blutto said:
...an interesting read on Britain's response to the Euro financial crisis...and yeah it is The Guardian, but others, whose opinion I respect ( for whatever that is worth ) have said more or less the same thing...
http://www.guardian.co.uk/business/2011/dec/12/britain-ruled-by-banks
blutto
Note: this is also posted on the Brits and EU thread
I'm an archetypal Guardian reader, but as I had a flight a couple of days ago and due to the veto, I thought it might be interesting to get the Torygraph's (Telegraph's) view on this. I'll mention a couple of commentaries, one that had my palm racing towards my pace (an opposite reaction to the comments from the paper's website) and one which was interesting (this in a future post though).
Janet Daley - Pity those still trapped in the euro nightmare
http://www.telegraph.co.uk/finance/f...nightmare.html
A lot of the first paragraph is hyperbole and rhetoric. The second half attacks the EU policy on taxation (which implies a much higher level of influence of the EU on national taxation policy than there is and calls for the "poorer" countries to devalue. I'd say that the arguments are those used by "little Englanders", but Daley is originally from the US.
Firstly, regarding taxation in the US, yes the individual states do have their own powers to set indirect taxes. She then comments
"If Ireland, for example, is forced to give up its lower rate of corporation tax (because the EU regards that as an “unfair” competitive advantage), it will lose the capacity that it might have had to recover under its own steam."
OK, she is not stating that this is happening or will happen, but within the context of the article, she is implying very strongly that the EU has such power over taxation policy in the member states. However, there has been no pressure on the Irish government to change the rate of corporate tax. In reality, Ireland has to balance its budget (for its own sake), the rules are there to ensure just this and not to say how Ireland should balance its budget.
After this she states
Without being able to devalue their currencies, or to slash their taxes in order to attract investment and commercial activity, the poor countries of Europe will be locked permanently into disadvantage and dependence. They will be forced to accept austerity programmes while being deprived of any of the fiscal mechanisms for improving their own economic condition. And if they behave in what the EU decides are incorrigibly delinquent ways, they may even have their elected governments replaced – so the democratic mechanisms for political change will go, too.
I now live in a country (I'm just in Austria for a while) which was definitely poor by European standards on accessing the EU. The EU certainly hasn't locked Ireland into disadvantage and dependence. True, at present the economy is presently in a bad state, but hardly anyone in Ireland would think seriously about leaving the EU or the Eurozone. Also, the recession hit Ireland hard due to the culture of borrowing, speculation and corruption in the banks (the last two factors arguably being much more acute than in the UK). As for the possibility of leaving the Euro and devaluation that, as I argued recently, is a pipedream. There are two possibilities:
1. The most likely in my opinion. Irish debts would still have to be paid in Euro. Thanks to devaluation, our savings would disappear and our debts will grow hugely in terms of the new currency, i.e. recession big-time.
2. Irish debts would be transferred to the new currency. In the short term, this would would Ireland less hard, but as happened to Argentina, Ireland would become a pariah in international trade.
Times are tough now, but looking at the history of the EU as a whole, it has been a positive influence.
Also, if governments do behave in "incorrigibly delinquent ways" they will be replaced. Not by the EU, but by the electorate. I'll admit that EU democracy is far from ideal, but her allusions to Soviet domination are simply sensational. Berlusconi wasn't replaced by the EU (OK not directly by the electorate, but there certainly a lot of pressure from that quarter).