Posted on November 25, 2011 by Phillip Lee

The current situation in the Eurozone is of great importance to Britain and hence Our local economy here in the Thames Valley. The Eurozone, which was created in the minds of many politicians in the years following World War II and established under the Treaty of Maastricht by the European Union in 1992, today is at the boundary of collapsing. The UK’s direct contribution to any Greek bail-out is limited to its participation as an IMF member, but the indirect effect of a Greek default on the UK would be disastrous. As a result, I will be pushing for the Conservative Party to have a referendum on renegotiating our relationship with the Eurozone.

The original idea was to create a “United States of Europe”, a political and economic unity, with no borders, customs fees, one common currency and lasting peace for the generations to come. In contrast to the US however, Europe is characterised by different languages, traditions and histories and demonstrates no consistency in foreign, economic and defence policy. Thus, a genuine unity is still far off. But can you have a monetary union without full-scale co-ordination in economic policy of all member states? The crisis that the Eurozone and its members are stuck in today reflects how challenging that problem is proving to be. Former independent states start to challenge the restrictions that are dictated by a superior body that appear to have lost the ability to make effective decisions. Especially the lack in leadership to provide sound conclusions to overcome the financial instability of some of its members (i.e. Greece, Portugal, Spain and Ireland) is increasingly worrying. The effects of the Eurozone crisis on the UK could be dramatic. First, EU countries are Great Britain’s most important export markets and credit defaults in some states can have an adverse effect on our export earnings. Second, the UK financial sector – one of the major income industries in our country – is closely involved in the debt crisis by providing securities to several member states. According to figures from the Bank for International Settlements, UK banks hold $14.6bn worth of Greek sovereign debt, $34bn for Germany and $56.7bn for France. Thus, Greece’s rising level of debt to 350bn Euros has not only placed a huge strain on the Eurozone, but also Great Britain.

I am increasingly coming to the conclusion that a referendum on the details of our membership is needed. In fact, to have ever voted in favour of the European Union you would have to be born before May 1957. However, this is the generation that is expected to pay the debt. I believe that the concept of Europe as it stands is not able to respond on the one hand to the increasingly complex market forces and to the other to the change of member states to define solidarity and sovereignty.  In those uncertain times, a weak European government with a weak European currency is not only dangerous for the members within, but also for the countries that help to stabilise the situation.

(Published in The Wokingham Times in July 2011)