Europe

No. 10’s response to its difficulties

Two issues are dominating Number 10’s thinking at the moment: Europe and the cost of living. How to deal with Europe is the biggest strategic challenge facing David Cameron. Cameron has to work out how to use this moment to advance the British national interest. But he also knows that Europe is an issue that could split the coalition and the Tory party.   Inside Number 10, it seems that it is becoming a question of when to announce a referendum not whether to call one. As I say in the Mail on Sunday today, senior figures there are pushing for the Tory commitment to a future referendum on the

Miliband resists temptation

There has been much speculation that Labour might insist on a referendum on Europe. This has been fuelled by numerous factors: the parlous state of the Eurozone, the increasingly likelihood of a 2-speed Europe and, above all, the fact that David Cameron doesn’t want the Tories to ‘bang on about Europe’, especially when in coalition with the Lib Dems. There have been a series of high-profile Labour interventions on the subject in recent weeks. Both Peter Mandelson and Ed Balls, arch-schemers both, have mulled the question in public, and the appointment of Jon Cruddas, a pronounced Eurosceptic, as the party’s policy reviewer, tickled fancies still further. But, today Ed Miliband

James Forsyth

Osborne’s City safeguards

Before David Cameron’s trip to Berlin later today, George Osborne appeared on the Today Programme to emphasise that in the event of a Eurozone banking union, Britain would require safeguards.   Given the importance of finance to this country, Cameron and Osborne can’t accept anything that creates a two-tier single market for financial services. The Tory leadership is also acutely aware that it was this issue that led to Cameron vetoing a proposed treaty last year. It would be politically dangerous for Cameron to do anything that could be characterised as undermining his own veto.   One option being floated by some Tory Eurosceptics is a British veto on financial

Divided we stand

Many Native American tribes would consult a shaman before embarking on a hunting expedition. In one tribe, a shaman would take a caribou bone, carve on it images of the kind of prey the tribe were keen to find (buffalo, deer, trailer-park video-poker addicts) and then place it on a fire. At some point the heat of the fire would cause the bone to split. The hunting party would then set out unquestioningly in the direction of the line of the crack. This is of course a completely insane practice; the kind of irrational, superstitious nonsense that would have Richard Dawkins foaming at the mouth. Except it isn’t. In fact,

The push for a European Banking Union

The warning by Mario Draghi, the president of the European Central Bank, that the euro is ‘unsustainable unless further steps are undertaken’ is about as stark as they come. I’m informed that what Draghi is pushing for behind the scenes is for the ECB’s remit to be expanded to include Eurozone financial policy. This would lead to, to put it crudely, the creation of a European Banking Union. It would see the ECB take over from national governments when it comes to bank bailouts and the like. This would, in turn, ease some of the pressures on countries like Spain whose borrowing costs are being driven up by the market’s

Euphoria gives way to worry

The slaughter of the innocents in Houla, Syria, has concentrated the West’s collective mind. The Times declares (£), not unreasonably, that there is a desire to stop what the UN, while making Robert Mugabe its tourism envoy, has tepidly described as ’18 months of violence’. The paper adds that ‘all options are on the table’. Western voices are emitting decibels of disgust. Secretary of State Clinton has castigated the Russian regime for its intransigence in the Security Council, and has said that Russia’s policy will ‘contribute to a civil war’. Meanwhile, Senator John McCain has repeated his view that the Obama administration’s inaction on Syria denies what it is to be

Osborne’s gambles

There is now a general acceptance that the Tories’ 2015 election manifesto will contain a pledge, dare one say a cast-iron guarantee, that voters will be offered a referendum on Britain’s relationship with the EU. James first revealed this in his magazine column a few weeks ago. The aim is to see off the surge from UKIP, prevent Labour from opportunistically seeking Eurosceptic ground, and to counter Boris Johnson’s popular adoption of the People’s Pledge. Since then it has been taken as read that George Osborne is responsible for this gambit, which is reasonable given that he is the Tories’ chief strategist, and a likely contender in a future leadership

Hunting season distracts from Euro-calamity

As James observed yesterday evening, the Westminster media has its eyes on one story today: Jeremy Hunt’s career-defining appearance at the Leveson inquiry. A deafening cacophony has broken out from a host of tweeters, talking heads and irate scribblers. It will be a diverting piece of political theatre at the very least. There is drama of a different kind in the Eurozone. Irish voters will go to the polls today to approve an EU budgetary restraint treaty, which they are expected to approve. Meanwhile, Spain’s borrowing costs have reached ‘perilous levels’ (6.65 per cent) according to the Times’ commentary (£). The European Commission has indicated that the European Rescue Fund is

The deeper problem behind Europe’s rising carbon emissions

The Government takes a lot of stick for blaming the weather when there are queues at airports or lacklustre growth figures. Now the European Union is blaming a ‘colder winter’, as well as ‘economic recovery in many countries’, for emissions in 2010 being 111 million tonnes of CO2-equivalent higher – about 2.4 per cent –than they were in 2009. They are insistent that ‘the increase could have been even higher without the fast expansion of renewable energy. ’ Looking at the record of emissions in the European Union and the United States though, it is clear there is a deeper problem. Even ignoring emissions exports — the amount emitted in

James Forsyth

The guilty men

There was a telling moment in Michael Gove’s testimony to Leveson yesterday, when he applauded Rupert Murdoch for The Sun’s campaign against the Euro: ‘Gove: Other politicians recognised that the campaign which the Sun and others ran to keep us out of the single currency was right, and I think if we’re reflecting on other newspaper campaigns, I think we can undoubtedly say that was a campaign in the public interest. Jay:  Well, some people might still disagree with that proposition, Mr Gove, but I’m not going to take you on it. Gove: I’m sure — well, a dwindling number may.’ To me, the exchange was a reminder of how

Clegg takes on the Establishment (and the Tories) again

So Nick Clegg wants to present himself as anti-Establishment, does he? That’s hardly surprising. After all, the Deputy Prime Minister has ploughed this furrow before now, attacking the ‘vested interests’ that are the banks and the political class. And it’s generally a large part of the Lib Dems’ ‘differentiation strategy’ to come across as insurgents in suits. But Clegg’s comments today are still striking for how far they weaponise this theme and then turn it against the Tories. It’s not just the context of it: with Tory ministers — including Jeremy Hunt — appearing before Leveson this week, Clegg chooses to attack those who ‘bow and scrape in front of

Let’s show Eurovision some respect

There are calls for Britain to pull out of the Eurovision Song Contest, after Engelbert Humperdinck finished second-last on Saturday, with Norway bottom. The Mayor of Leicester has today denounced Eurovision, saying: ‘The politics of Europe — which countries are friendly with which others — has a lot more to do with it than the quality of the songs.’ I agree: politics are involved and it is outrageous. Had George Osborne not given Ireland that £3.2 billion loan we would not have had its four points and Britain would be where it deserved: at the very bottom. We were dismal, and in the eyes of half a billion people. But

The coalition’s euro-differences start to boil over

Nick Clegg did not show his Berlin speech on the Euro crisis to Number 10 or the Foreign Office before releasing it to the media. This is quite remarkable. Up to now, there has been a recognition that while the Liberal Democrats may try and differentiate themselves from the Prime Minister on various things, the government must speak with one voice on the deficit reduction strategy and foreign policy. No credible country can afford to send mixed messages to either the bond markets or foreign governments. Clegg’s freelancing on this issue is a reminder of how Europe remains the biggest ideological fault-line in the coalition. When David Cameron formed the

A shift in the government’s thinking about the Eurocrisis

Theresa May’s suggestion that Britain could suspend the free movement of people in the event of a Eurozone break up is a reminder of just how transformative an event the falling apart of the single currency would be. The Home Secretary is a cautious politician who picks her word carefully, so when she says that the government ‘will be doing contingency planning’ about the immigration implications of a Eurozone break-up you know it is serious. One of the things that makes this such an intriguing development is that it suggests a shift in government thinking on the severity of the crisis that could be coming. A few months ago, a

The IMF is losing patience with Greece

Much ado about Christine Lagarde’s interview with the Guardian this morning — and understandably so. After all, the head of the IMF is normally so restrained and delicate, yet here she lets that drop. When it comes to Greece, she says, ‘I think more of the little kids from a school in a little village in Niger who get teaching two hours a day, sharing one chair for three of them, and who are very keen to get an education… I think they need even more help than the people in Athens.’ And she also stresses that the Greek people should ‘help themselves collectively… By all paying their tax.’ Common

James Forsyth

Ukip’s new deal

Nigel Farage is relishing the chance to sow discord in Tory ranks Nigel Farage looks round with mild disgust at the antiseptic Westminster restaurant in which we’re meant to be having lunch. The leader of the United Kingdom Independence Party tilts his head back and sniffs the air theatrically, then whispers, ‘Why don’t we just go to the pub?’ We head off down the street. Farage is in a pinstripe suit with a Ukip golf umbrella under his arm. He puffs on a cigarette, his gait — half-jovial, half-military — straight out of an Ealing comedy. When we get to the pub, he greets his pint of bitter with an

Leveson continues, but it is a sideshow to the Euro drama

Fred Michel’s testimony this morning at the Leveson Inquiry was embarrassing but not devastating. The texts between him and Jeremy Hunt are cringe-worthy but my read is that the Culture Secretary is not in a weaker position than he was this morning. More important for Hunt’s survival prospect is the appearance of his former spad Adam Smith this afternoon. The question is, did Hunt not know of the extent of contact between Smith and Michel? Everything going on at Leveson, though, is a sideshow compared to the economic news and the storm brewing on the continent. On that note, it does seem odd that Nick Clegg is suggesting that the

Cameron loses his rag

Ed Balls succeeded in getting David Cameron to lose his rag at PMQs today. The shadow Chancellor sledged the PM throughout the session, apparently asking him how many glasses of wine he had had today and the like. Towards the end of the session, Cameron snapped and called Balls ‘the muttering idiot sitting opposite me’. The House erupted. Ed Balls looked even more pleased with himself than usual while the Tory benches cheered the line. The exchange will put Cameron’s temper up for discussion which is Downing Street’s second least-favourite topic after the PM’s work-rate. But I suspect that there’ll be limited cut through to the public: politicians insulting each

Bondholders are sheep — and they’re flocking out of the euro pen

Sweden’s Anders Borg (Fraser’s favourite finance minister) is wrong, says Citigroup. Bondholders and deposit holders are not like wolves, as Borg has made them out to be. They’re more like sheep — and currently they’re baa-a-a-cking out of the eurozone pretty quickly. We all know that money’s leaving the Continent — but how much and how rapidly? Citi’s credit strategist Matt King, basing his analysis on imbalances in TARGET2 (the euro area’s main payment settlement system) relative to eurozone countries’ current accounts, has come up with a few interesting observations. — Since mid-2011, Spain has suffered private-sector outflows of €100 billion, and Italy €160 billion (or a tenth of their

Alex Massie

Labour’s Disingenuous Flirtation with an EU Referendum

Apparently the Labour leadership is considering making a commitment to hold an In or Out referendum on British membership of the EU sometime in the next parliament. Guido says this would be “opportunistic, calculated and brilliant”. Well, he would say that wouldn’t he? He would, I think, quite like to see Britain leave the EU. Of course the Better Off Outers would welcome Labour’s conversion to an In or Out plebiscite. But since Labour remain, I believe, a Better Off In party it’s a mystery why they would wish or risk a referendum that can only – by dint of just asking the question – increase the likelihood that Britain might