Monday, 17th October 2011
North-South divide hindering EU Growth
Speaking to the Glasgow South Conservative Association, Struan Stevenson MEP said:
We have come through some turbulent times so far this year. The Eurozone has been taken to the brink of disaster by countries like Greece, Portugal and Spain, while Germany, France and the UK are forced to bail them out. I don’t know about you, but I’m getting a little fed up with the responsible north having to fork out for the profligate south.
Sarkozy and Merkel are now desperately casting around for solutions. When the Eurozone was created, they introduced the Growth & Stability Pact which limited the deficit that any Member State could run to 2.5% of GDP. Greece this week reached 170% and will soon reach 200%. Greek debt continues to spiral and there is no way that they can afford to pay it off. The problem for the Euro elite is that Greece only represents 2% of the entire Eurozone. If they can’t sort out the problems in Greece, there will be little or no confidence in their ability to sort out the problems in the much bigger economies of Italy, Spain, Portugal and even France. This is why the international markets are nervous and are watching closely to see if a solution can be found and found quickly.
Various schemes have been touted by Barosso. Last month he told us that he favoured the introduction of a Tobin Tax. This would effectively be a tax on all financial transactions that take place inside the EU. The trouble is, 80% of such transactions take place in London, which is not even part of the Eurozone. So the UK would end up paying 80% of the cost of bailing out the failed economies of the so-called PIGS – Portugal, Italy, Greece and Spain. What Barroso forgot to mention was that any such tax would require a Treaty change and David Cameron wisely has a coalition government pledge to call a referendum in Britain before any Treaty change can be agreed. There is no way the UK would vote in favour of a Tobin Tax in any referendum.
It’s all very well for Angela Merkel last week to say that Europe should not be afraid of Treaty changes, but that is simply bluff and bluster from the German Chancellor. No Treaty can be changed without a unanimous vote involving all 27 EU Member States. It only takes one country to block a Treaty change and Britain will be more than happy to fulfil that role if our interests are being directly threatened!
Now, the Euro elite are even talking up the prospects for an EU-wide system of corporation tax, set at 8% by Brussels, to underpin the teetering Euro. And they want Britain and Denmark and other countries not even in the Eurozone to be part of this federalist strategy. They look at the US dollar which is under-pinned by a federal system of taxation and they want the same system for the Eurozone to stabilise the Euro.
Well let me say this: once we lose the power to set our own taxes through our own democratically elected government, we lose the right to call ourselves a sovereign nation. If Sarkozy and Merkel are keen to prop up the Euro, then instead of levying new taxes, they should look at making some serious savings in the scandalous EU budget, which they propose to increase by a whopping 6% next year, while the rest of us are being asked to tighten our belts.
The President of the European Commission, Jose Manuel Barroso is even suggesting that Britain should give up its budget rebate which enables the UK Treasury to claw back over £3 billion every year from Brussels. It was hard-won by Maggie Thatcher over 30 years ago when she swung her handbag at Jacques Delors!
I want to remind Mr Barroso of some areas in the EU where savings could be made:
Firstly, maintaining two separate ‘Seats’ for the European Parliament in Brussels and Strasbourg is a ludicrous waste of money and continues only to satisfy French pride. Closing the Strasbourg building would save an estimated £180 million annually in staff and infrastructure costs alone. An extra £178 million would be saved annually by stopping the travelling circus which forces up to 4000 staff and MEPs to travel 12 times a year from Brussels to Strasbourg. There would also be a saving of an estimated 19,000 tonnes of CO2 every year – carbon that is pumped needlessly into the atmosphere because of the extra travelling that going to Strasbourg entails. Do you know, the European Parliament now occupies 62 separate buildings and while the number of MEPs has remained static at 736 for the past five years, the number of highly paid officials has risen by a staggering 58% to 6,500! Conservatives have identified how more than £400 million could be saved in the parliamentary budget through staff and building cuts.
Secondly, it is hardly credible, but sadly true, that the Euro elite want to build and furnish a museum to commemorate the creation of the EEC. Killing-off this wasteful ‘House of European History’ project would save another £53 million.
Thirdly, closing down the completely irrelevant Economic & Social Committee (ECOSOC) which is supposed to represent the interests of business, industry and trade unions in Europe but does little or nothing to justify its existence, would save a mammoth £104 million annually. Equally, the even less relevant Committee of the Regions, which acts as a grandiose travel agency for councillors from Europe’s 27 Member States, could be abolished at a saving of £68 million a year.
In addition, the EU’s 32 external, de-centralised agencies could be done away with. I’m sure no-one would miss costly bodies like the European Institute for Gender Equality or the EU Agency for Fundamental Rights, not to mention the Community Plant Variety Office and the Monitoring Centre for Drugs & Drug Addiction? Getting rid of that lot would save a whopping £659 million every year.
So, altogether this short list could already save Mr Barroso over £1.5 billion per year and that’s even before he begins to look at staff savings and cuts in the fat-cat salaries paid to Eurocrats, over half of whom earn more than David Cameron! Time for a reality check in Brussels!
If you think that £1.5 billion is simply nibbling at the edges of the problem, then let’s get serious and slash the CAP budget which accounts for 42% of the money spent running the EU every year....a staggering 50 billion Euros, the lion’s share of which ends up in the pockets of French farmers! So let’s talk tough! We don’t need or want a Euro tax and we don’t need or want a 6% budget increase....what we need and demand is a major budget cut.
Indeed we also need a reality check in how the Eurozone is regulated. It was a badly misconceived idea from the outset. Trying to bind together 17 disparate economies with different needs and different traditions, in a single monetary union with a single interest rate, was always going to be an accident waiting to happen. Just look at Greece. Only 25,000 Greeks claim to earn more than €110,000 per year for tax purposes. The huge Greek shipping tycoons are exempted from all tax because they are regarded by the government as star performers! Every person on the payroll of the huge Greek public sector workforce gets 13 months’ salary a year. Hundreds of millions of Euros have been paid in pensions to the families of Greeks who died decades ago, despite the fact that even a cursory check would have established that the recipient was over 120 years old in many cases.
The Greek economy is a basket case. But we should bear in mind that we are not bailing out Greece, we are being asked to bail out the banks who lent money to Greece, knowing it was a high risk. In many cases this is the second time in three years that we are being asked to bail out the same banks. It is unsustainable. We need to allow a structured default in Greece. They cannot possibly pay off their current level of debt, so 50% of it should be written off and the banks must be told to take that hit. The remaining 50% debt should be programmed for paying off over a long period – say thirty years. That is the only way a rescue package can work.
In the meantime, we need strict rules to bring profligate countries like Greece into line and we need tougher regulation to ensure the banks behave themselves and stop playing roulette with our money.
So where does Britain fit into this revised EU superstructure? In fact, I think the time has come to re-define British membership of the EU. That’s why the UK Conservative MEPs left the federalist EPP-ED Group and set up the European Conservatives and Reformist Group in the European Parliament. We have broken the old grand coalition between the EPP and the Socialists. In all of the key areas of importance to Britain, like the internal market, trade, research and industry, we have facilitated a centre-right coalition. When the battle is between left and right in the European Parliament, it is our votes in the ECR Group that ensure victory for the centre-right.
But we need to go further. We need to halt and even reverse the move towards further and greater integration. We support the single market and taking down barriers to trade and we support the free movement of goods, services, capital and people – a potent force for good, promoting business growth and jobs. Europe has 23 million unemployed right now....up to 40% youth unemployment in some countries. We risk a lost generation of European workers.
That’s why we need growth...the vital component of any economic recovery. But the single market has some deep flaws which we need to tackle head-on. There is no good economic reason why Britain could not opt out of the EU’s social and employment regulations which, according to the CBI, have cost our economy an estimated £148 billion in the decade from 1998 to 2008, with daft regulations on working time, paternity leave and casual workers being treated the same as full-time employees.
The world is struggling to emerge from one of the greatest economic shocks in modern history. In countries the world over, citizens and businesses continue to feel the consequences of the deepest global recession since the 1930s. In Britain the pain has been particularly acute, because Labour left us with a pole-axing £1.4 trillion debt. Even in Gordon Brown’s devalued, debased and degraded system of accounting, that is still an astonishing sum, equal to about one year’s national output. Thank heavens we have a Conservative Prime Minister and Chancellor who are determined to sort out this appalling mess.
So the real challenge for David Cameron and the coalition government is not to manage decline better than the rest of Europe, but to equip Britain for a new era of economic prosperity, where we can compete with the burgeoning economies of the East, like China and India. We cannot begin to do that if we are locked into the red tape and regulatory morass of EU federalist policy. Let’s unlock the shackles and set the pace for a two-speed Europe, where Britain is in the fast lane.
STRUAN STEVENSON, MEP
