Small row in Europe, not many hurt

During the August riots I was on holiday in Shropshire. I didn't buy a newspaper and spent my evenings planning days out in places like Ironbridge and Bishop's Castle rather than watching the television news.

What contact I did have with the world of telegrams and anger was via Twitter, and because I was on holiday in a quiet part of England it was hard to relate to the picture it painted. Evan Harris, for instance, didn't like it when I poked gentle fun at his call for the Army to be deployed.

Four months on, and my reaction does not seem so silly, because the riots have been largely forgotten. Yes, there have been inquests - Iain Duncan Smith blames The X Factor, the Guardian blames the police - but all those claims that the riots showed that British society was going to have to change fundamentally now seem a little silly.

Well, I have been on holiday again this week and, perhaps as a result, I have the same feeling about events in Europe. I just don't see that Britain's failure to agree to a new economic treaty is as important as is being claimed.

This is for a variety of reasons.

The first is that I think that the attempt to shore up the Euro is probably doomed in its current form. However strict the new rules about reducing public sector deficits, I do not think that they will be enough to keep the likes of Greece on board. (Besides, the problem in the past was not these rules, it was the fact that everyone ignored them when it suited them.) So this week's events are likely to no more than a footnote to this more important story.

The second is that the agreement the European Community comes to without Britain will make little difference to Britain. We will not be bound by it, but whatever government is in power here will have to adopt an austerity programme for the foreseeable future, EC or no EC.

 

The third is I simply do not feel a sense of outrage that the British government has failed to agree a treaty that would pass over significant control over the British economy. You may think it would be a good idea to do this, but no party advocated such a move at the last general election. I think there is debate to won here first.

I am not happy that David Cameron exercised his veto to help the City of London. Even among Conservatives there is agreement that the economy needs to be rebalanced, with manufacturing having a greater role and finance a lesser one.

And I am also attracted by the idea of a Robin Hood tax. But it does rather depend what you are going to use the money for. When I went to New York with Oxfam last year everyone I met was sure that it should be use to fund development in poorer nations. Then I went to a training event with Save the Children and there was a widespread feeling that the proceeds of the tax should be used to reduce the cuts to public services in Britain.

I find both those ideas attractive. But the idea now seems to be that the EU should tax the financial sector and use the proceeds to ensure that its less well-governed members don't have to pay for their folly in borrowing or spending more they can afford. I find that a far less attractive prospect.

Finally, I note that the new proposals would effectively make Keynesian reflationary measures illegal. Such measures are unlikely to be possible for years to come (we are suffering because we forgot the bit in Keynes about the government running a surplus in the good times), but I am enough of a Liberal to find that upsetting.