"Britain Is In The Wrong Place," Daniel Hannan Blasts "The World Economy Has Left Europe Behind"

Tyler Durden's picture

Authored by Daniel Hannan (Conservative Member of the European Parliament), originally posted at CapX blog,

I love the idea that prosperity can be decreed by a G20 communiqué. World leaders in Brisbane have airily committed themselves to two per cent growth. (Why only two per cent? Why not 20 per cent? Or 200 per cent? Who knew it was so easy?) Meanwhile, in the real world, the divergence between Continental Europe and the rest of the planet accelerates.

The Eurozone has technically avoided its third recession in six years. Having contracted sharply in the second quarter of this year, it managed 0.2 per cent growth in the third. But it seems unable to shake off its debilitating condition.

Six years after the credit crunch, every other continent has recovered robustly. Europe alone appears to have contracted a chronic disease.

That infection has spread right across the continent. By far its three largest economies are France, Italy and Germany, accounting among them for two thirds of the Eurozone. All three are experiencing recurring bouts of illness.

France managed to return to growth largely because of a massive injection of government cash in healthcare. This, though, is hardly a solution. Au contraire, it is more of the medicine that sickened the patient. France last ran a balanced budget in 1974. This can’t carry on.

Italy has now contracted for 12 consecutive quarters. Indeed, to a single approximation, it has not grown since the euro was launched.

But if the malaise in France and Italy was predictable, Germany’s slowdown is a shock. Until now, the EU’s largest state had been carrying the single currency. It acted partly from a sense of historical responsibility – a sincere if incorrect belief that European integration made war less likely – and partly because, so far, the euro has brought advantages to Germany.

It’s true that the meltdown in the Mediterranean forced German taxpayers to write out IOUs to more profligate governments. But it also pushed down the value of the single currency, thus allowing German exporters to benefit from an artificially cheap exchange rate.

So far, like Atlas, Germany has been able to bear the weight of the euro on its shoulders. But it’s starting to sweat and sway. German exports, hitherto the Eurozone’s great success story, are now falling faster than at any time since the global crisis began.

Some blame the tit-for-tat economic sanctions with Russia, imposed because of the war in Ukraine. Others argue that a weak euro disguised the effect of years of underinvestment. Whatever the explanation, German analysts have slashed their growth forecasts. A report by the country’s five leading economic institutes, the so-called Wise Men, says that the economy has “stagnated”, and predicts a rise in unemployment.

We can’t console ourselves with the thought that the Eurozone has been failing to recover because it has been concentrating on paying off its debts. On the contrary, borrowing continues to grow. Bad debt at Eurozone banks is now estimated to be 18.9 per cent higher than previously thought, at about 880 billion euros – equivalent to nine per cent of the entire Eurozone economy. Italy’s national has grown to 133 per cent of GDP; Belgium’s to 107 per cent.

It’s no longer credible to keep blaming the sub-prime crisis. Every other continent has bounced back convincingly. So, indeed, has Britain, which is now the fastest-growing economy in the G7. The EU’s problems are older and deeper than the credit crunch.

The long-term indicators for Europe are dire. While the single currency has certainly accelerated the EU’s economic decline, it did not cause it. The underlying problem may be simply stated. Too few people are generating wealth and too many are consuming it. Europeans are spending more and more time in education, and living longer and longer after they retire. Many of them spend the few years in between working for the government.

Europe’s working age population peaked in 2012 at 308 million, and will fall to 265 million by 2060. The ratio of pensioners to workers will, according to The Economist, rise from 28 per cent to 58 per cent – and even these statistics assume the arrival of a million immigrants every year.

Emmanuel Todd, arguably France’s leading demographer, has observed that these figures disguise big variations within Europe: Britain and Scandinavia have much younger populations than the Continent. He points out that the Anglosphere – the United States, Canada, Australia, New Zealand and Britain – will soon be more populous than mainland Europe, and concedes that Britain would be better off with the other English-speaking democracies.

He’s right. We are now members of the only trade bloc on the planet that is shrinking. The calculation we made when we joined what was then the EEC in 1973 turned out to be wrong.

Back then, we looked across the Channel and saw what looked like a thundering success story. We noticed that our pounds were worth less and less each time we visited Germany, and read clever articles about how the “Rhineland model” of economics was better than our own. We decided to hitch our carriage to what seemed the most powerful locomotive on the planet.

In retrospect, our timing could hardly have been worse. Western Europe had indeed spectacularly outperformed the UK between 1945 and 1973, as it bounced back from the artificial low of the Second World War. Britain, in contrast to most Continental states, had amassed a colossal debt in the struggle against Hitler, and spent the next three decades inflating it away, with calamitous effects on our economy.

But the picture changed with the oil shock of 1974. Suddenly, Western Europe was no longer the runaway success we thought. Far from hitching our carriage to a locomotive, we had shackled ourselves to a corpse.

Worse, we had done so at precisely the moment when common-law and English-speaking economies around the world were beginning a growth spurt that endures to this day. In 2013, the Commonwealth’s economy overtook the Eurozone’s.

All the core Anglosphere countries are projected to grow next year by between 2.5 and 3.1 per cent. India, according to the IMF, will grow at 6.4 per cent. But we can’t sign a bilateral free trade agreement with any of these countries. We surrendered our trade policy to Brussels on 1 January 1973.

The case for being in the EU has been overtaken by technology. You could just about make the argument, in the early 1970s, that regional trade blocs were the way forward. But no one seriously believes that in the Internet age. Geographical proximity has never mattered less.

Perhaps, decades from now, the past 40 years, during which we sundered ourselves from our hinterland and artificially redirected our trade to Europe, will be seen as an aberration. When Charles de Gaulle vetoed our entry into the EEC, he gave a very good reason. Britain, he explained was “insular, maritime and linked by her exchanges, her markets and her supply routes to the most diverse and often farthest-flung of nations.”

Indeed. And those far-flung nations would make a far more natural trade bloc than the EU, bound as they are by language and law, habit and history. After all, the whole purpose of commerce is to swap on the back of differences. It never made much sense to abandon a diverse market, which comprised agricultural, industrial and service economies, in favour of a union of similar Western European states.

David Cameron can hardly have failed to notice, as he looked around the G20 table, that his European colleagues are the ones with the worst problems. Britain is in the wrong place.

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Cognitive Dissonance's picture

"David Cameron can hardly have failed to notice, as he looked around the G20 table, that his European colleagues are the ones with the worst problems. Britain is in the wrong place."

David Cameron is most certainly not an independent thinker or acting in the best interest of the people of Great Britain. So why would he have noticed anything that is contrary to the herd other than to query his handlers on how to gather closer to the herd in order to better feed his controllers?

doctor10's picture

all you really need for currency transactions and transnational business is an iphone app. You don't need a bureaucracy in Brussels to "facilitate" anything-like they do anything more than line their pockets off the europeans anyway.

unrulian's picture

Wait till the US dollar tanks...he'll be glad he's on an island

philipat's picture

Another defector to UKIP?

Sudden Debt's picture

The fact that the populations is going down is because couples can't afford money or time to raise 3 kids anymore.

When both persons in the relationship don't work, people simply can't afford housing anymore.

These days, 50% of wages goes to housing, 30% goes to cars and the rest is for food and a summervacation.

it costs 125 euro's downpayment per 25K you borrow, so when a house costs 400K... having kids now as a young couple... and 3... good luck with that...

Seize Mars's picture

You're right of course, but don't forget the total tax burden (US or UK, take your pick) is something like 50%. So there's that.

BrosephStiglitz's picture

Yup, and both nations are squeezing their middle classes between a rock and a hard place (increased welfare benefits and increasingly [in many cases] regressive taxes) and thus choking the life out of their productivity/future.  Gooood times.

scrawfo_98's picture

solid commentary, so far as it goes. The sticky part is trying to release the constraints without inflicting high, burdensome damage.

 

AccreditedEYE's picture

Clearly, Hannan is not aware that his state boasts the most high tech, in-demand export known to man these days: financial engineering.

High growth and creation of real goods & services is a very antiquated way to look at the world, Daniel. Trust in the UK to do what it does best. Lever and twist capital while destroying sound money principals.

BrosephStiglitz's picture

Hannan has all the hallmarks of a pro Western and pro Anglosphere commentator.  The amount of aggregate leverage which the UK is exposed to is absolutely astounding.

Don't go slinging (literary) fecal matter at Europe yet Hannan, the next few decades are going to be jarring for a number of countries, including the UK.

falak pema's picture

Not just Britain, the whole of the West, from LA to Urals, and down to shores of Tripoli (both in Lebanon as in Libya).

From the Halls of Montezuma to the shores of Tripoli; was what they sang ! 

pitchforksanonymous's picture

It's amazing the number of women I have seen around me getting divorced thinking their prince charming is just around the corner, only to find there aren't a lot of men out there looking for a woman with three kids. Doh!

The whole world is in a depression. It's just being hidden with bread and circuses.

Notsobadwlad's picture

People do not need others outside of their country to provide them with banking, insurance, government, education and religion. There is nothing unique that cannot be done locally.

The whole idea of dividing the world into interdependent spheres of expertise is moronic fantasy... unless those who produce are so blinded by corruption that they cannot see that they have no need for those who do not.

There is no need for an England that hangs its importance on banking and a queen ... who no one needs.

People will gravitate to new technology and give power to those who control the things that they need and want. Money and markets can easily be produced locally.

Roanman's picture

I quit after this bit of nonsensicle crap, "Six years after the credit crunch, every other continent has recovered robustly. Europe alone appears to have contracted a chronic disease." 

GetZeeGold's picture

 

 

had amassed a colossal debt in the struggle against Hitler

 

My inner child is screaming at me....don't you dare comment on that.

 

OK....so I won't.

AdvancingTime's picture

The euro-zone is in a far bigger mess than recent headlines and figures suggest. Most of the growth in the Euro-zone over recent years has been in Germany and that bright spot is now under pressure. Italy has been in recession for two years; France’s economy has been stagnant for months. Now that Germany is in trouble, many economist think the chances of a Japan-style deflationary spiral have risen sharply.

What it all boils down to is Germany can’t keep buying Greek bonds and other bad debt with German taxpayer money until the end of time. The article below looks at the corner Central banks have painted economies into by attempting to paper over reality and how these polices will hinders growth for as long as the eye can see. Bottom-line, debt does matter!

 http://brucewilds.blogspot.com/2014/10/global-economic-malaise-due-to-debt.html

 

Al Tinfoil's picture

HAVE NO FEAR!!!   DRAGHI IS HERE!!!   Our friend and saviour, Saint Draghi from the High Church of Keynesians is going to fix everything by importing that wonderful American concept known as "Quantitative Easing".  QE cures all ills.  Trust me.  It has worked so well in America that national debt is almost beyond imagination, fiscal deficits are huge, the middle class is shrinking and its wealth and income decreasing.  The US gov. says unemployment has falled to 5.9% (by removing from the official numbers the 30% of the working population who have no jobs, and by defining long-term unemployed persons as "not seeking jobs").  As soon as your unemployment benefits run out, you become a "non person".

  But QE has made Wall Street even richer and more powerful, so it must be good. 

no more banksters's picture

"A second consequence for the US deep state would be the loss of Europe in the new Cold War. Except from Britons, who have traditional deep ties and common interests with the US, the rest of Europe could slip to the Sino-Russian bloc which grows rapidly in the military and economic field and increasingly gaining independence from the Western economic system, attracting other countries too."

http://failedevolution.blogspot.gr/2014/11/basic-reasons-for-which-us-de...

RaceToTheBottom's picture

So correct.  Therefore I recommend implementation of a plan to bring more bodies into the British country.  

Preferably African or Middle East Burka Babushkas, both who are particularly adept at plunking out kids (baby burkas) at a prodigious rate.

Doom and Dust's picture

Living in Western Europe and often travelling to Japan, if this is what terminal decline and imminent collapse look like, bring it on. Most people in the world would kill to live in these overdeveloped, immensely wealthy and prosperous nations. And that includes most Americans.

mrpxsytin's picture

I doubt most Amurikans would know where the EU is, let alone kill to get there. Most would probably kill for an EBT card though.

photonsoflight's picture

I do believe that there is a sizable amount of poeple in the U.S. that know where Amsterdam is and would love to visit. cough cough.

Doom and Dust's picture

Always welcome in my hometown. Great coffee!

Azannoth's picture

Europe has been living of off it's "Fat Reserves" for 10-20 years, things are not getting any better here, just that technology keeps things running and astronomical taxes keep (at least for now) the streets sort of clean. However Europe as we know it today won't even exist 10-20 years from now, between the Millions of non-white immigrats, collapsing social structures, ballonnig costs Europe will be done for within a Generation.

RaceToTheBottom's picture

Come to Jesus meeting has been scheduled, just has not occurred yet.

 

Peter Pan's picture

Every nation and every continent has problems of one kind or another, whether they be demographic, economic, political or racial. No nation is an island including Britain.

We will either shortly or in due course enter a period unlike any other in recent history where current paradigms will be demolished only to be replaced with new ones.

The only question is whether those new  paradigms will be based on peaceful co-existence where technology, lateral thinking and synergies prevail or whether the world ends up in a series of fortresses each with its own reality.

Omen IV's picture

"new  paradigm"   - There will be No Sovereign States - sovereignty is a privilege, not a right!

USA + Corporations = the subjective acceptable governance - is the new paradigm for the world - make up subjective atrocities or make them happen via false flags

Ambassador Power rose to prominence in government circles as part of her campaign to promote a doctrine known as the Responsibility to Protect. This doctrine, advanced by the United Nations, is predicated on the proposition that sovereignty is a privilege, not a right, and that if any regime in any nation violates the prevailing precepts of acceptable governance, then the international community is morally obligated to revoke that nation’s sovereignty and assume command and control of the offending country. The three pillars of the United Nations-backed Responsibility to Protect are: • A state has a responsibility to protect its population from mass atrocities. • The international community has a responsibility to assist the state if it is unable to protect its population on its own. • If the state fails to protect its citizens from mass atrocities and peaceful measures have failed, the international community has the responsibility to intervene through coercive measures such as economic sanctions. Should all others measures fail, then military intervention is required. Command and control of that force should be centered in the UN, according to Power and her colleagues.

 

 

photonsoflight's picture

I don't believe it.The nations might be weakened as the nwo crowd tries to create their one world goverment, but it won't last. The next great world spanning empire will be the new ottoman empire 2.0. When that happens all their plans for nwo will go out the window. Prepare accordingly.

Al Tinfoil's picture

"Responsibility to Protect" is an American neo-con construct, their answer to counter the Nurenburg principle (another American construct) that it is a crime to engage in aggressive war against a sovereign nation.  R2P, and the allegedly defensive War on Terror, allow the US and its NATO allies to invade other countries that do not respect US military and economic hegemony.  These have been foremost among the excuses used for military actions and enforced regime change in Yugoslavia, Libya, Afghanistan, Iraq, Syria, Egypt, Ukraine, etc.  The "Colour Revolutions" have been fomented under the R2P and "Spread of Democracy" rubric.  The early Colour Revolutions were actions to spread US and NATO military, poliitical, and economic power, but the recent ones have added the dimension of protecting the Petrodollar system from any country that dared to sell oil for any currency other than dollars.  In Ukraine, however, the US and NATO seem to have bitten off more than they can easily chew in taking on a major oil exporter and nuclear power.  In seeking to drive a wedge between the EU and Russia, drive Russia out of its Black Sea base, and exploit Ukrainian and Black Sea-bed petroleum resources, they have driven Russia and parts of the EU closer to the Asian and BRICS blocs, and Russia has declared war on the Petrodollar system.  The EU nations joined in sanctions against Russia when Russia was their fastest-growing export market and trade with Russia was enormously advantageous for the EU since Russia took EU manufactured goods and supplied oil and gas in return.  The balance of trade was also very much in the EU's favour.  

National Sovereignty has been surrendered to multinational corporations under international trade agreements such as NAFTA, GATT, and the WTO.  ITA terms trump national laws and ITA tribunals trump national courts.  ITAs were sold to domestic audiences as opening foreign markets to domestic goods, but in fact allowed domestic manufacturers to move to low-wage, low-regulation foreign areas but maintain access to domestic markets for the sale of their manufactured goods.  The 1st world nations lost their factories and high wage jobs to Mexico, China, Malaysia, etc., and ran up trade deficits and debts buying foreign-made goods.  Easy and abundant credit allowed the 1st world population to maintain the illusion of prosperity while their incomes stagnated, until the debt burden overwhelmed the middle class.  Now we have come to realize that a "service economy" is a polite term used by economists to conceal the fact that real wealth producing jobs have left and we now have a nation of bureaucrats, hairdressers, cleaners, and fast-food providers ruled over by financial manipultors.  Multinational corporations take advantage of low-tax and tax-shelter jurisdictions (Herr Juncker could tell you all about tax shelters in Luxembourg, I expect) to avoid taxes, and the "laundered" proceeds of business end up in the London City banks where speculators attempt to lever up these profits into greater profits - the EU system seems ideal for tax sheltering and financial manipulation, it seems.  

THE DORK OF CORK's picture

Complete and utter rubbish,

The internet cannot deliver you real goods,

Geographic closeness will get closer

I am taking about basic village life.

Its_the_economy_stupid's picture

"World leaders in Brisbane have airily committed themselves to two per cent growth."

 

One must understand politi-speak. What they are actually committing to is 2% inflation (or 15% or whatever depending on how the economy is crashing and burning).

THE DORK OF CORK's picture

Typical false British meme

"Too few people delivering.wealth"

 

We live in the age of capital ,until we return to the age of labour and the horse these pathetic soundings from a British imperlist will remain just that

armageddon addahere's picture

"Too few people delivering wealth" gee I wonder why.

What happened to the people who used to deliver your wealth? The ones who made the British Empire the richest most powerful on earth?

scurlaruntings's picture

Hannan is Silver spoon Tory boy who empathises, sympathises and longs for the Past 'glory' of the colonial British Empire. (Think of a an even more emasculated neutered Churchill..)As a journalist he's worst than a joke. There's little point in reading any of articles as his opinions are completely divorced from reality. I'm more surprised that idiot hasn't stood for UKIP yet. They represent his entitled right wing corporatist ideology to a tee.

THE DORK OF CORK's picture

People in the UK work but they don't, produce much.

They work to access purchasing power.

To eat the mainly mercantile production of europe.

If people of mainland Europe return to village life then its all over for England which now has a jap like population density.

shovelhead's picture

I believe I will commit myself to growing some pixie wings so I can fly.

This can be considered a reasonable proposition, no?

d2thdr's picture

another proof. politicians dont understand economics.

THE DORK OF CORK's picture

The standard of living is falling in southern Europe is falling for a very simple reason.

In Y2010 Italy and Spain had. Total net migration of 4.25 million people........

These means local youth cannot access purchasing power by way of jobs.

They cannot therefore afford  a two kid family

The function of this is to provide cheap goods and holidays for the British jurisdictions.

Both Spain's and Italy's structural goods surplus with the UK has exploded since the crisis having begun a euro inception.

localizer's picture

The long-term indicators for Europe are dire.

How about another fresh round of Russian sanctions, huh? /s

Pairadimes's picture

That's not a growth target, it's an inflation target.

moneybots's picture
"Britain Is In The Wrong Place," Daniel Hannan Blasts "The World Economy Has Left Europe Behind"

 

The rest of the world has yet to catch up with Europe.  The global debt bubble is 156 trillion.  All bubbles burst and deflate.

basho's picture

"Britain Is In The Wrong Place," Daniel Hannan Blasts "The World Economy Has Left Europe Behind"

oh really, UK is at the bottom of the pile by so many criteria it isn't in any better shape than europe. In many measures it is worse. ...not to mention the food.

what do you suggest DH, maybe BRICS, maybe talking to RU about the Customs Union. Maybe a stop on the new Silk Road.

Or maybe it can succeed in Libya, Iraq or Afghan militarily, fat chance.

the UK is just going back to being a s*itty little island, soon w/o Scotland. Deal with it.

Hamm Jamm's picture

we need to COLONIZE another 3rd world shithole...   to boost the economy  !!    That is all ENGLAND EVER DOES  !!!   

 

I hear ebola is hitting some countries...  better send some Medical COLONIZERS down there to helps with the extraction of resources...  I mean treat the symptoms of the sick and not cure them... ...

 

reality sucks

Equality 7-25-1's picture

Remember when the ultimate backstabbing, bottom feeding, conniving oppressor of Britain and looter of the planet asked the EU to recognize him as their emperor?

MASTER OF UNIVERSE's picture

Margaret Thatcher, Ronald Reagan, and Jeffrey Sachs fixed the UK

for the end game they really deserve. The Whore of Babylon is the Queen of England and she was all in when the Mafia illuminati decided

to rig world markets so that the 1% would reap the windfall. They liked the rigged game because it feathered their nests at a cost to the serfs

and poor. The tables are turned and now the motherfuckers can't take the heat in the kitchen that they decided to burn to the ground. Frankly,

I have _no_ sympathy for the people of the UK or the EU because they

decided to put themselves ahead of everyone else in the world. Their crocodile tears have no effect on anyone other than themselves.

 

NOTE: The Monarchy will be waterboarded, chained like dogs, and photographed naked in a pyramid just for fun, yippie. :|

Prairie Dog's picture

"France last ran a balanced budget in 1974. This can’t carry on."

Er, if it's carried on for 40 years, then why not?