Not one sterling pound to save the euro!

To help or not help the euro zone? This is the question about which the British prime minister David Cameron is being forced to discuss in and out of his own government. Meanwhile, the reflections of the country’s economy look healthy only by comparison against the battered image of the European continent at the financial mirror. 

LONDON | You may not know Jeremy Browne, but when you read the recent remarks of this secretary of the UK Foreign Office, you will agree with me that there’s an urgent need of a handful of Brownes in each of the European Monetary Union member governments. Leaving aside the discussion about UK involvement in the rescue plans at the International Monetary Fund and the European Financial Stability Facility, Browne has simply reminded his fellow cabinet companions in Downing Street that

We don’t have a God-given right to be one of the richest and most influential countries in the world – that is earned. If we don’t adapt, then we will decline. There is no eternal rule that says Britain will be a paramount global force in global politics indefinitely.”

To reactivate the economic flexibility of the island, Browne has listed a few principles rather difficult to deny: let’s improve our infrastructure, transform the education system into a more competitive environment, and let’s learn the history and culture of the nations whose economies are developing at a breakneck speed in contrast to the Old Continent. And then, let’s expand our international partnerships.

The message, in effect, would serve well in both sides of the Channel. While we Europeans spend years navel-gazing without realising that time is against all naive expectations of a painless solution for the single currency, Mexico, South Korea and Brazil take positions in the global manufacturing race, and China is already pulling the rug out from under the feet of the United States.

David Cameron, however, has confirmed he is as European a European leader as the Greek George Papandreou, the French Nicolas Sarkozy or Angela Merkel of Germany: instead of uplifting speeches packed with credible strategies for an economic recovery, the prime minister of  the United Kingdom has jumped right into the populist euro scepticism pool shaking his cheeks to remain afloat with policies that he is likely to betray. In fact, the Whitehall machinery has leaked the figure of £40 billion available now in London as a contribution to inject into the IMF’s lending projects.

Cameron’s mantra, repeated ad nauseam, that not a single pound will go to the rescue of the euro means little when it is feasible that the IMF ends up involved in salvage operations of any more country or countries in the euro zone. In spite of the many twists he gives the wording of the affair, what is happening is that even among the Conservative Party MPs he isn’t quite trusted. His orthodox wing has been aiming to force a broader debate, more coarse, more sentimental over the relations between the island and the mainland: traditional euro sceptics would like to hold a referendum to dissociate the UK once and for all from the European Union.

In the absence of arguments, the isolationists are using single pieces of data: for example, £10 billion of financial injection into the IMF represents a spending per household of £400 pounds from the asphyxiated pockets of the British families; or the social regulations of the European Union cost UK companies nearly £8 billion per year, equivalent to creating 140,000 jobs. Matt Retsson, from the think tank Open Europe adds, not without reason, that

“While the single market is important for British businesses, the one-size-fits-all nature of EU social law often results in cumbersome and unnecessarily costly regulation of the public and private sector.”

NEITHER WITH YOU, NOR WITHOUT YOU

But the direction of those numbers can be reversed. The Coalition government says that about three million jobs in Britain depend on UK’s special trade relations with the rest of the European Union. And Cameron himself breathlessly recites that because the euro zone crisis is cooling UK’s economic recovery, it is obvious that the UK authorities must be out front for the rehabilitation of the monetary union’s public finances, wishing a long and fruitful life to the single currency.

According to the National Institute of Economic and Social Research, if the outlook worsens in the continent, the prospects for a formal recession in the UK soar up to 70%. Not in vain, the gross domestic product reviews are constantly on the downfall side: from the 2% announced in August, we now approach an official 0.8% or, worse, the 0.5% offered by the Bank of England.

Exports have fallen between August and October for the first time since 2008, according to the confederation of employers CBI,

“Small and medium-sized manufacturers have seen domestic demand flat-lining in the past three months, and will have been particularly disappointed by an unexpected fall in export orders.”

The auditing firm BDO has said that before the end of the year or during the first quarter of 2012, the British economy seems to have all the cards to win a contraction in the services sector, which represents three quarters of the overall economy.

It may be just then, as it happens to the rest of his fellow leaders in the continent, that Cameron will see it is inevitable to reformulate that famous saying of his about ‘the euro zone sorting itself out before the world can help but not the other way around.’ If the Coalition does not stop the British decline, someone sooner than later will say the same to them.

About the Author

Victor Jimenez
London contributor at thecorner.eu, reporting about the City and the Eurozone economies. He regularly writes for Spanish newspaper group Prensa Ibérica--some of his features include shared work with journalists of The Daily Telegraph and the BBC.

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