The return of David Cameron from Brussels was greeted by the clinking of glasses by conservative backbenchers at a pre-arranged party at Chequers. He was the man who had finally said 'No' to Europe. He hadn't blinked, and in doing so had protected the 'national interest'. He was the saviour of British sovereignty! Or was he? Outside of the country home, however, the rest of country woke with the realisation that their relationship with Europe had now changed. Predominantly for the worse.
The failure to reach an agreement at the summit of EU leaders over closer fiscal integration, is one that has several implications for both going forward. Firstly Britain will now have to sit on the sidelines and watch the rest of Europe decide their (far from certain) fate. The French President, Nicolas Sarkozy, claimed after the summit that Brussels had seen the emergence of "two Europes", one made up the 26 EU nations and the other including Britain alone. This is dangerous for the latter. Europe's survival is of extreme importance for the short and medium prosperity of Britain. Currently Ireland, Spain, France and Germany are all some of Britain's main trading partners (with all being in the UK's top 10 export partners in 2009) and so their economic demise would hurt, and hurt hard. It would take several years for the UK to strengthen trading ties with its other rapidly growing partners such as India and China. With no significant internal growth on the horizon and the vision of the current government to be an 'exporting nation', the need for export led growth for Britain has never been greater.
Mr Cameron cited the failure to reach an agreement was down to his decision to protect Britain's 'national interest', in which he was referring to protecting the financial sector (the 'City') from a potential collective European regulatory and taxation system. Now while it is widely known that the prosperity of the UK before the Great Recession of 2007-20008 was largely down to the 'city'. The failure by regulators and the government to see that the sector had become to bloated and its failure would put the whole economy at risk. I site that we unfortunately witnessed.
A European call for tax on financial transactions, a so called "Robin Hood" tax by fans, should be implemented on the City of London, something so far the coalition government has resisted. (It is understandable on the conservative side considering around 50% of its funding comes from people who work in the 'City') Despite the scaremongering of the 'City' that a tax would lead to devastation for the sector, the figure mooted by other economists of only around 0.005% would raise around £11 billion for the British government. And with budgets being slashed throughout the economy, the 'city' should share some of the pain. After all we are "all in it together", according to Mr Cameron.
So as Cameron and his backbenchers wake up from the night before, hung over and dazed. One can only hope that realisation that Britain's relationship with Europe has changed, and not for the better , will have a sobering effect.
Author: Thomas Viegas