Tag Archives: Britain

Blair develops lean and hungry look. Will he bring in the Euro?

I’ve amalgamated two stories here – one on Blair about to become head (permanently) of the EU which I read in the Guardian on Saturday. Thoughts of Tamburlaine and Augustus Caesar rolled into one spring to mind. England was not enough. The opening two paras are from there. The other is from an interesting website which features European news called EU reporter. Good story EU people. They seem convinced we will have the Euro any minute. A second picture divides the two features.

Tony Blair has been holding discussions with some of his oldest allies on how he could mount a campaign later this year to become full-time president of the EU council, the prestigious new job characterised as “president of Europe”. Blair, currently the Middle East envoy for the US, Russia, EU and the UN, has told friends he has made no final decision, but is increasingly willing to put himself forward for the job if it comes with real powers to intervene in defence and trade affairs.

Blair, who is being actively promoted by the French president Nicolas Sarkozy, recognises he would need to abandon his well-paid, private sector jobs if he won. His wife Cherie – often portrayed as seeking ever more wealth and well-paid consultancies for her husband – is understood to be supportive of him accepting the job.

Some Blair allies also say that he now recognises that as envoy in the Middle East he is not going to be allowed to become the key player in furthering Israeli-Palestinian talks this year, and will be reduced to a role of supporting political development in Palestine and boosting its economy.


There is absolutely no solid evidence to suggest it but this publication predicts that by the end of the month of January Britain will have announced that it intends to join the euro.

We were right about Tony Blair being the lead candidate for the first permanent President of the European Council – heads of state and governments below which ministers of the 27 member states meet on their specific portfolios. We said that 18 month ago to hoots of derision.

Tony Blair launched his campaign in Paris last Saturday and was supported by French President Nicolas Sarkozy who said: “When we appoint the president of the European Union I want us to set the bar high and not aim for the lowest common denominator.”

As to the euro, even Chris Davies the euro enthusiastic Liberal Democrat MEP who pushed his Britain in the euro campaign forward after we debated the point with him initially told us that the idea that Gordon Brown was about to join the euro was “a bit far fetched”.

But we have been tipped by a senior banker in Luxembourg that he economic crisis facing Europe “is bigger than anyone is prepared to admit”. “The banks are desperately short of money,” he added, referring of course to euro zone banks.

In short: the euro zone needs Britain. There couldn’t be a better selling point for a change of fiscal strategy than, coincidental, firstly with the arrival of the reform treaty as the EU constitution is now known – secondly with the onset of a campaign to put former British Prime Minister Tony Blair in the driving seat backed by Nicolas Sarkozy and Angela Merkel, the German Chancellor and the vision of former Chancellor Gordon Brown riding to the rescue of the euro.
In a rather long-winded interview with the BBC’s Radio 4 Today programme recently Gordon Brown highlighted that the British economy was strong with a global reach while America was in recession and the euro zone unable to reduce interest rates because of galloping inflation.

This makes a fascinating backdrop for the highly controversial summit of the EU’s euro group made up of France, Germany, Italy and the UK to be held in London at the end of this month.

It gets more interesting when, as we were told by the UK’s permanent representation to the EU, Chancellor Alistair Darling is “to host” a preliminary meeting in Paris the day after tomorrow January 17.

While the British media focus on the protests from other member states, particularly Guy Verhofstadt, the Belgian Prime Minister, at the ‘arrogance of four large member states’ meeting apart from the 23 other member states it is, perhaps, more interesting to consider the agenda. There isn’t one.

At least, the agenda, if fixed has not been announced. The official reason for the meetings is described as “in response to the global financial crisis how will we respond.
It is also curious that no decision had been taken as late as tonight (Tuesday) on whether the President of the European Commission would be invited.

Chris Davies is one of the brighter British MEPs and he quickly changed his slant – if not his position – as we debated the issue with him. Keen to promote Britain’s membership of the euro he had done the research and highlighted the question of Gordon Brown’s five economic tests.

On the telephone to Strasbourg it was possible to sense Mr Davies’ brain whirring. He provided us with the five tests in a flash by email. They are:

Are business cycles and economic structures compatible with eurozone interest rates on a permanent basis?

If problems emerge is there sufficient flexibility to deal with them?

Would joining the euro create better condition for firms making long-term decision to invest in Britain?

What impact would entry into the euro have on the UK’s financial services industry?

Would joining the euro promote higher growth, stability and a lasting increase in jobs?

Well what about that then? The pound has dropped 10 percent against the euro surely making a switch more favourable? Leaving for the moment the second question would joining the euro create better conditions for firms making long term decisions to invest in Britain? No company wants to invest in a country with volatile exchange rates. That one is a no brainer.

What impact would joining have on the UK’s financial services? EU legislation, introduced since the five tests were drawn up, allegedly in the back of a taxi by the then assistant to Brown Ed Balls, now govern all, or most aspects of financial services across Europe.

The fifth question is subject to the fundamental reason for holding the Paris and London meetings in the first place. Both the UK and the eurozone are desperate to protect jobs and would be happy with simple, straightforward stability.

But what of the second question? Nicolas Sarkozy has been banging on recently about France having more control over EU interests rates and therefore over the European Central Bank. We have been reporting on this fundamental French position for ages but now the president has come clean.

The bank of England was given a questionable independence by Gordon Brown as Chancellor.

As Chris Davies thoughtfully concluded: “Britain is the worlds fifth largest economy. If nothing else membership of the euro would put the UK within the world’s largest.”

He might have added that the UK has the second largest economy in Europe after Germany. But as Gordon Brown said on the Today programme Germany has been, and still is, in recession.

Nicolas Sarkozy has famously told the French people to think like Anglo-Saxons and to speak English. France, as we have reported, is in a parlous economic state.

As we spoke Chris Davies suggested that opposition in the UK would be so huge that the idea we were presenting was fatuous. But then, professional that he is he pondered out loud on the telephone: “The Conservatives are fuzzy on the reform treaty. That issue has the Conservatives on the back foot. That issue has gone quiet. Gordon Brown needs some sort of fight. Joining the euro would take everyone’s mind off the constitutional issues.”

He disagrees that Tony Blair is favourite for the presidency citing Anders Fogh Rasmussen the former Danish Prime Minister as a more likely candidate. We disagree. The EU may have changed but there is a long tradition of appointing candidates from large states to such new and important posts.

Besides, you don’t have to be an economist to ask where are the European banks and the eurozone economy without the fifth largest economy in the world. It would certainly suit New Labour to see Tony Blair, recently converted to Catholicism, as the first president of the EU and right now the negotiating chips are all in Gordon Brown’s pocket.
Last Updated ( Thursday, 24 January 2008 )