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Original poster

Cameron uses UK veto - what will it mean for us and Europe (and the rest of the world)?

268 replies

Callisto · 09/12/2011 08:10

Just that.

I'm glad that DC had the balls to use the veto - the treaty being discussed would not have been good for Britain and could have been bad. However, the Asian markets have already responded by falling and I'm guessing that that US and Euro markets will fall too. So, are there any economists (or otherwise) out there who can throw some light on what may happen next?

OP posts:
niceguy2 · 09/12/2011 18:40

Personally I think we'd be in deeper poo than we already are. I read somewhere that our deficit was about the same size as Greece's.

We'd have been unable to change our interest rates which would be set by Germany the ECB nor would we been able to do several rounds of Quantative Easing. Both tools which have been vital in propping up our economy.

TalkinPeace2 · 09/12/2011 19:05

The UK's deficit is very different from that of Greece.
For a start there is a 90% chance that the numbers are correct.

The UK joining the Euro was never really on the cards since the day we dropped out of the ERM so its a bit of a non discussion
UK Interest rates have roughly tracked those of Europe and the US for many years - because if they didn't the money market traders would penalise the outlier.

I am still not sure I'm convinced about QE as much of the money has been hoarded by banks to prop up their balance sheets rather than pumped back into tangible industries like manufacturing (as is the case in Germany and Poland)

But the main thing is that without Government backed mortgages - as they have in the US (you hand your keys back, the bank chase the government for the debt, not the borrower) we have a HUGE housing readjustment brewing in the whole of Europe which will evaporate a lot of "wealth" especially among the middle classes and those who start businesses

mathanxiety · 09/12/2011 19:37

Chasing the government for the debt means chasing the taxpayers for the money, of course...

NinkyNonker · 09/12/2011 20:07

I agree with MoreBeta. And on a tangent, we need to start making stuff again. We will never compete on mass produced goods, however we are great at specialist, high technology science and engineering. We need to raise the profile of these fields, attract the bright graduates and start building niches.

MrIC · 09/12/2011 20:47

what veto?

apologies if somebody has already pointed this out, but dear Dave didn't actually stop anything from happening (so, therefore, didn't actually veto anything). He said he wouldn't agree to the proposal as his party's funders in the City didn't like it. However the 23 of the other countries decided to go ahead with the proposal anyway, just not include him. So in effect:

  • Britain has been left out of the decision making process
  • France and Germany are going ahead with their plan
  • Dave looks like a party-pooper scared of his own party

Nice one Dave!

bemybebe · 09/12/2011 20:50

"France and Germany are going ahead with their plan"

Since when do we have to do what France and Germany are telling us??

dikkertjedap · 09/12/2011 21:07

Quite a plausible scenario is:

  • 26 countries will start working towards much closer integration and tax harmonisation. They will implement financial transaction taxes. Finance companies reliant on euro area might be better off inside than out, e.g. in Frankfurt or Amsterdam.
  • UK is out, lot of bad blood from other 26 towards the UK, UK increasingly marginalised and unable to win favours for anything it likes. Possibly may as well exit EU altogether. Pound collapses but UK has nothing much to export and needs to import a lot, thus further increasing its trade deficit and liabilities as a result. Deep recession.

Other scenario (slightly less likely):
-eurozone breaks up

  • deep recession or worse in eurozone and UK
bemybebe · 09/12/2011 21:12

afai understand all treaty decisions have to be made unanimously. no unanimous vote - no ability to change the treaty

iloverainbows · 09/12/2011 21:31

I havent read thoroughly so apologies if this has been said already. The 'Robin Hood' tax would raise 49 billion for the EU, of this 34 billion would come from London, of course Sarkozy et al are unhappy about Cameron. I believe he made the right call actually. Whilst it looked like he was snubbed by Sarkozy frankly, they were hardly going to hug him and have a tete a tete was he? You see a snap shot in a clip.

I am pleased by this result but then I have always struggled to understand Europe, I can't understand why we turned our backs on the likes of NZ and Oz. We are a country of over 60 million people, we have big buying power, don't forget that.

MoreBeta · 09/12/2011 21:37

That is my understanding too. The UK is a block on treaty changes at the moment.

TBH, France is going to regret this. Without the UK, France is going to be vulnerable to being pushed around by Germany. When France loses its credit rating the job wil be complete. Germany wil be running Europe.

Youllbewaiting · 09/12/2011 21:40

Not a Tory, not a Dave fan, but I'm with him on this one, the UK would have come out of this worse off.

RyokoTheRedNosedLamedear · 09/12/2011 21:44

Got nothing to do with the UK not being under the thumb of Europe and all that crap. he didn't want a part of it purely because he doesn't want tight controls on the banks, seeing as they provide 40% of the Tories funding, he has to keep them sweet with toothless laws and insultingly low taxation, so they are free to do as they please and fuck us all over time and time again.

TalkinPeace2 · 09/12/2011 21:49

Iloverainbows
tobin tax - well, YES, it will hit London harder than the rest of the EU
cos the rest of the EU had not fallen sucker to the non dom / cap gains crowd and makes traders pay INCOME tax rates on their turnover
so the 0.001% charge will be diddly squat on mainland europe

in London on the other hand, all the trades that ended up with the HMRC tax office buildngs being owned by a Cayman Islands Company (Mapeley Steps) would have at least been taxed (at a pittance rate) by the tenant.

NB
The city know EXACTLY what each trade is worth - that's how they calculate the "bonuses" ffs

MoreBeta · 09/12/2011 21:57

Fraser Nelson (Editor of The Spectator) on Sky newspaper review just said that this puts the UK an a different trajectory to possibly exit the EU.

I really feel he is right. In effect, the other EU members rejected the UK today in a last desperate attempt to save the EU project. It will fail so in the end it wil not matter. The financial markets will bring down the EU one Govt at a time. Merkozy hates the City, blame it for the entire problem his own and other countriesface. Problem is he is ignoring the fact that he and previous Govts just borrowed too much and lived off Germany providing transfers via EU subsidies and especially the huge agriculture budget.

On another tack, I feel this may also break the Conservative - LibDem Coalition. For once Cameron did the right thing today. Just stil have a feeling the UK will back down and come to a messy compromise that is not really in our interest and yet having damaged our position in Europe.

iloverainbows · 09/12/2011 21:57

Of course they know what trade is worth, FGS they are not stupid, we all know that. But what have successive governments done, especially the last government, they have decimated our manufacturing industry and bigged up the city/financial services industry. That is what we have (along with a massive populuation) and whilst NONE of us like it, it is what we have. The other option is that we go with Europe the land of 'rules that we'll just change as we see fit to fit our agenda', ignore referendum results (Ireland) etc etc. I know which I prefer. If he had gone with the tax it would have been bye bye city. It IS hard to swallow but I don't see another way. We are in one big mess.

claig · 09/12/2011 22:05

I think the eurozone will be a success and the Euro will strengthen. The markets will try and pick off governments and downgrade the credit ratings etc. but I think they will ultimately fail.

I think Heseltine knows what he is talking about, and as mad as it seems, I think that Britain will eventually have to join the Euro.

www.dailymail.co.uk/news/article-2064104/Euro-bounce-Britain-join-says-Tory-Michael-Heseltine.html

Colleger · 09/12/2011 22:06

Big balls Dave, you deserve huge respect for coping in such a hostile environment. You've got my vote if you can hold your nerve!

TalkinPeace2 · 09/12/2011 22:08

bye bye city
PLEASE stop falling for that empty threat
the braces brigade will not leave (as me to detail in the morning)
AND the little ratbags need to have an "onshore" base
to get away with their games

the bits of what they do that add value to our economy will survive both tonight and a tobin tax
and the rest can go to hell in a handcart the sooner the better

claig · 09/12/2011 22:09

'His intervention came just days after German finance minister Wolfgang Schauble warned that the pound was doomed, and said that Britain would be forced to join the euro.'

I think there is a political and financial power struggle going on and although the City and the markets are very powerful, I am not sure they will be more powerful than the Eurozone in the longterm.

claig · 09/12/2011 22:10

I doubt this is about the Tobin tax, I think there is much more at stake.

maypole1 · 09/12/2011 22:10

He had to do it, if he signed he would of had to hold a referendum on the EU we all would of voted no then a year later he would of given the same answer he is giving now

This is not about if the euro breaks up it's about when and we shall be the ones dictating the terms

A Tobin tax that were are not in is fab news why will euro banks trade out of france, or greece when they have to pay were will they look to trade with out the monkey on their back us I believe as we speak euro banks and finical services are packing up and looking to London which means jobs

We shall see how long it takes technocrats to turn into unelected dictators we shall see how long germans will prop up those who are not willing to curb their own spending

Its not if it falls apart its when it took the US about 200 years to get fiscal union and the French and Germans think Europe can do it in 10 hour meeting WTF

smallwhitecat · 09/12/2011 22:13

This reply has been deleted

Message withdrawn

maypole1 · 09/12/2011 22:14

And the swedes will never have this I have heard all budgets will have to be agreed by Brussels first whatever
The swedes are used to governess by referendum the swedes have said yes with out asking the people lets see how brave the Swedish pm is when he gets home ay

MoreBeta · 09/12/2011 22:16

maypole - very good point. Again feeding my scepticism. Did DC really reject the Treaty change in order to avoid a referendum?

Once he gets the financial services tax taken out or we get an opt out then I still feel he will agree the treaty amendment (which will be defined as not being fundamental) and we will still not get our referendum.

edam · 09/12/2011 22:20

I'm no fan of the city or the Tories... I would like a Tobin tax. But not introduced to beggar the UK and transfer even more wealth and power to Germany. Our bankers may be horribly destructive but I can't see anything good for the UK coming from empowering German financiers instead.

I am concerned about us being sidelined in EU decision-making but someone said today it's like being isolated by failing to board the Titanic. All the other passengers may be looking smug now...