Holland and Hollande; they’re the non-identical twins that are causing palpitations across Europe today. Holland, because the country’s Prime Minister yesterday resigned after failing to agree a package of cuts for his country’s budget. Hollande, because he’s the socialist candidate set to win the presidential election in France, probably eroding that country’s commitment to fiscal consolidation in the process. The markets quivered in fear at this morning’s headlines — and what they mean for the eurozone — even if they have, in some parts, slightly recovered since.
It’s all another reminder that the Eurocrisis just isn’t going away — neither for countries such as France and the Netherlands, nor for George Osborne. The Chancellor is, of course, signing over another £10 billion of British money to the IMF, which falls within the parameters already agreed by Parliament. ‘If I had felt Britain should have contributed more then I would have asked Parliament for the authority to make a larger loan,’ is how he put it yesterday. But what about in future? With things as they are, it’s doubtful whether the IMF will pull back its begging bowl quite yet. Osborne will surely be put under pressure to contribute even more.
If so, The Chancellor will surely face counter-pressure from his own party’s backbenchers. After all, Britain’s own fiscal position is hardly encouraging. The latest figures, released by Eurostat yesterday, have us among the ten EU countries who are still exceeding the Brussels-recommended levels of borrowing (i.e. 3 per cent of GDP) and debt (i.e. 60 per cent of GDP) — and we’re towards the worse end of that spectrum too. Here, to finish, are the graphs for CoffeeHousers:
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