“If the Euro fails, then Europe fails”. So said Angela Merkel, the German Chancellor. This is what we have been hearing from pundits and experts for weeks now. Predictions of economic Armageddon if the eurozone breaks up have been aired ad nauseam by politicians and experts.
Commentators and journalists hardly ever ask the two most important questions. Why? How?
The Euro as the currency of seventeen diverse countries with their different cultures, lifestyles, traditions, tax and spend regimes is dead. The sooner we realise that, the better it will be for everyone. Research by the Centre for Economic and Business Research (CEBR) predicts a rosier future after a short sharp shock of eurozone collapse.
In an article in the Telegraph, headlined “Collapse of the Euro will help Britain”, the conclusions of the research are presented as:
Britain will be better off in five years’ time if the eurozone breaks up than if the single currency survives the debt crisis, research suggests today. The disorderly break-up of the euro would mean a short, sharp economic shock and probably a recession, but would be followed by a quicker return to strong economic growth, according to the Centre for Economics and Business Research. The economists also predict that break-up would free many eurozone members from the deficit-cutting austerity policies that threaten to subdue their growth for years.
The article quotes the research thus:
If it [the eurozone] breaks up the immediate pain is much more intense, but then there is a more stable basis and we would expect that within about 30 months growth will actually be faster than if the eurozone survives in its current form.
I am no economist, but this analysis makes a lot of sense to me and probably to most people in Europe. In the absence of cogent explanations to the contrary from politicians who have invested a lot of capital in the Euro, and are influenced by self serving institutions and lobbyists, I believe the CEBR conclusions.
The clash between democratic ideals and the straight jacket of the Euro is succinctly put in this scenario by Jackie Ashley in the Guardian:
David Cameron and George Osborne have resigned. They did their best, but were unable to carry support, even in the Tory party, for the devastating attacks on pensions and living standards the markets demand. To prevent a British default, Reginald Pinstripe-Grey, formerly chief economist of Megabank in New York, is to be installed in the Lords as acting prime minister, leading a Government of Unity and Patriotism. In London, representatives from the EU and German “advisers” will sit alongside the truncated cabinet. British MPs have been warned that any attempt to resist the extreme austerity measures by parliamentary vote will result in the final collapse of the British economy, and anarchy. No elections will be held in the meantime. Orwellian fantasy? The plot of an unlikely TV drama? For many voters in Greece, and Italy too – despite joy at the disappearance of the idiotic Berlusconi – this effective suspension of democracy feels all too here-and-now.
What is happening in Italy and Greece could well be repeated in Portugal, Spain…etc. The position of the British government is curious and contradictory. Having congratulated itself for staying out of the eurozone, British politicians, nevertheless, urge other countries to save the Euro. If it is right for Britain to be out of the euro, surely it is right for other countries to ditch it.
It is one thing for people to enact measures through democratically elected politicians, it is quite another to be told to swallow a medicine that is causing a lot of pain by leaders of other countries and unelected bodies such as the ECB, financiers, and the IMF.
The remarks by Angela Merkel would be more accurate if turned on their head. The austerity and hardships imposed on people to save the Euro are leading to disharmony, division and hostility between the peoples of Europe. This is the opposite to the European ideals of unity under the banner of freedom, democracy and human rights. Now Mrs. Merkel, these are ideals worth fighting for, not the Euro.