Bill Emmott - International Author & Adviser

Article

The Times
Get them singing to our single market tune - December 19th 2011

“My centre is giving way, my right is in retreat; situation excellent, I shall attack.” Those reported words of Marshal Ferdinand Foch during a rather different European conflict in 1918 might not exactly summarise the feelings of David Cameron following his disastrous/brilliantly successful European summit on December 9th, but he could and should take inspiration from them. Britain has a fine chance to climb on a white charger and go into the attack, on Europe.

            No one can yet know whether our “isolation” is going to prove irrelevant, just Euro-business as usual, or will lead to a damaging marginalisation. It all depends on what happens to the euro, obviously, and whether the bleak midwinter of all our western economies turns into a new ice age or a reviving spring.

            Yet two things are clear, already. One is that, given the febrile nature of Britain’s Eurosceptic politics and public opinion, signing up to a treaty would have necessitated a referendum, which would almost certainly have been lost, meaning that Britain would have scuppered the treaty eventually anyway. That was the political logic. The second clear point, however, is that the economic logic upon which Mr Cameron stood aside was bizarre, in a way that damages any sense that Britain offers economic or even moral inspiration to others.

            The economic logic was bizarre because the “stability union” proposed by Germany for this treaty could have come straight from the Cameron-Osborne songbook. Don’t we think that budget deficits and public debts need to be reduced and held down, amid a long-term framework that convinces investors we mean business?

            To reject that, because of a refusal to make concessions to us on financial regulation, the area that most Europeans (including Brits) blame for the mess we are all in, was truly weird. Whatever the merits of those concessions and of the proposed new regulations, this was not the place or time in which to argue about them. Doing so made Britain look unprincipled, which is not how we like to see ourselves.

            The row about perfidious Albion, and about the equally unprincipled attacks by the governor of the Bank of France, Christian Noyer, on Britain’s AAA credit rating, will probably blow over soon enough, helped by the Christmas break. But that still leaves Britain in an unseemly position. Fortunately, there is still a chance to turn seemly, even to show an inspiring form of British leadership within the dear old European Union.

            That chance comes from another page of the Cameron-Osborne songbook. They have led us to believe that they are in favour of deregulation, of competition, of liberalising markets whenever possible and desirable in the interests of promoting higher productivity, innovation and the Holy Grail, economic growth. This is also, supposedly, what Germany and other grumpy northern European creditors want to be done by southern European debtors such as Italy, Greece, Spain and Portugal.

            Italy, you may well have noticed, no longer has a Bunga-Bunga prime minister but rather a sober, professorial former European competition commissioner called Mario Monti. During his time in Brussels in the 1990s, he became known as “super-Mario” for his tough pro-competition stance, though some American businesses who suffered from his toughness thought he might be better likened to Saddam Hussein.

            The mood in Italy, from where this column is in fact being written, is a mixture of relief, anger and foreboding. Relief at the end of Silvio Berlusconi’s government, anger at the budget cuts and tax rises Mr Monti’s new government has already imposed, and foreboding about the pro-competition reforms that he says are on the way. Like cuts, you see, competition is all very well as long as it is imposed on someone else.

            As luck would have it, last year Mr Monti, while in his previous guise as an economics professor and distinguished former public servant, wrote a report for the European Commission on how to deepen and indeed complete the European single market that Margaret Thatcher’s nomination as European commissioner, Lord Cockfield, launched as long ago as 1985. That report, essentially a paean to liberalisation, to opening up markets in services, telecoms, e-commerce and other modern sectors, as well as to facilitating further open trade in goods, has since been gathering dust.

            So there is Britain’s chance. Call the German bluff about liberalisation. Gather together supporters from among the central European and Nordic member states, who are traditionally more liberal than the others. Above all, make a friend of Mr Monti, who is about the most liberal Italian prime minister there is ever likely to be, but needs a spot of help in convincing his own countrymen. How? By championing the Monti report, and leading a new vigorous push to bring good Thatcherite liberalisation to Europe’s sclerotic over-protected, corporatist economies.

            That really would be the way to “save” Europe, and even the euro. It would show that great missing ingredient, genuinely far-sighted and principled leadership from Britain. It would put Germany’s Angela Merkel on the spot, not to mention France’s Nicolas Sarkozy: how could they oppose something so perfectly matched to what Europe is supposed to be about? The old scare stories about competition from Polish plumbers if service markets were opened would be shown up as hypocritical humbug.

            It would also, ahem, be in Britain’s economic interest. Not that that is the reason for being principled, for riding a white charger, you understand. But open trade, especially in services, helps us. We happen to be pretty good at services, and so could thrive if the Monti proposals for, say, a pan-European telecommunications market or EU-wide online broadcasting, or easier e-commerce, were to come about.

            Britain already does well in its trade with the euro area. This is often described as if it is a dependency, but a better way to see it is as a sign of success but also of bargaining power and influence. An excellent report by David Marsh, chairman of a think-tank for central banks called OMFIF, called “Inconvenient euro-truths” pointed out this week that Britain is actually the euro-zone’s biggest trading partner, with 187.4 billion euros of trade in 2010, just ahead of China and well ahead of America. In a liberal Europe, that could increase even more. Situation excellent: let’s attack.


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