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Keir Hardie's Cat

europe

I believe that along with others, I share some trepidation about the imbalance between what the UK contributes to the EU budget and what we receive back in direct payments.

However I recognise that we need in turn to balance that against being a member of the biggest market in the world and the benefits that this offers to all sectors of the UK economy.

David Cameron has often spoke of the need to build the manufacturing sector (the trade unions have been arguing for this for three decades) to rebalance the over reliance on financial services. However, his decision to veto the recent proposed treaty has been heralded to protect our financial sector, but this may be to the detriment of manufacturing and the service industries.

Why do I say this?

Quite simply, I believe that multinational companies are ruthless by nature and faced with a choice of continuing to invest in the UK or one of the other 27 countries in the EU they will consider which countries have the greatest opportunity to exert influence within the EU. It is patently obvious that Cameron seriously damaged the UK’s ability to wield influence by playing the ‘one trick’ veto to appease the eurosceptics within his own party.

No doubt the multinationals will also be casting a watchful eye over the right wing of the Tory party who appear to have their minds set on leaving the EU. Whilst I have my own concerns about how the EU is managed, I do ask myself, given that this ‘fractious rump’ is dictating an exit policy to Cameron, will the multinationals see the UK as a sound place to invest their money whilst this influence prevails?

 

The Eurozone crisis is increasingly in the news.

Many commentators are making comment upon it. Most (with the glowing exception of Ed Balls) are simply parroting the Coalition line on the matter.

Most therefore are saying that austerity cuts are fine, and let's have more austerity cuts for those overspending non-taxpaying Greeks. A few are saying let them go bust (and implicitly let the Greek people become semi-destitute).

What few are saying, as I said with the honourable exception of Ed Balls, is that austerity cuts are not working and this is the source of the problem

Let’s take Greece. Greek governmental debt is not a great problem at 89% of Gross Domestic Product (think of a mortgage). The Greek deficit, which is growing governmental debt, is.

The Greek austerity cuts (in wages, pensions, services, economy) are the problem. They have increased the deficit since their introduction (and we are now on round 3) because they lead to unemployment, depressed living standard, lack of domestic demand, loss of tax base and therefore growth in deficit.

And the austerity cuts don’t deal with the huge tax avoidance in Greece (as in other countries) by their very rich and denial of contribution to public purse and deficit resolution.

Nor with the massive private debt of private companies (which typically are 4 to 5 times governmental debt).

Then the financial markets, and remember how short term and mad they are (in 2002 they said the California sub-prime mortgage debt was of triple A rating) say Greek debt is unsustainable (it’s growing but is not unsustainable) and raise interest rates on government borrowings.

It’s the same elsewhere. Spain, Italy, Portugal etc. The UK as well, as we well know. Austerity cuts are not working (and also why should ordinary people pay for the excesses of the bankers and world traders and their debt crisis).

Hence the crisis - a combination of austerity cuts not working and financial markets with short term goals (and addicted to high level of returns and presently no loaning desire).

What we need in the euro zone (and the UK etc) is:

  1. A stabilisation package to stop collapse (we will be hurt by collapse as well).
  2. Some flexibility in the euro zone (it is true countries’ economies work at different speeds and have different national problems, so no flexibility is a problem, but what flexibility means is also a problem)
  3. A pan Europe approach to curtailing tax avoidance by the very rich and recovering for the public purse.
  4. Some kind of financial market control (the Rubin or Robin Hood tax to prevent excessive trading) to avoid financial markets short termism and panic. Also some strategy to deal with the massive private debt and debt ratios which are in part driving the financial markets fears.

These are a few first comments. To be a bit trite (but true) we need a people's Europe (and UK) not an austerity cut Europe.

 
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