Norman Lamont: he told us so too
Norman Lamont, the former Chancellor, has written an excellent article about the euro crisis in the New Statesman. Both parts of that sentence are surprising, so I shall quote some of it to prove my point:
The crisis in the eurozone represents a threat to our economy and, indeed, that of the world. One commentator* compared the Chancellor’s task to that of a doctor treating a patient on board the Titanic.
Lamont’s “I told you so” is unusually self-effacing:
My mind went back to the House of Commons debate in 1993 when, as an ex-chancellor newly arrived on the bank benches, I asked John Major … whether one could have a single currency without a single government.
The Prime Minister gave a convoluted, evasive answer, and in the wind-up, Foreign Secretary Douglas Hurd was highly scornful. I was furious and unwisely rushed into the Labour lobby, voting against the government. I hadn’t given much consideration to what I was doing. But the papers were explicit the next day: I had committed a not very elegant political suicide, some suggested I was drunk, and many backbenchers cold-shouldered me. It was a difficult moment.
He recalls the stubborn selfishness of the Germans in 1992 (photograph, above), refusing to help Britain out of its problems with the exchange rate mechanism, but implies that they were right to do so, and that they are right to be equally inflexible now.
The same single-mindedness has been in evidence in the euro crisis. The Germans want the euro to survive, but they are not prepared to depart one iota from the rigorous discipline that has served them well. I don’t blame them and am not surprised.
His analysis is clear to the point of acerbic:
Denial has been a constant theme of the crisis. A few weeks ago, a Greek default could never happen and the break-up of the eurozone was both impossible and unthinkable. We also had the suggestion from Michel Barnier, the European commissioner for internal markets, that credit agencies should be banned from expressing views on European Union economies. It is extraordinary that we have an EU Charter of Fundamental Rights that enshrines freedom of speech but, in Barnier’s mind, this does not extend to credit agencies simply doing their job …
Now all the talk is of fiscal union. But the Germans do not mean what we mean by fiscal union. We tend to think of a common treasury, a single finance minister and a common tax system. The Germans mean more rules, more restrictions, more external supervision of national budgets. That is unlikely to work.
The German approach seems to be that each country that is in difficulty should deflate for long enough to become competitive with Germany and to put its public finances on a sound footing. However, given the dire state in some of these countries, I question whether that is sustainable. The eurozone threatens to asphyxiate its members.
*That was Roger Bootle, in the Telegraph.
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