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With metronomic predictability, David Cameron is paralysed by the issue that all but destroyed his predecessors. This time the question of Britain's role in Europe is not a political game, a subject for the constitutional anoraks. The livelihoods of millions are at stake. Yet the narrative is depressingly the same. Britain stands on the sidelines, carping and snorting, pleading to be involved and yet refusing to engage constructively.
The Prime Minister's awkward day trip to Berlin last week was reminiscent of John Major, diplomacy only just masking mutual disdain and the UK's less-than-blissful isolation. As in Major's time, as with the string of hapless Conservative leaders while Labour was in power, Cameron is unable to break the stranglehold of his party's Eurosceptics at Westminster. So strong has the hostility to Brussels grown, he is unlikely to expend any capital trying. He fears he cannot win and, to a certain extent, he agrees with them. The best he can do is to channel their venom towards the Continent in order to blame the Germans and French for the UK's economic woes.
The issue is putting considerable strain on the Coalition, but Nick Clegg is treading warily. The polyglot Deputy Prime Minister reads the tabloids and sees the opinion polls. A week ago, Douglas Alexander, the shadow Foreign Secretary, made clear that Labour is as sceptical now as the Tories. This is one area where there is no benefit in seeking ideological definition. There are no votes any more in extolling the European "project".
What exercises senior officials in Whitehall is not the rights and the wrongs of Cameron's EU strategy. It is worse than that. There is growing concern that the Prime Minister does not have a strategy - beyond taking rhetorical pot shots at other European governments.
The curiosity is why Cameron and Angela Merkel have fallen out so badly. They have much in common. They are pragmatic conservatives; they are suspicious of the French (the German Chancellor initially couldn't abide Nicolas Sarkozy); they are cautious about public spending; they are austerity junkies. They could have formed an alliance of sorts. The Germans were ready to listen to the British, even though they were outside the euro.
Instead, at every twist and turn of the currency crisis over the past year, rather than working with the Germans behind the scenes, the Brits chose to grandstand in public. Many of the concerns about Merkel's position are legitimate.
She was slow to respond at the beginning. She has failed to show strong leadership. Her dogged refusal in recent weeks to allow the European Central Bank (ECB) to intervene, to support the euro, has bordered on the obsessive. The cracks in the German position - desperate for the euro to survive but unwilling to help the newly contrite and previously spendthrift Greeks - were open for all to see.
At the start of the crisis, during the first Greek bailout, the British still had influence. But they wasted it by indulging in schadenfreude. How right we were not to have taken part in that flight of fancy, monetary union, ministers proclaimed. Even though the Government knows how badly the UK will suffer if the euro fails, no assistance - financial or otherwise - was offered. No wonder, after a few months, we were told to mind our own business.
It is the tone more than the substance that has so irked the Europeans. After all, Britain has little to gloat about. Our economy has consistently underperformed those at the heart of the euro, including the French and the Dutch. As for the Germans, do we really have anything to tell them when it comes to long-term economic thinking, research and development, training and - shock, horror - their ability to make things that people the world over want to buy? When the British extol the need to trade beyond the European Union, who has invariably made the most inroads into the BRIC countries - Brazil, Russia, India and China? Yes, the Germans.
The area of greatest tension, both within the EU and in Whitehall, is Britain's reliance on financial services. Cameron's rejection of a tax on the banks, the so-called Tobin Tax, is an act of desperation. On one level he is right to say that such a punitive measure would play into the hands of New York, Dubai, Shanghai and other financial centres, but he has done nothing to seek a global consensus. The unpalatable truth is that the UK relies to an unhealthy degree on a sector that acted so recklessly, and could do so again.
Cameron has little choice but to defend the banks (his likening of the Tobin Tax to a tax on French cheese was particularly crass) because they are pretty much all we've got. But it goes beyond necessity. What particularly concerns the Lib-Dems is that a man whose only experience outside politics was to spin for major corporations instinctively sees Britain's economic crisis as cyclical rather than structural. In his mind, once the banks have been restored to health, all will be fine, hence his resistance to any move against them from Europe.
The British position is mainly defensive - to ensure that any change in European treaties does not apply to us; to press for the ECB to do more to support ailing economies, while ensuring that the UK does not pay a single penny more, and to stop any moves on the City. It is also confused and contradictory - to accept deeper fiscal and economic integration of the 17-member eurozone in order to stabilise the single currency, while demanding that powers be repatriated from Brussels.
Most of all, the strategy is shallow and counter-productive. One of the paradoxes of an economic crisis caused by the greed of the banks is that it is politicians of the Right and economic austerity who now run Europe's chancelleries. Joining the French and the Germans, the Spanish last night opted for a new Right-wing leader in Mariano Rajoy. The political alignment in Europe could scarcely be more propitious for Britain's Conservatives - if only they realised.
John Kampfner is the author of Blair's Wars and Freedom For Sale
Reader views (10)
@mat the hopple - cameron can create 'what if' scenarios and look at the options AND then decide; at least he'll look as if he knows whats going on, anyway what business experience could prepare anyone for whats been happening, and the banks are still in control, but in severe debt (they could advise T Cook)
Havent you noticed , other than greece, how all the euro countries appear to be equal, through using the common currency.
Anyone know how that balances out - at least when there used to be individual currencies which generally reflected any particular country's value, you could get an idea how they were doing.
At present serious decline seems to just appear
as a recent turn of events whereas in reality a particular country was in a bad trading situation for some time and couldnt deal/settle/or even face upto the debts.
To me this has been the whole joke of the eu, but as we all know politics took over, trade took a lesser place to most and the leader germany plus hangers-on
continued waving the flag (when it suited).
The oddball, us , missed the rise, paid plenty of taxes, and now appear to be riding out the euro breakdown/maybe its demise (only if it costs germany too much).
Seems to me that this is presenting cameron a good chance at getting uk sorted/or on right road.
Its too late to deal with banks but not to get some tougher rules/controls for them and he can look good too!
- steve rudds, bromley kent, 22/11/2011 19:42
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dear little englanders,
here is what to do:
support the banks that screwed us all over ..
hold on to the only thing this country still has, namely finance (which by the way does not give a toss about queen or country) ..
oh, and don't forget to wave the flag in celebration of the royal newlyweds announcing that an heir will be born ..
meanwhile, our country is falling behind on every scale that defines decency and quality in life (both private and social) .. just check the stats ..
good luck
- blah blah, london, 22/11/2011 01:36
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Cobblers Kamfner.
- Anglo, The Heart of England, 21/11/2011 20:29
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Mr Kampfner. So many abjectives; paralysed, carping, snorting, disdain, venom and so on.
I suppose when you havn't got much to go on you do need to dress it up like a pantomime dame in Aladdin that would make Christopher Biggins wince.
The foundation of this seems to taken from the Brits commenting that just as well they didn't join the Euro. By this you try to make out that the leaders Merkel and Sarkozy are such shy retiring sensitive types that they are emotionally wounded, I say emotionally because ofcourse Sarkozy joined in the NATO strikes to blast some nasty regime types to pieces. Are these the same sensitive fairies that laid into Britains reliance on banking after the 2008? I think they are a bi tougher than you make out.
They want non Euro countries to bail out the Euro through a tax on pension funds and savings. Mr Kampfner, I think they may be the baddie in Alladdin, afterall, why don't they go ahead and implement the Financial Transaction Tax on the 17 eurozone countries?? Saying they can't because the UK who is not in the eurozone is a ruse (a bit of an untruth, baddies do that).
- John, London, 21/11/2011 18:59
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Thimms is wrong comparing the proposed FTT with what took place in Sweden, then they acted alone now it owuld be a backed by the Eurozone. Quite honestly having been initially against any tax on transactions its becoming increasing clear that far too many are nothing more than computer generated for the underlying benefit of the banks alone and directly, High Frequency Trading (HFT) serves absolutely no purpose at all.
The killer is that the vast majority of tradling in London is HFT based. And if some of it went to the USA or Hong Kong so what. The one thing about HFT is that there will be buckets of trade so long as you can continue to split the second. The wiiners are as I said the banks and the Stock Exchange (LSE) where it charges clearing fees against every transaction.
Is it helping liquidity, technically yes but against what, the LSE is a private company and has turned London into something that is not doing any longer what it ought to do.
Perhaps if banks looked at all sized businesses and jhelped raise money for them across the board, they would mop up in fees, perhaps start to get a better reputation and make the issue of the FTT irrelevant as less HFT trading would generate less tax.
Where Kampfner is right is that Cameron is inexperienced in business and only knows a bit about spin. We are now seeing that thsi is not helping but damaging UK plc.
- Robert Marshall, London, 21/11/2011 16:04
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On the contrary the Europeans should be told to mind their own business and let people have referendums and abide by the result
- Jesus, London, 21/11/2011 14:50
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Mat the Hopple, London, 21/11/2011 13:33 - I wholeheartedly agree! The only way out of this mess is for the British people to take things into their own hands and vote UKIP next time around. When we are free once more we will also bring freedom to the rest of Europe because the whole rotten edifice will collapse.
- John, Battersea, 21/11/2011 13:50
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"Cameron's rejection of a tax on the banks, the so-called Tobin Tax, is an act of desperation." Sounds like an intelligent act. Swedish Finance Minister Anders Borg constantly warns that a six year experiment with FTT in Sweden saw implementation and collection costs alone out-run revenues, not even subtracting substantial revenue losses from lower GDP. The EU Commission's Impact Assessment reveals trillions in lost net revenue over a few decades.
- Thimms, USA, 21/11/2011 13:41
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"Cameron's rejection of a tax on the banks, the so-called Tobin Tax, is an act of desperation." Swedish Finance Minister Anders Borg constantly warns that a six year experiment with FTT in Sweden saw implementation and collection costs alone out-run revenues, not even subtracting substantial revenue losses from lower GDP.
- Thimms, USA, 21/11/2011 13:41
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Typical nonsense fromthe New Labour (ex New Statesman editor) and europhile Kamfner. His weak grasp on what is actually happening with the death of the Euro and EU and it's effect on global economics is displayed in his complete failure to understand what is occuring now. The UK is not in the Euro so what can Cameron do? Even those at the heart of the disastrous Euro experiment - France and Germany - can't agree and haven't the faintest idea how to resolve the crisis. Less of this turgid nonsense please.
- Mat the Hopple, London, 21/11/2011 13:33
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