Archiv für Juni 2011

Eurozone Threat to Political Order

Donnerstag, 30. Juni 2011

Further to our Euro Debate : That Britain should join the Eurozone (refer Categories/ Chairmans Blog/ Federal EU/ Euro Debate in the right-hand index column), Charles Moore writing in the Daily Telegraph Saturday 25 June, sees Britain as the political outsider, essentially proven right now that the dangers of the Euro as a one-size-fits-all currency have come to pass. He thinks this very outsider status also gives Britain little chance of influencing the current Eurozone crisis now threatening the political order in Europe. There will, therefore, be no new post-crisis agenda that Britain can change.
Since in theory existing treaties forbid bail-outs of Eurozone members, the very nature of the continuing Greek bailouts (currently the second one) is helping to bring about further European integration e.g. Euro-enthusiasts losing patience with the difficulties of extracting bail-out money from national governments, are proposing more pan-European taxes instead. The government debts of the weaker Eurozone members are being transferred from banks and other creditors to the European taxpayer. Dogmatic EU leaders are saying ? like the failed Communist ideology of the former Soviet Union ? if Europe is not working, it is because we do not have enough European integration.
However, fear and boredom are currently letting these European leaders get away with it. EU boredom works well in the UK for example with 400,000 people marching through London in protest at proposed government cuts of £6.2 billion, yet Britain has committed twice this amount to the Euro bail-outs with no one taking to the streets in protest. Fear similarly holds the angry populations of the Eurozone in check. The people of Greece do not like the austerity measures imposed on them (as they see it) by the European Central Bank (ECB), but they know that if they left the Eurozone the value of their savings would halve. Therefore, Greece will pretend to do what is demanded by the ECB, and Eurozone leaders will claim that everything is under control, until the next crisis.
The Germans are angry as well since they do not like subsidizing the profligacy of Greece, Ireland and Portugal etc. but they also do not want to lose the competitive exchange rate of the Euro, the respectability of being good Europeans or the problems of their own banks to be exposed. So Chancellor Merkel agrees to the bail-outs but only on terms so perversely punitive that they cannot work and, therefore, will guarantee e.g. a third Greek crisis.
The question is whether boredom or fear will continue to outweigh the anger of the European people. When influential people make other people poor while they remain rich, the political order can start to crumble. Charles Moore concludes that although the Euro was ill-conceived, we should not wish for its demise. There is some logic in a common currency for large parts of mostly northern Europe and only misery for many if the Eurozone falls apart. However, to be seemingly proven right as a Eurosceptic brings no power for Britain over how events in the Eurozone will evolve. Certainly, the endorsement of the Euro by the Chinese Prime Minister during his recent visit to the UK brings powerful support for the continuing viability of the Eurozone.

Euro Debate: That Britain should join the Eurozone

Donnerstag, 23. Juni 2011

As previously advised (refer to Categories/Chairmans Blog/ Federal EU/ EU & Euro Survey in the right-hand index column) on 20th June, the British Conservatives in Paris (BCiP) held a lively and stimulating debate chaired by Paul Thomson on the motion that Britain should join the Euro.
Given the current financial crisis facing the Eurozone, the dice seemed already loaded against the opening speaker Gregor Dallas who, however, proposed the motion in feisty style. He spoke of the Euro and the UK as being an enormously emotive issue steeped in politics that lots of people preferred to avoid talking about, including some members of the Conservative party. Yet some 60% of our exports go to the European Union of which two-thirds are to Eurozone countries. The political aspects can be traced back to the aftermath of the Second World War and the ambitious ideal to maintain the peace through the stabilizing influence of trading links developed within a single European market. Today this presents Britain with a market of around half a billion people, a major part using a single currency, and to compare this with the US our largest, single trading partner, the latter represents only 16% of our exports.
He elaborated that the single European market acts to stamp out the extremes of nationalism on the far right and socialism on the far left, with terms such as economic sovereignty or national sovereignty essentially blown out of the water by the collapse of the Bretton Woods system in 1971. Prior to that in November 1967 we had The Pound (£) in your pocket of PM Harold Wilson when the Pound was devalued by 14.3% and which seemed to change nothing for anybody living within Britain. However, Britain lost the trust of its important trading partners not only in 1967 but also in 1949 and after flotation in 1971. Now we have floating exchange rates and so-called hot money speculating on the highest return currencies and there is still no major improvement in exports for the UK.
Of course given the current financial crisis in the Eurozone, Germany is concerned about the so-called Club Med-countries but the Euro is a German invention and it tracks the former Deutschmark. It would be a disaster if Greece was forced to quit the Eurozone but in fact no such exit plan exists. There is no way back for national currencies, all members of the Eurozone want it to work and it is significant that China has already adopted it as a reserve currency. The UK must, therefore, join the Eurozone because it brings a strong, stable currency for a 21st century economy.
Michael Webster who opposed the motion saw the current economic situation as making it impossible for the UK to join the Eurozone. The Eurozone is also too dominated by Germany with e.g. the French economy suffering as a result. The market economy of the UK is completely the opposite of the dirigisme found on the Continent of Europe. In referring to the effect of interest rates and exchanges rates, he saw the need of the German economy for low interest rates as leading to cheap money and the resulting economic ruin of Eurozone countries such as Ireland, Portugal and Greece. At least the UK can only blame itself for the results of its own economic policies. Now Germany wants higher interest rates with its economy booming and this leads to the euro being overvalued in the money markets. As far as exchange rates are concerned, the UK has essentially devalued the Pound (£) in order to improve export trade, whereas its imports from Portugal have been reduced by some 50% due to the strength of the Euro.
A Swedish government minister has been quoted as saying that a reason for its successful economy is that it is not a member of the Eurozone. Indeed, the financial situation in the Eurozone is so bad that Greece will never be able to pay its debts, with e.g. ?45 billion owed to German banks and ?65 billion to French banks all under threat of default. Britain has already taken steps to withdraw some ?12 billion in bonds from the Eurozone as one step in trying to avoid the Greek debacle. Sterling is, therefore, still rated AAA in the financial markets by the rating agencies while the current credit rating of France is under threat, and French manufacturers are trying to relocate their production sites to lower cost countries. There is no possibility of the UK joining the Eurozone.
Seconding the proposer of the motion, Robin Baker quoted two traditional views of the Conservative party as 1) a belief in sound money and 2) a natural distrust of governments which manipulate the affairs of the country for their own, short-term electoral advantage. Sound money acts to counter the cancerous effects of inflation on the economy, with governments as major borrowers taking benefit from the effects of inflation, by being able to pay back their debts to lenders in devalued currency. The current UK inflation rate of 4.5 % would double prices in 16 years if left unchecked, whereas within the Eurozone France has inflation of only 2.0 %, Germany 2.3 % and even Italy only 2.6 %. The Eurozone, therefore, shows the benefit of taking the power to devalue away from national governments and also being able to dampen the effects of inflation through sound money.
Being able to devalue has also not helped the UK to grow relative to the 27 states in the European Union (EU). In 2002, the UK economy represented 17.2 % of the EU but by 2009 this had fallen to 13.3 %, while the share of the 16 Eurozone countries had increased by more than 2 %. During 2010, growth in Eurozone GDP was 30 % greater than that of the UK, and currently France is growing at twice our rate and Germany three times. Devaluation also does not seem to have helped our exports. In 2010, the Eurozone had a balance of payments deficit of ?30 billion but the deficit of the UK was 30 % worse for an economy only one sixth of the total Eurozone. From 2002 ? 2009 our share of total EU exports fell from 12.8 % to 10.4 % while total Eurozone world market share increased, our intra ? EU share also having fallen from 9.6 % to 6.4 %.
Our exporters suffer the commercial disadvantage of not sharing the same currency as 40 % of their customers and are forced to price higher to offset adverse currency movements or ask the customer to take the risk. In short, without the security of sound money and no benefits to growth in our economy or trade in being able to devalue compared with our European partners, Britain should join the Eurozone.
To close the formal part of the debate and confessing to being no economist, Evelyn Joslain the seconder of the opposition to the motion, chose to speak more passionately on behalf of the people of Europe in asking why the Brits would want to drop the Pound (£) for the Euro. The Euro is dying; you need to look more at defending what is left of your sovereignty and the problem of your soaring deficit is more pressing. She asked the audience to consider the success of countries outside the Eurozone such as Switzerland and Sweden which are doing much better. Germany is also very unhappy with what has become of its Deutschmark in the guise of the Euro and is faced instead with a Greek tragedy. Behind the Eurozone lies more European integration ? before it was to avoid war but now it has gone too far. We must avoid the excuses of the former Soviet Union that it only failed because the correct ideological measures were not sufficiently applied.
The Euro is a favourite of the currency speculators to short and coupled with excessive welfare payments and bail-outs is a recipe for disaster. It is easy to get into the Eurozone but hard to get out and there could also be a two-tier system between the north and the south. The Euro was forced on the population of Europe in an undemocratic way and the people are being ignored in a march towards a centralized super state. On the 100th anniversary of the Titanic, it is appropriate that the UK should reject the disaster of the euro.
The comments from the floor which followed the formal part of the debate touched on the emotional (all we have left is the Pound and our Royal family), lack of proper financial rigour (Germany & France were the first to press for relaxation of the 3 % limit on budget deficits), lack of transparency (surely they must have known what was happening in Greece?), a disaster for Europe if the Eurozone collapses, it is more a question of political will to hold Europe together than a financial problem, the euro is now one of the most important currencies but failure of the political cycle matched by failure of the financial cycle has changed the Euro, the Eurozone has steadily abdicated its responsibilities since its launch, as Conservatives we must balance ideology against pragmatism and now is not the right time to join and if the UK had been allowed into the EU earlier, it could have had more influence but it is too late now.
A vote was taken and the motion was defeated with 5 votes for but 15 votes against.

British Expatriate Voting Rights

Montag, 20. Juni 2011

Those of us British expatriates who have been non-resident in the UK for more than 15 years are thereby denied the right to vote in our country of origin, even though we might remain British citizens and the UK our country of domicile for tax purposes.
There is now more encouragement for those who still value this basic human right to vote, however, from the launch of a new website www.votes-for-expat-brits.com in support of a campaign to enable all British expatriates to be able to participate fully in the political process in their home country, by giving them unrestricted voting rights in national elections.
Click on the above link to browse through the issues of the legal position, how other countries treat the voting rights of their expatriates, the view of the European institutions concerned, British parliamentary discussions on voting rights, media buzz about denying British expats the right to vote and how two concerned British expatriates – James Preston and Harry Shindler – have legal cases on their voting rights before the courts.
All you then have to do on the website is to add your vote to an on-line poll to show your support for this campaign.

National Health Service (NHS) Reform Setback

Donnerstag, 16. Juni 2011

So the Coalition government has had to step back from its proposed reforms for the NHS, having considered it best to accept the recommendations of its independent commission. This has the benefit of keeping the Liberal Democrats happy and saves the face of Nick Clegg their leader and Deputy Prime Minister. The main concessions then appear to be to:
? Limit competition from the private sector.
? Involve hospital doctors and nurses together with the original General Practitioners (GPs) on commissioning panels for care and managing the associated budget.
? Have no fixed deadlines for implementation of changes.
The government is spinning the outcome as positive saying that health professionals are now back on board (where they should have been before launching the initially proposed reforms of course!) with the proposed changes having the support of patients and professional bodies, as well as back-bench Tory and Liberal Democrat MPs. The legislation is said to have been improved by such scrutiny with the Liberal Democrats claiming a lot of the credit, despite the Coalition only trying to build on what the previous Labour government had started to try and do i.e. to involve the private sector to meet demand over and above what the public sector could support.
One Liberal Democrat back-bencher commented that their efforts had mitigated the effects of untrammelled competition and if local communities did not want competition, they would now be able to call their local health commissioner to account. However, other feedback from the medical profession saw it as now more like a dog?s breakfast!
After all this we are now left with the situation as Nick Robinson the political correspondent of the BBC put it, if the general public did not know before how the NHS worked, they certainly do not understand now:
? how the NHS would have worked with the originally proposed reforms or
? how the NHS will now work in the future with these changes.
If the general public does not understand the problem of the NHS, it becomes an almost impossible task to convince.
The main issue seems to be a broad public unease about profit-making by the private sector in the provision of public services and this includes the Liberal Democrat partners in the governing Coalition, with Nick Clegg calling on Monitor, the health regulator, to promote collaboration among providers rather than competition. However, the UK is unusual among rich democracies in how little private involvement there is in public service provision with e.g. only 4% of acute-care beds provided by private companies. Given that the German economy is held up as a successful example and driver for the European Union of Member States, it is instructive that (according to The Economist of 21st May, 2011) the proportion of for-profit hospitals at 32% already exceeds the 31% of publicly-run ones, with the rest operated by charities and voluntary organisations.
It is ironic that the original idea of putting the care budget of the NHS in the hands of GPs (such family doctors being private operators since the foundation of the NHS in 1947), was aimed at reducing the high cost item in the NHS budget of hospital care by their also finding lower-cost solutions sometimes only involving primary care and not always hospital beds e.g. for elderly patients.

EU and Eurozone Membership Survey

Freitag, 10. Juni 2011

On 20th June we are having an internal debate on whether the UK should join the eurozone.
We are, therefore, interested in the opinion of visitors to our website who are concerned by this issue and other such issues impacting the UK as a Member State of the European Union (EU).
Your participation would be much appreciated in our on-line survey.

NHS Funding Crisis.

Donnerstag, 2. Juni 2011

The National Health Service is facing a £20 billion-a-year funding black hole that will threaten its founding principles unless the Coalition?s controversial reforms are brought in to prevent it, the Health Secretary Andrew Lansley has warned in the Daily Telegraph of 2nd June.This is a sobering message but is anyone listening?
Perhaps Minette Marrin writing in the Sunday Times (minette.marrin@sundaytimes.co.uk) has it right when commenting on what she describes as the horrifying findings of the Care Quality Commission report of last week, on the frequent abusive neglect rather than care of old people in National Health Service (NHS) hospitals. She thinks that the British public has got the NHS it deserves and sees it as the fault of the British voter and the British medico-political establishment.
As the current impasse between the government and entrenched interests within the NHS indicates, reform of the NHS seems almost politically impossible due to what Ms Marrin considers the inflexible, deeply held, quasi-religious beliefs of the public about the NHS. Nigel Lawson, a former (Conservative) Chancellor of the Exchequer, is widely quoted as having once said that the NHS was the religion of the British people, which perhaps explains why Tony Blair, a former (Labour) Prime Minister has said he believed in the NHS. David Cameron, the current (Conservative) Prime Minister in the Coalition government has also said that he believes in the NHS.
However, as Ms Marrin sees it, religion can be dangerous when based only on faith and not taking due account of evidence. On one side then we have the main article of faith of the NHS quasi-religious belief system that all medical care ought to be run as a state monopoly. At the other so-called right-wing extreme, it is argued that nothing should be run by the state. In between, there are for example the health systems of France and Germany where medical care is rated better. Perhaps as Ms Marrin suggests, the lack of constructive critics or whistleblowers among NHS employees is because there is largely only one health employer in the UK i.e. the NHS.