Bring on the United States of Europe
The UK’s prime minister, David Cameron, may be guilty of ‘stating the bleeding obvious’ when he told the G20 summit in Mexico that the Eurozone must act quickly to solve its problems but it’s a message that cannot be drummed home enough.
We depend on Europe for around 40% of export sales and these are under threat if, heaven forbid, the Euro collapses. It may be less disastrous for the UK than the European countries involved but it will still hurt us in the short to medium-term.
Most pundits now admit the launch of the Euro was a triumph of political ego over reality and even some of its architects stressed at the time that the currency could only survive long term with a full political and fiscal unity, ie the United States of Europe.
Precisely the thinking that copper-bottomed opposition in this island nation of the UK, conveniently surrounded by its own moat, from joining the single currency.
Yet the need to link currency with fiscal and political unity remains as true today as it was back in 2002 when the currency hit the streets amid all the fuss and fanfare which looks so painfully embarrassing now. And, maybe, it’s embarrassment that stands in the way of Europe’s industrial powerhouse, Germany, from doing what the financial world wants to see them do and underpin the Euro and, by implication, all the Eurozone countries.
I was in Dusseldorf recently covering the Reifen 2010 tyre fair and conversations with German businessmen made it very clear that they are now more than happy to keep their distance from the ‘sick men’ of Europe. That’s hardly surprising given their country’s recent history of economic growth and many will probably admit they’d be happier going it alone without the Euro than seeing their hard-won success, built despite the back drop of the huge financial stress of unification between East and West Germany, squandered by politically and fiscally weaker neighbours.
While it is probably true that in the short to medium-term Germany, would survive very well in a Eurozone currency crash, the long term effects will be just as bad for them as any country within the system. Imagine a situation where their neighbours devalue currency enough to attract foreign investment in manufacturing and heavy industries and Germany will not only be facing production competition from Asia and the Far East but from several European countries as well.
So now is not the time to be xenophobic no matter how attractive it looks in the short term. Germany must lead the move to greater European integration with a clear plan that the stock markets of the world can believe in.
For the UK’s sales potential, the future prospect of a powerful commercial trading entity on our doorstep called the United States of Europe can only be a good thing, albeit one we are never going to join!