Chasing a sinking ship.

| | Comments (4)
eurodesign.JPGVince Cable is apparently bouncing the Liberals into a more sceptical position on the Euro. 

First, it's tactical, of course, being the Liberals: " is a ship that has sailed out of the harbour. There is no point in jumping into the sea and swimming after it." 

Second, it's a slightly vague recognition of the problems the Euro has caused a number of European economies: "There are various things that we have learnt about euroland, and about the eurozone, which are clearly problems that need to be resolved." 

Consider the problems the MPC have each month here - do they cut rates to try and kick-start the housing market, or do they raise them to try and bring inflation back within Brown's targets? For five months they've been stuck in these headlights, and have kept interest rates steady at 5%.

Now imagine trying to set one interest rate across a continent with varying inflation rates, and varying economic conditions. For example, Spain's inflation is at 5%, Italy's at 4.1% (same link), while the Dutch are at 3.25%. Simultaneously, the Guardian reports that Latvia's house prices have fallen 24.1% over the last year, Germany's have gone down 6.9% over the last two years, while in Spain, France and Greece they're still rising at a little over 3%.

How on earth should the European Central Bank reconcile all that? How would you feel if you lived in Latvia, and interest rates were set to suit Germany, or vice versa? Where's the democratic oversight? (Note: Latvia are part of European Monetary Union but have not yet adopted the single currency, but their currency is pegged to the Euro).

Anyway, if the Liberals do come round to the flaws in monetary union, this would leave the only British party wishing to subscribe to a Europe-wide interest rate as... the SNP. I've never understood their argument that we shouldn't let London make our economic decisions for us, but instead they should be taken in Frankfurt. 

To quote an SNP press release: "With distant London in charge, Scotland will just keep on slipping further behind." Isn't Frankfurt even more distant?

In that same release, the Nats cite Iceland, Ireland and Norway as the so-called "arc of prosperity". They're an interesting experimental lab, actually. Ireland's on the Euro, while Iceland and Norway are out of the EU altogether. Personally, I'll take the latter model, but let's see what happens.

Footnote: there are plenty of Greens who believe in the single currency, including many here in Scotland. For some, it's a key symbolic part of being pro-European. Personally, though, I am comfortable being utterly pro-European but against monetary union, as per the party policy, set in an internal referendum in 2001, which reads as follows:

"The Scottish Green Party believes that governments should be free to set their own levels of taxation, public spending and public borrowing in areas that only affect their own country. We consider that European Monetary Union will undermine local and regional economies and that it takes no account of environmental or social criteria. It is run by a collection of bankers subject to no effective democratic control, but able to override democratic decisions made by member states. We therefore oppose Scottish membership of the Euro."


Estonia still has the kroon but the ultra-right wing Friedmanite politicians who dominate things here are determined that Estonia will join the Euro by 2011. It was meant to be last year but, er, the conditions weren't right. Not sure how they're going to be right by 2011 to be honest, as there are more houses for sale in Tallinn alone than there are in the whole of Sweden and there are widespread predictions of economic meltdown in the autumn to come, here.

Oh, apparently the best way to control an economic crisis is to put up taxes steeply. So, gas and alcohol taxes are set to rocket in the next year. Straight from the book of Friedman himself. It;s the inflation rate rather than people that matter.

My vierws on the euro have completely changed from five years ago. I suppose I'm much closer to your position now- very pro cultural and social integration, very against monetary union driven by an increasingly obvious global corporate agenda.

Norway isn't in the EU. It still has to pay for it though.

For personal travel convenience the Euro is wonderful, but I think the main thing for Scotland is to break the hobbling monetary link with London.

Thanks, I just updated to sort out my mistake.


The attempt to shift the Liberals to become more Euro-sceptic is for one reason only (the very same one for which they've just voted for big tax cuts paid for by "efficiencies" - heard that before somewhere?). Most of their MPs face their biggest danger from the Tories, so have to attract their supporters to avoid anihilation.

Yes, I'm a pro-Euro Green. Why? . . .
Adjusting interest rates to 'fix' economic problems works only in the short term and so is a convenient political tool to create artificial booms which future governments are left to clean up when inflation eventually catches up (e.g. people used to complain that Scotland's interest rates should have been lower than SE England's, but it is now recognised to have resulted in a more robust economy without the big drop in house prices up here. A currency is a means of barter, no more no less (no-one would reinvent separate currencies if we were to start from scratch).

And I do object to giving banks 5% commission every time I want to go abroad.

Leave a comment

Your Links At Last


Other Politics



Friends and Stuff I Like

If I've forgotten to link to you, let me know. If I don't want to link to your blog I'll pretend I never got your email.

The party's site of which I am rather proud

Along with Jeff (formerly SNP Tactical Voting) and Malc (formerly In The Burgh), I now co-edit Better Nation, a group blog. Stuff will still appear here, but more will be there. Better Nation

Post History

This page was published on September 14, 2008 9:31 AM.

Robin to hand over leadership. was the previous entry in this blog.

Revenge of Iron Claw. is the next entry in this blog.