Eurozone break up will be a disaster for jobs, growth and the environment


‘Eurozone on the brink’ screams the latest headline; and indeed, as the eurozone (EZ) lurches from one crisis to the next, the whole structure seems increasingly imperilled by its lack of political cohesion, writes George Irvin

British Tories may wring their hands in glee, but the demise of the euro cannot but lead to the unravelling of the whole integration project, with disastrous consequences for a unified approach to jobs, growth and the environment.

Britain-in-the-European-Union-2011
Let the same British Eurosceptics reflect on two simple facts: first, there is little respect in Europe for the imperious and arrogant British – the image of Nigel Farage’s antics in the European Parliament are not easily effaced.

Secondly, as much as Britain may criticise the euro’s construction, our own economy is not exactly thriving. Not only is Britain stagnating, but its social infrastructure is crumbling while its wealth and income inequalities grow.

But back to Europe, which uniquely for Brits means ‘Continental’ Europe.  The single most worrisome manifestation of the EZ’s predicament is the near-total marginalisation of the European Commission and European Parliament in the context of the crisis. Instead, it is the national politicians – Angela Merkel, Nicolas Sakozy et al. – who have made all the running.

What could be more indicative of a ‘democratic deficit’ than the fact Europe’s elected MEPs have become invisible.

There is a paradox here. Europe cannot go back to what it was before the crisis, nor can it tread water – but neither can a large EZ economy run by squabbling small-minded politicians from 17 countries thrive. Even George Osborne admits full fiscal integration is the way forward; ‘un gouvernement économique européen’ to use the jargon.

Such a form of governance would need far more powerful political institutions including quite possibly a directly elected President. Equally, the legitimacy of a far more centralised EZ would depend on its delivering – nay, on being seen to deliver – secure jobs, higher incomes and common social services.

Take pensions: although a strengthened EZ cannot take over the entire pension system given current productivity differentials, it could deliver a basic citizen’s pension, a payment which would guarantee a subsistence minimum for all its retired citizens financed by a Robin Hood tax.

The principle is clear: if the EZ is to prosper politically, it must deliver tangible benefits. The young French and Dutch voters who voted against the European Constitution in 2005 were not generally anti-European; they merely wanted a more social Europe.

Whatever the free-market fundamentalists may say, greater social cohesion/social justice lies at the very heart of the European project. To deliver a genuinely social Europe, a new social contract is needed. Democratic governance is not about national politicians fighting for their narrow interests by drawing red lines – still less about 17 national parliaments agreeing to each line of some new regulation – it is about a genuinely European political debate over our common interests.

Only when this lesson becomes clear to all can we overcome the sort of gridlock we see today.

See also:

Farage should check his own funds before accusing others of being in it for the moneyAlex Hern, October 24th 2011

While the Tories squabble over EU membership what’s the future for the euro?Ben Fox, October 21st 2011

Judgement day approaches for the eurozoneBen Fox, September 28th 2011

The euro lurches towards the abyss – but does the Left have a Plan B?Ann Pettifor, September 14th 2011

Progressive politics and the purple peril: The rise of UKIPRobert Ford and Matthew Goodwin, April 17th 2011

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  • http://www.timworstall.com Tim Worstall

    “Take pensions: although a strengthened EZ cannot take over the entire pension system given current productivity differentials, it could deliver a basic citizen’s pension, a payment which would guarantee a subsistence minimum for all its retired citizens financed by a Robin Hood tax.”

    You what?

    Pensioners are about 20% of the UK population, take that number to be true for all of Europe. So, 100 million out of 500 million people.

    A basic citizen’s pension. £100 a week? 100 million times £100 is £10 billion a week. Some £500 billion, or half a trillion, a year.

    And, umm, you think you can fund that with a Robin Hood Tax? The EU thinks they might be able to get €50 billion a year out of the RHT (this is before falls in income from other taxes driven by the RHT shrinking the economy which they themselves note).

    You’re £450 billion short aren’t you? Either that or the “basic pension” needs to be £10 a week.

    I know the economics at SOAS is a bit squiffy but I did think you were up on arithmetic.

  • Rob the crip

    The RHT would help it’s not going to pay for all pension payments is it.

    My worry is the expanding EU with much poorer countries who we are told will want billions to help fund their growth, we are now letting in countries who are basically in a mess Romania, Lithuania, then you have Italy who has a leader who is lets be honest a bloody moron, you have Greece who spent well above it’s limits like the UK, wars at all cost who pays for it.

    Germany are now saying point blank no more money, and they are now talking about a safety fund of 2 trillion to save Greece and Italy, but save them for what.

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  • Andrew Campbell

    “neither can a large EZ economy run by squabbling small-minded politicians from 17 countries thrive”
    Nor will it thrive when run by squabbling small-minded politicians from the EU parliament, but they’ll be even less chance of the people of Europe booting them out.

    “if the EZ is to prosper politically, it must deliver tangible benefits”
    Your example being to tax more and give that money to some of the population, minus the bureaucrats’ cut of course.

    What you’re basically asking for is one monopolistic government covering all of the EU. Monopolies don’t provide good value in the private sector, what makes you think they do in the public sector?

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  • Ed’s Talking Balls

    ‘there is little respect in Europe for the imperious and arrogant British’

    And there’s no respect in Britain for the imperious and arrogant continental Europeans (and deeply misguided Europhiles who set up a single currency which even Gordon Brown could see would be a disaster).

  • Sensible Man

    Farage is not liked in Brussels as he tells the truth about the structural problems of the EU which the Germans and french, as architects of the project hate to hear. How many millions of lives of ordinary europeans in Spain, Greece, Portugal and Ireland will be sacrificed in the name of this “european project” dreamed up by socialist politicians who have no experience of even basic economics. The EU is the biggest threat to european peace and stability since WW2

  • Sensible Man

    Farage is not liked in Brussels as he tells the truth about the structural problems of the EU which the Germans and french, as architects of the project hate to hear. How many millions of lives of ordinary europeans in Spain, Greece, Portugal and Ireland will be sacrificed in the name of this “european project” dreamed up by socialist politicians who have no experience of even basic economics. The EU is the biggest threat to european peace and stability since WW2

  • Sensible Man

    The headline of the article predicting an economic disaster in the event of a euro breakup and yet it has no relevance to the article itself?

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