Opinion from Lord Digby Jones

Final Reflections

Published Saturday 17 December, 2011

I settled down to pen a few bon mots last weekend. Some thoughts on the Autumn Statement and the Public Sector Pensions issue I decided. But then I looked to the end of the week ahead and decided to keep my quill hovering over the papyrus until the umpteenth "Three-milliseconds-to-save-the-Euro" Summit had taken place. As it turned out … a good move!

With very little room for manoeuvre George Osborne did well in his Statement. It is essential that the markets and the credit-rating agencies (and our investors and trading partners from overseas) are assured that Plan A is there to stay. We are one of the very few Nations who, in this developed-World crisis, have a well-published plan and are sticking to it. That breeds confidence and that means our debt is very much cheaper to service than in other countries. But cuts and tax rises (no matter how necessary) don't grow an economy and the only way out of this mess is to grow and trade our way out. So his offerings on infrastructure investment are welcome as is some help for SME's around the fringes. But where were the BHAGS? The Big Hairy-Arsed Goals? Abolish the Jobs Tax for small business George; you want the private sector to drive employment but then tax job-creation … National Insurance Contributions for Employers. How crass is that! Do away with it George and plug the gap with a hypothecated rise in corporation tax which can be reduced as growth returns.

The Public Sector Pensions Day of Strikes turned out to be a great day for the Retail Sector. Only half of the 29% who voted actually said yes to a strike so the rest had the day off (in the interests of Union Solidarity I presume; so much more important than educating the next generation of course; China must think it's their Birthday!) and went shopping! It continues to be difficult for the public sector to whip up general sympathy when the disadvantaged in this Pensions Apartheid Society, the Private Sector, have a median wage that is a thousand pounds a year less than that in the Public Sector, pay their taxes to enable the Public Sector to have pensions they can only dream about … and then they can't get their kids educated!

But the conclusion of the Brussels Summit in the early hours of last Friday morning justified my decision to delay troubling you with a few reflections until now.

For the life of me I fail to see what the Prime Minister has done that is so "spectacularly" bad (to use an Ed Milliband description) or what has given cause for LibDem hand-wringing and full-blown media accusations of damaging our National Interest and being in some freezing isolation. Let us just list a few realities that are there for all to see:

  1. We don't belong to the Club that has the problem. So whilst we want them to sort it all out and get growing again so we can get back to selling to them and having them invest in our Country and not have default bring down any of our Banks, why should we feel "isolated" not to have been invited to the Club Meeting?
  2. So Brussels (sorry … Berlin) want an EU (not Eurozone) Treaty to ensure that domestic tax rates, levels of public spending and banking regulation EU-wide are set by Brussels (… er … or by somewhere else) and not individual countries. The Prime Minister has said no to that. What was he meant to do? Say yes? Imagine the media storm and the attacks from Mr Balls if he had turned over and had his tummy tickled (or "entered into meaningful compromise in the interests of Franco-German export markets" as it might have been described) on that one!
  3. As De Gaulle said in the mid-sixties, "France doesn't have friends, she has interests". Why is it OK for Monsieur Sarkozy to act in the best interests of his Country but not for our Prime Minister to do the same?
  4. We are the second largest economy in the EU and the fifth largest on the Planet. No country in the EU is going to stop trading with us because we failed (as Terry Smith so aptly put it) to get a ticket for the maiden Voyage of the Titanic.
  5. The developed economies (including us and the USA) have paid themselves money they haven't earned for decades. It is not the fault of bankers (save that they could be blamed for lending the difference in the first place) that politicians of all parties have promised the earth to electorates and borrowed the gap between the bill and their countries' sales. Electorates now don't like having their goodies taken from them (who would?) but we simply cannot afford to go on as we did when (and this is the biggest reality check of all) there is little or no growth in the developed nations. Brussels has been marching valiantly towards the 1970's for years. Social Europe has been the great emblematic totem around which electorates have danced and under which growth (the ONLY way to be able to afford a Social Europe) has been trampled to near-death. Making it illegal to work more than 48 hours a week may sound marvellous on the election hustings but doesn't grow your economy to generate the jobs and the tax needed to pay for the services we all want but can't otherwise afford.
  6. The Growth and Stability Pact that the Eurozone Countries entered into at the time of the Euro's inception to govern the various gdp/debt ratios and economic policies necessary to "make it work" contained some tough sanctions. Virtually every country broke those rules at various times over the past ten years when it suited them (including France and Germany) and no one said a word. So there are going to be tough rules and sanctions this time, are there? And what happens when they're broken? Don't hold your breath.
  7. Fiscal compliance, public sector expectations, levels of corruption, work ethic, wage levels, export capability … they are all vastly different in Northern Europe to the Club Med nations. How can one size fit all going forward? Without an integrated Federal Europe it just won't work in recessionary times.

Giving a cancer patient morphine stops the pain but it doesn't cure the cancer. As Michael Portillo has said, 27 (or maybe only 26) countries have now reached the stage where saving the cancer is becoming more important than saving the patient.

The Euro's survival has become more important than what is really, badly needed from Nuremburg to Naples, from Copenhagen to Catalonia and from Athens to Athlone. It is GROWTH that will sort this out; period. And an EU that subsidises its farmers more than its Universities, that makes it so difficult to let employees go that employers don't employ people in the first place and that sets such an appalling example of corporate and financial governance that it hasn't had a clean audit report for over a decade has chosen the wrong tree to bark up. How can the EU be globally competitive when there are rules about throwing perfectly good fish back into the sea (dead) but none about skilling up so many unemployable people across the Continent?

It is not Eurosceptic to want to be a member of a group of 510 million people living in relative prosperity, living in sustainable peace for the first time ever, trading in a tariff-free environment and, through the correct policies, developing a meaningful economic rival to the titans of the 21st Century in Asia and Latin America. 

And so, dear reader, as I lay down my quill until the New Year I look forward to 2012 with a certain trepidation. But the UK can anticipate some morale-boosting high points, with the Olympics and the Diamond Jubilee bringing a collective burst of pride to us all.

I'd rather be dealing with the problems of the World from this Country's present situation than anywhere else in the EU, that's for sure.

Merry Christmas!