Opinion: The Lib Dems need to lead to solve the Eurozone crisis

There are only two possible results to the Euro-crisis: 1) collapse of intra-European trade, or 2) greater European integration. The first has far-reaching negative implications for Britain, Europe and the world. The second indicates a massive area for future growth in our shared economy.

While the current political challenge remains to deliver stability and growth at the same time it’s up to Britain to choose to find the political will and lead on the issue. Why? Because continual continental dithering and endless domestic bickering will mean economic conditions stay in the doldrums until the Eurozone countries wake up to the fact that no other options remain, and they forge ahead on integration without us, leaving Britain scrabbling for crumbs from their table as per usual.

If we want to set the terms of agreement and see the full benefits then we must resolve to fully commit to the process. Which means the real question is how much of the former are we prepared to accept before we move on to the latter.

As the only committed pro-European leader at Westminster, Nick Clegg is smart enough and sensible enough to understand this, but his frankness in offering regular reminders won’t help him win popularity contests any time soon. So he should be bolder in challenging public opinion in order to reap the political rewards later – after all there’s still time to get this strategy to pay dividends before the next election and most commentators argue he doesn’t have much left to lose. Having the courage of your convictions is a virtue which he – and we – can make the most of.

While the real possibility of Greek default grows ever nearer Clegg appeared to lay some foundations for giving the European project a vitally-needed boost in his widely-reported speech to the LSEby indicating his favorability towards shifting the British position to be more active on European integration:

“In terms of the Eurozone, the real failure has not been the original concept of monetary union. It’s that the rules were never applied stringently enough. The Stability and Growth Pact was actively watered down in 2005, allowing members to wriggle out of their fiscal commitments to each other. Now we are seeing the effects.”

“The single-most important question, the urgent question is what role can we play in helping the Eurozone avoid further turmoil, creating the stability needed for prosperity and jobs – in the Eurozone and in the UK too.”

With rising consensus that the coalition’s deficit reduction plan has assured stability while restricting ability to boost growth” there is no time like the present to use the Lib Dem reputation as long-standing advocates of European integration to our advantage, and strike the note of clear differentiation which members and potential supporters alike are desperate to hear. While Conservatives have forced themselves into a dead-end on growth, Labour lack credibility on stability — yet neither want to talk openly about Europe and the way their actions combined in tandem to undermine the Stability and Growth Pact.

As Clegg said, “we’ll do whatever it takes to return our economy to health,” but while we can pull all the right levers at home to provide a temporary demand stimulus it must also mean creating the conditions for sustainable growth by increasing cooperation abroad and driving ahead with integration to complete the single market and guarantee the four basic freedoms.

We cannot put stability at risk by loosening fiscal policy now, but neither can we avoid integration out of a misguided sense of patriotic pride when growth is at risk. Perpetual focus on stability results in stagnation, yet myopic focus on growth leads to escalating volatility – only the LibDems can successfully balance these twin impulses and therefore we must speak up more forcefully in the national interest both of Britain and each of our European partners.

* Oranjepan is the pseudonym of a Lib Dem supporter working in a politically restricted post.

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This entry was posted in Op-eds.


  • We need to pull out altogether. It’s completely undemocratic.

  • toryboysnevergrowup 21st Sep '11 - 1:42pm

    How about an emergency levy on all the oil, gas and energy companies to generate a one off payment to every UK family of c£500, payable just before Xmas and with a promise to repeat the medicine if their price gouging continues. No impact on the deficit, punishes those who have abused the market, and encourages growth – and will get a few votes – what isn’t there for LibDems not too like?

  • “There are only two possible results to the Euro-crisis: 1) collapse of intra-European trade, or 2) greater European integration. The first has far-reaching negative implications for Britain, Europe and the world. The second indicates a massive area for future growth in our shared economy.”

    Dream on. In what way will further integration help growth in our shared economy? The continent already has no restrictions on the movements of goods and people, and it has a common currency. There’s no way any unexploited economic opportunity will suddenly find itself exploited simply because we drop national anthems or hand over more political power to Brussels.

    Secondly how will the Euro crisis cause the collapse of intra-European trade? Any break up of the Euro will give nations in economic trouble the benefit of a devalued currency. This would, far from collapsing intra-European trade, actually boost it because it would become cheaper to buy goods from Greece, Italy or Portugal but just as expensive at home whether home is Dortmund, Nice, or Basingstoke.

  • @Oranjepan

    Did keeping the pound hurt us?

    Denmark, Switzerland, Sweden, Lithuania and Latvia and Poland have all retained their own currencies. The city states of Hong Kong and Singapore have their own currencies, and had amongst the highest rates of GDP growth during 2010. Does anyone in these nations bemoan long term market shrinkage?

    Competitive advantage gained from a weakened currency isn’t short term, it last’s as long as the currency is weak only ending when the currency strengthens with the economy. Varying exchange rates help economies self correct, ensuring the flow of demand and investment go where it can do the most good. I don’t believe there is any net advantage of a currency bloc the size of a continent. Geographically any advantage to regions is either temporary due to piggybacking on debt (as Greece did) or is only experienced in the richest areas at the expense of the poorest. Economically the advantages to industry by having a common currency are outweighed by the inability of regional economies to respond to local recession.

    Consider the US, it’s single currency and political structure is a potential model for the EU, yet you can clearly see how it’s single currency damages parts of the country. The rust belt is a prime example, suffering as free trade opened up competition with countries with much cheaper wage costs. Had the Rust Belt used a different currency to the rest of the states, as the regions economy had shrunk the currency would have weakened making outsourcing increasingly less attractive.

  • @ Steve
    We will never pull out altogether as Europe is where politicians go to further milk the gravy train. Example Kinnock and family and no doubt Clegg wants the same.

  • Malcolm Todd 22nd Sep '11 - 11:46am

    Sheesh. I agree with Jedibeeftrix.
    Never thought that would happen.

  • Old Codger Chris 25th Sep '11 - 11:32am

    Cameron’s smartest political move right now would be to promise a referendum on EU membership if the Tories get an overall majority in 2015.

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