Europe

Friday

Jonathan Jones

From the archives: Nigel Lawson on the Euro

13 years ago, The Spectator carried an interview with Nigel Lawson in which he gave his views on the EU’s Economic and Monetary Union – views that seem especially prophetic today. ‘It’s going to be very nasty’, Christopher Fildes, The Spectator 2 May 1998 The Nigel Lawson Diet now seems to suit its inventor. Gone are the days when I had to defend him as chancellor against his girthist critics. Then he fell out with Margaret Thatcher – at first, over Europe. He wanted to put the pound into the exchange rate mechanism: she would not hear of it. Now I catch up with him at the House of Lords,

Mats Persson

Europe, and the UK, should be much more proactive about Portugal

As Portugal bites the dust – following Ireland and Greece in asking for an EU bail-out – the most important question is still not being asked by EU policy-makers, or by the British government for that matter: will a bail-out actually solve any of Portugal’s problems? The simple answer is, it won’t. Asking the European Central Bank to take on more junk bonds, or piling more taxpayer-backed loans on Portugal’s already heavily indebted economy is not a long term solution. Ireland and Greece have already sought to renegotiate their bail-out terms as they are struggling to grow fast enough to repay their EU/IMF loans (ECB rate increases like the one

Peter Hoskin

A headache made in Lisbon

Developments aplenty on the Portuguese front — the most noteworthy being that Britain is probably in for a €4.8 billion share of the €80 billion tab. Robert Peston explains the numbers here, although it basically comes down to the lending mechanisms that will be deployed. Add up our 13.5 per cent exposure to the European Financial Stabilisation Mechanism (EFSM) with our 4.5 per cent exposure to the IMF’s pot, and it comes to €4.8 billion. Or, rather, £4.2 billion. The politics of the situation are precarious for the coalition. Yet I doubt they’ll be unduly troubled by Ed Balls’s suggestion that “it would be better if this was sorted out

Thursday

Peter Hoskin

Osborne’s credit card fraud

Well, David Cameron is doing his part to boost the Spanish economy — by EasyJetting to the country with SamCam to celebrate her 40th Birthday. But what about Spain’s peninsular cousins, the Portuguese? They were, more or less, the subject of George Osborne’s speech to the British Chambers of Commerce conference earlier — but not how they might have hoped. The chancellor didn’t dwell on the prospect of British help for their stricken economy, but he did cite Portugal as a kind of worst case scenario. “Today of all days we can see the risks that would face Britain,” he said, “if we were not dealing with our debts and

Peter Hoskin

The Portuguese fallout

How much are we in for? That is the question that springs most readily to mind after Portugal’s request for fiscal aid from the EU. And, sadly, the answer is difficult to work out. The figures being spread around range from £3 billion to £6 billion, with valuations in between. But, really, it depends on how much of the €80 billion package is agreed to by European finance ministers, and which lending mechanisms are used. The European Stability Fund, the EU’s emergency fund and the IMF’s pot of gold all have differing levels of UK involvement. If our country does end up making a significant contribution to any bailout package,

Tuesday

Daniel Korski

Lords: government not championing European single market “strongly”

Tucked away in an old building, where few people knows of its existence, lives one of the most important parliamentary creatures – the House of Lords European Union Committee. Often ignored because it applies analysis to a debate where loudness is the main currency, it has produced a new report on the Single Market. The government would do well to read it. For pushing the Single Market should be what animates the Europe Directorate in the Foreign Office. The Single Market is the main reason for British membership of the EU and the committee implies that successive governments, including the Cameron administration, have dropped the ball in this area. As

Thursday

David Blackburn

Irish banks in a worse state than was thought

Robert Peston called it: the Irish banks are mired. The latest round of stress tests has been conducted and the headline figure is that the Irish banks face a shortfall of 24 billion euros. A major recapitalisation will follow and it’s likely that more institutions will be taken under state control. Ireland is also likely to ask for more cash from the EU. These tests were based on conservative criteria, where the Irish economy contracted by 1.6 percent this year, unemployment peaked at 15.8 percent and there was a cumulative collapse in property prices of 62 percent. It’s grim in Ireland, but not that grim: most forecasters are predicting GNP

Monday

Daniel Korski

Cairo Diary: it’s the economy, stupid

Whether revolutions devour their own children often depends on the ability of a post-revolutionary government to deliver political freedom, jobs and services. Egypt is no different. If the economy opens up, then the country’s transition to democracy is likely to continue. If not, then anything can happen. So, which will it be? The stock exchange has reopened and is doing better than many expected. The government is bullish about growth, but it is hard to see where it will come from. Tourists, who account for a major part of the economy, are staying at home. Hotels are empty and BA is cancelling flights due to lack of passengers. The uncertainty

Friday

Daniel Korski

Libya has shown the government the virtue of a multilateral approach

The Libya intervention has already turned the international kaleidoscope, showing new and remarkable patterns. It has seen China acquiesce to a no-fly zone, and the West in alliance with the Arab League. Nobody thought that was likely 6 months ago. It has also changed reputations. Nicolas Sarkozy may win re-election on the back of the war. William Hague, who had a bad revolution, is having a good war.   The government has become more multilateralist, as opposed to the kind of bilateralism it espoused when it took office. Nearly a year ago, it sent a clear message to the FCO — bilateral ties would matter, multilateral ties less so. Now,

David Blackburn

Merkel is running out of patience with the eurozone

Like an unseasonal Atlantic gale, the Portuguese sovereign debt crisis has blown in to ruin the latest EU summit. This meeting was intended to mark the beginning of the end of the eurozone crisis. Instead, the ponderous European Union has been overtaken by events, with grave consequences. Already speculation about contagion is rife: Spain, Malta* and Italy are now being spoken of in hushed and exasperated tones. The Economist’s Charlemagne correspondent reports that several countries are now wary of the monetary pact that Germany is demanding for delving deeper into its pockets, because they do not want to be accused of surrendering sovereignty. Likewise, the injection into the European Financial

Thursday

Matthew Hancock-Mp

What Portugal means for the UK

Last night, Portugal’s parliament voted to reject its latest measures to deal with its deficit. It was the fourth time that the Portuguese parliament had been asked for more taxes and for more spending cuts. The result has been a further loss of confidence in Portugal’s ability to pay its debts. Market interest rates have risen to over 8 percent. European leaders are meeting this weekend to work out a path forward. The lessons for us here in the UK are starkly clear. First, it is better to set out all the difficult decisions needed to deal with the debt crisis, even if these take place over a number of

Mats Persson

Cameron’s €4 billion Portuguese challenge

As if the budget and Libya weren’t enough, the UK Government woke up today with another major challenge on its hands – yet another flare-up in the eurozone debt crisis, which has been continuing to bubble away under the radar.   Yesterday, Portugal’s Prime Minister José Sócrates literally walked out of Parliament, during a debate on EU-backed austerity measures. The austerity package was subsequently voted down and shortly afterwards Sócrates announced his resignation. Portugal is now facing the prospect of being without a government for months, as its electoral rules require a 55 day break between the dissolution of Parliament and new elections.   The episode has increased the already

Fraser Nelson Fraser Nelson

Scouring the Budget small print

This morning’s newspapers have a feast of analysis on the Budget. I’ve covered 15 of them, and what journalists normally do is spend the day trawling the small print of the Budget document hunting for stories. But this time, the stories seem to have migrated to the Office for Budget Responsibility’s accompanying report, packed with new analyses and metrics — even disaster scenarios — which those with an interest in UK economics will find useful. The OBR document is now released with the Red Book, and speaks with the authority of government economists who (unlike the rest of us) have had weeks to chew over Osborne’s claims. The OBR must

Tuesday

Fraser Nelson

Nuclear hysteria

The above Japanese video – explaining the nuclear accident to children — makes a lot more sense than many of the hysterical reports we have been reading in the last few days. The figures are not out yet, but it’s likely that tens of thousands were killed by the tsunami. Yet the newspapers were all focused on the nuclear meltdown — which injured 15 people. The irony is that, when a tsunami strikes, the local nuclear power station is pretty much the safest place to be. This is the argument advanced in the leading article for the current issue of The Spectator (subscribers, click here; non-subscribers please join us for

Saturday

Daniel Korski

The winners and losers

In English we have an odd expression: “to have a good war”. The phrase was originally used to describe someone who was decorated or otherwise distinguished themselves, usually during WW II. Allan Massie, for example, wrote that author William Golding “had a good war, first as an ordinary seaman, then as an officer in command of a Landing Craft Tank (Rocket) on D-Day”. Today, newspapers and blogs have been quick to use the phrase for politicians. So David Cameron and Nicolas Sarkozy are said to have had a “good war” over Libya, so far at least, with Barack Obama faring differently. Organisations also have good and bad wars – with

Andrew Haldenby

The government has been the author of its troubles

In his Spectator column this week, James Forsyth painted a picture of a government taken by surprise by enemies who have, in effect, ambushed them – the civil service, the civil service’s lawyers and the European Union in particular. Clearly the government is frustrated by the “forces of conservatism” and the “enemies of enterprise”, but the difficult truth is that a lot the government’s problems are of its own making, and in its own hands to put right. When it comes to the civil service, the government hasn’t simply inherited an uncooperative Whitehall. It has strengthened its position, as a conscious policy decision. Francis Maude said it in terms at

Friday

Fraser Nelson

Clegg’s coup

Libya is not the only scene of conflict today. Nick Clegg has just won a powerful victory over the Conservatives, appointing a Bill of Rights commission which is certain to leave the ECHR intact. When you see the names Philippe Sands, Helena Kennedy and Lord Lester on the list — even alongside Tories — you know that this review is over before it has begun. Clegg is a firm believer in Europe, and has played his hand very well — outmanoeuvering the Conservatives who thought that a British Bill of Rights should supplant edicts from Strasbourg. Upshot: there may still be a Bill of Rights, containing various declarations inserted by

Thursday

Alex Massie

A Grim St Patrick’s Day

St Patrick’s Day is often pretty grim, not least on account of the American habit of suggesting the poor old boy is actually the patron saint of uncooked hamburgers. It is St Patrick’s Day or Paddy’s Day and “Patty’s Day” is an abomination. True, the pubs tend to be stuffed with insufferable amateurs today but in general Ireland is a decent place to pass St Patrick’s Day and a better one than most. At least there are proper Irish people there. But this is not an especially bonny St Patrick’s Day and not even a new government that can scarcely fail to be some modest improvement upon its predecessor can

Tuesday

James Forsyth

Gaddafi’s coming victory is a huge strategic setback for the West

It now seems almost certain that Colonel Gaddafi will now not only survive in Libya but reassert control over the whole country. With the fall of Ajdabiya, there is no break between Gaddafi’s forces and the rebel capital of Benghazi. The window for international action is shutting rapidly, even if it has not yet closed. But, as so often, there seems to be no multilateral desire for action. Gaddafi’s triumph is a disaster for the Libyan people but also one of the biggest strategic set-backs the West has suffered in the post 9/11 world. Every dictator will now know that they can suppress a revolt with violence without fear of

David Blackburn

The EU wants concessions out of Ireland

The mood in Dublin is febrile, despite the gloom of 14 percent unemployment. Everyone has advice for Enda Kenny on how to revive the Celtic Tiger. This morning, 17 prominent businessmen and public figures submitted A Blueprint for Ireland’s Recovery to the Department of the Taoiseach. The Irish Times reports that the authors propose deeper spending cuts and greater efficiency in the public sector. This is a different approach from influential Irish Economist Colm McCarthy, who argued on Sunday that ‘fiscal stringency is not enough to resolve the crisis’ because the banking restructure (contained within the IMF/EU bailout) is ‘impractical’. Enda Kenny, it seems, agrees with McCarthy, which is why