU

So who is Lord Hill anyway? He doesn’t have a particularly long entry in Wikipedia, suggesting he hasn’t made much of a splash politically so far. He worked as a special advisor to Kenneth Clarke and then served as a political advisor to John Major in 1992-4, the years of the Maastricht rebellion and its aftermath. He was appointed leader of the Conservatives in the House of Lords by David Cameron 18 months ago. Not much else of relevance in Wikipedia and a search on the internet to find out more about him didn’t come out with very much. Unsurprisingly, given his links with Ken Clarke, he is a supporter of our EU membership. “I..believe that the UK’s interests are best served by playing a leading role in the EU,” he is quoted as saying. He claimed that one of the Commission’s challenges would be “how to strengthen public support in many countries for the European Union.”

Well, if that it is desire, the very fact that he has been shoe-horned into his post without any popular mandate will hardly endear either the EU or the man himself to his fellow-countrymen. If any further confirmation that Lord Hill is bad news, surely his endorsement by Nick Clegg is sufficient:- “Lord Hill’s experience and the respect he commands across all parties makes him the right candidate to be the UK’s next European Commissioner.”

Lord Hill said, “In five years’ time, when the next European elections take place, I want to be able to say to people across Europe – including Britain – that the European Commission has heeded their concerns and changed the EU for the better.” Some hope. Let us hope that by the time those elections take place, we are on our way out and this nonentity is out of a job.

The Eurozone crisis is far from over

Three years ago, it looked like Greece would have to leave the Euro. The country was bust and had to be bailed out by the European Central Bank (ECB), the International Monetary Fund and the European Commission (the so-called “Troika”) as no one wanted to loan such a profligate state any more money. Of course, the country should never have been allowed to join the Single Currency in the first place. The books were cooked to hide the huge debt burden the government owed even back in 2000. One of the culprits was Lucas Papademos, the governor of the Central Bank at the time. He was later installed as Greek Prime Minister without any ballot after the incumbent, George Papandreou, incurred the wrath of Brussels by threatening to put the Troika’s tough bailout proposals to a referendum and was forced to resign.

The governments in Spain and Ireland had not been guilty of such profligacy, but the Eurozone interest rates in the years before the Great Recession of 2007 were too low for their housing markets, creating an unsustainable boom that turned into bust. Also vulnerable were Portugal and Italy. Portugal in particular had been struggling because some of its most important exports, such as textiles, were being undercut by cheap goods from Asia. With both countries being tied to the Euro straitjacket, they were unable to respond in their time-honoured manner – devaluing their currencies. (Remember how many lire you used to get to the pound on those Tuscan holidays?)

However, although the Eurozone wobbled for a while and its break-up was prophesied by a number of respectable economists, it became apparent that the various EU institutions were prepared to go to quite extreme lengths to ensure no country withdrew from the Single Currency. One particularly significant moment in the crisis was a speech in London in July 2012 by Mario Draghi, the ECB governor, who promised to do “whatever it takes” to keep the Eurozone together. In the weeks following this speech, Draghi didn’t actually do very much, but his words calmed the markets and borrowing costs for the Spanish and Italian governments started to fall from levels widely regarded as unsustainable. Last year, even the Greek government was able to return to the money markets after recording a “primary surplus” (greater tax revenue than expenditure excluding borrowing costs) for the first time in years.

So it’s all rosy in the Eurozone garden now? Not quite. The price paid by countries who have required a bailout has been very high. In order to balance their books, the governments of Spain, Italy and Greece have been forced to slash their expenditure. While the number of public sector employees in Greece in particular has been too high and their pensions too generous, the scale and the rapidity of the cuts has resulted in a series of strikes and a sharp rise in unemployment. In Greece, over one quarter of the entire workforce has been out of work for almost two years, with youth unemployment remaining stubbornly above 50% in spite of many young people leaving the country to find work elsewhere. Two years ago, one third of business in central Athens had closed because of the downturn. The unemployment figures in Spain are equally dire. Over half the young people are out of work here too and there is very little sign of things improving.

Although no one is talking about bailouts, government finances are facing increasing pressure because of low or, in some cases, negative inflation. While very low inflation is good news for consumers, governments rely on inflation to pay their bills. If you are a government which has borrowed a hundred thousand euros over a 10-year period, it helps if prices and wages go up because, thanks to a bigger tax take, you receive more money to help pay off your debt by the end of the loan period. If prices are actually falling, as they are in Greece, Cyprus and Portugal, people defer buying big-ticket items in the hope that they will become cheaper. Besides this being bad for governments, it does not help manufacturers either, as they suffer a fall in orders.

Then there is the problem with some Eurozone banks – particularly but not exclusively those located in the Mediterranean countries. The precedent set by the bail-out of banks in Cyprus, where savers had to take a hit, means that any hint of insolvency will cause a run on the bank in question. Portugal’s Banco Espirito Santo rattled the markets last week, and this is unlikely to be a one-off incident. In November this year “stress testing” of over 100 Eurozone banking groups by the ECB due to start. In order to ensure that their assets meet the necessary criteria and do not offer the slightest hint of insolvency, banks are tidying up their balance sheets and keeping well clear of any loans with an element of risk. This, of course, is hardly a healthy environment for businesses seeking to borrow money to finance expansion. , and the recent problems with Portugal’s Banco Espirito santo .

Added together, these developments have resulted in a climate of stagnation in much of the Eurozone. The stock of both consumer credit and mortgage loans across the 18-nation single currency area are decreasing and manufacturing in several countries is also in decline. France’s industrial production shrank by 1.7% in May compared to April while Italy’s fell by 1.2%. It is widely believed that the Italian Prime Minister Matteo Renzi dropped his opposition to the nomination of Jean-Claude Juncker as President of the European Commission in exchange for an agreement to relax the austerity policies demanded by Germany as his government struggles to balance its books.

So far, these ongoing troubles in the Eurozone have been kept out of the headlines. However, Anthony Couglan’s recent report on Ireland (See link here ) which captures the sombre mood of a country which has been widely touted as “the poster-child for austerity”, illustrates what is rumbling beneath the surface. The Irish, like the Spanish, Portugese and Greeks, have made heroic sacrifices to keep the Single Currency afloat. But if another spark causes a renewed eruption of this still-ongoing crisis, how much more will they be prepared to take?