Jonathan Fryer

Writer, Lecturer, Broadcaster and Liberal Democrat Politician

Posts Tagged ‘euro’

Pound Euro Parity?

Posted by jonathanfryer on Saturday, 19th August, 2017

Pound Euro exchange rateIn the run-up to last year’s EU Referendum, many UKIP and Tory Brexiteers proudly wore pound signs (£) in their jackets, symbolising for them the strength of Britain standing alone. But I wonder how they are feeling now that the pound sterling has sunk so much in value? Airport currency exchanges in the UK this week have been offering just under one euro per pound and at ATMs on the Continent the exchange rate is not much better, So for UK travellers going to the Continent, things are about a quarter more expensive than they were in June 2016. People staying at home are being hit, too, as inflation caused by higher import prices is now exceeding wage rises. Of course, some exporters are benefitting from sterling’s fall, but for many of them that boon will be short-lived, as more expensive imported raw materials and components will mean that their costs will rise, and so must their prices. So the net effect of voting Leave last year has been that most people are worse off — and Brexit hasn’t even happened yet! Britain’s economy has meanwhile fallen from being the strongest-growing among OECD countries to the weakest. The Eurozone is doing better than it has for some time and the euro itself has risen against the US dollar, too. Naturally, as a Remainer I believe that the sensible thing now is for the government to admit that Brexit is going to be far worse than they imagined and therefore they will pull the plug on it, organising a referendum for permission to do that, if necessary. But I very much doubt that Theresa May, let alone her Brexit team, has the courage to do that. So the UK may indeed crash out of the EU in 2019. And I would not be surprised if some future UK government has to go knocking at the EU’s door, asking to be let back in, accepting the euro and all.

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Spare a Thought for Expat Pensioners

Posted by jonathanfryer on Thursday, 18th August, 2016

expat pensioners 1The collapse of the pound sterling in the wake of the Brexit vote was widely predicted, but the ramifications are only just beginning to sink in. London’s tourist trade is enjoying a boom and so should British exports. But soon consumers in the UK will start feeling the reality of higher prices as we import so much of our food and other products. Families heading for the Continent this summer are finding everything much more expensive, with the pound now almost on a par with the euro. But spare a thought for the many British pensioners who decided to move to a warmer climate in countries such as Spain, Portugal or Greece on retirement. They have been used to getting by on a regular pension income but when converted into euros now it is worth nowhere near as much, causing real hardship. It’s a pity more British expats did not register to vote in the Referendum; any who have been abroad for less than 15 years were entitled to do so. Presumably most who did register voted for Remain, but whichever way they voted all but the most wealthy will now be beginning to feel the pinch. Moreover their long-term future on the Continent cannot be guaranteed unless a Brexit deal offers some sort of reciprocal arrangement for EU migrants — or even better, if the UK government or parliament decides that proceeding with Brexit is not in people’s best interests.

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Cyprus Banking Crisis

Posted by jonathanfryer on Monday, 18th March, 2013

Thoughtful piece from Petros Fassoulas of the European Movement on Cyprus, the banking crisis and the EU:

18 March 2013
Is the Cyprus deal the lesser of all evils?
In case anyone thought that the bank and sovereign debt crisis that has engulfed certain parts of the eurozone has produced all its dramatic twists, events this weekend came as a rude awakener. Eurozone leaders agreed early on Saturday morning a deal to bailout and restructure the Cypriot banking sector.
Bank in LimassolThe most controversial part of the deal sees a tax levied on depositors to raise about 5.8 billion euros, to add to the €10 billion committed by the Eurozone and (probably) IMF. A 9.9% levy will be imposed to deposits over 100.000, while deposits below 100.000 will face a levy of 6.75%. So for the first time depositors, who were considered sacrosanct until now, are forced to share the cost of a bail-out. A lot has been said about how this decision was reached. The blame shifts depending who one talks to, but the Financial Times give a good account. It seems that considerations about the future of Cyprus as an off-shore financial centre played a role when deciding how widely to spread the pain among depositors in Cypriot banks. It was feared that taxing only non-resident depositors would scare investors away. So the main bone of contention (in an overall contentious decision) is that smaller depositors are put on the firing line, in a move that is seen as unfair and dangerous. Asking working people and pensioners to sacrifice their savings in the service of a failed banking sector is indeed cruel. But WSJ’s Simon Dixon makes a fair point, there is an element of fairness when asking locals to contribute to the bail out of their country’s banking sector, especially when that sector represents such a huge part of the country’s economy.
Many argue that it should not have come to this at all, that depositors should have been spared all together. But as Hugo Dixon of the Reuters argues the Eurozone and the Cypriot government had very little choice. Imposing a haircut on government debt, like it was done in Greece’s case, was not possible because most of the country’s sovereign debt is held under English law (making a Greek-style restructuring hard) and the remaining is held by Cypriot banks, making a hair-cut self-defeating. Hence the decision to impose a tax on depositors, many of whom are non-resident, predominately Russian and in many cases suspect of money-laundering. It would have been a hard task politically to explain to taxpayers across the Eurozone why they should contribute more to a bail-out that would have, to some extent, helped Russian oligarchs.
Cyprus euroThe most important thing that one should consider is what would be the cost of an alternative. In the absence of a bail-out deal (one that the Cypriot government had delayed long enough) Cypriot banks (which are already under ECB life-support) would collapse, taking the Cypriot economy with them. Lest we forget that the banking sector in Cyprus is more than 5 times the Cypriot economy. The one good thing that can come out of this is the de facto reduction of Cyprus’ banking sector to a size closer to the EU average, as the Eurogroup statement, that followed the bailout agreement, calls for. As we have seen in other European countries like Ireland and the UK, an oversized financial sector holds huge risks for the host country, especially for one whose economy is as small as that of Cyprus. To a large extent this is a banking crisis, rather than a “euro-crisis” and no matter what the structural inefficiencies of Eurozone’s governance (and European politicians inability so far to separate bank from sovereign debt) what Cyprus is faced with is the collapse of a banking sector that grew too big for its own good and made far too many bad decisions.
There is still a lot to play for, not least a parliamentary vote to approve the bail-out deal. Until then there is time and room to reconsider how the burden will be spread among depositors, and there are many proposals on the table on how to shield small depositors and reduce their contribution to the bail-out pot of money. Some reports talk about reducing to 3% the levy imposed to deposits up to €100.000. One last thing. The situation in Cyprus shows that in an interconnected world we are not immune to what happens “over there”. Capital as well as people are mobile, the banking sector interconnected and as a result banks and people’s savings are affected, irrespectively whether we are part of the Eurozone or not. The fact that British citizens who live and hold deposits in Cyprus will have to be part of the bail-out levy shows how important it is for the British government to be as involved as possible in Eurozone governance and EU-wide efforts to address the systemic faults of Europe’s financial sector.
Petros Fassoulas, European Movement

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Vicky Pryce’s Debt Write-offs

Posted by jonathanfryer on Wednesday, 28th November, 2012

Though many — perhaps too many — Brits rub their hands in glee that the UK is not part of the troubled eurozone, and therefore may sometimes benefit from currency fluctuations, only UKIP MEPs and other delusionists could relish the thought of the single currency’s collapse. “Europe”, as so many in Britain continue to refer to the Continent, as if we are somehow not part of it, is still the biggest single market for British goods and is likely to remain so for some time, despite the rise of the BRICs — Brazil, Russia, India and China. Moreover, those who would like us to become another Norway, being part of the European economic area but having no say in the rules and regulations that govern it, are positively unpatriotic, in my view. I was glad that Vicky Pryce, former Chief Economist at the Department of Trade and Industry and later working with Vince Cable at the Department of Business and Skills, stressed, at a Pizza and Politics put on by Islington Liberal Democrats this evening, that the UK is far better in than out when it comes to the EU. The author of a recently acclaimed book, Greekonomics*, she has since her departure from government employment become something of a guru on what is happening in Europe’s economy, with particular in relation to Greece, whence she originally hails. Indeed, she is forever popping up on the TV and radio as the one commentator who knows what she is talking about on the subject, yet does not slag off her compatriots as good-for-nothing lazy tax-dodgers. That is, alas, the image still in the minds of many Germans, for example, though they would do well to acknowledge just how well Germany has done out of the single currency — selling goods left, right and centre — even if they are now expected to bail out the declining European periphery. I was struck by Vicky’s comments about the possibility of the need for a debt write-off for Greece and possibly some others, as their debt levels are unsustainable and will only drive them further into the sloough of despond. I was reminded so strongly as she spoke of the Latin American debt crisis that I used to commentate on for the BBC in the late 1980s. I asked her whether she could ever envisage Britain during the euro — as Peter Mandelson, amongst others, have suggested. She was cautious about the possibility — more so than myself — but she didn’t rule it out completely.

* Biteback Publishing

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20 Years of the European Single Market

Posted by jonathanfryer on Monday, 5th November, 2012

When people ask me ‘What has the EU ever done for me?’ my answer usually relates to the Single Market, which has given individuals and businesses four basic freedoms of movement throughout the 27 member states, relating to goods, people, services and capital. The EU is now celebrating 20 years of the Single Market, though given the current problems in the eurozone it is not, as Internal Market and Services Commissioner Michel Barnier has said, the right moment for a birthday party. Nonetheless, it is appropriate to take stock of what the Single Market has achieved and what still needs to be done. So in member states across the EU events have been going on bringing together interested parties from government, business and civil society to discuss the Single Market 20 Years On. Today the EU Commission’s London Representation has been hosting a conference subtitled ‘ What’s in It for the UK?’. The star speaker this morning was Lord (Leon) Brittan, a former Vice-President of the Commission and one of the leading pro-Europeans in the parliamentary Conservative Party. Unlike many of his colleagues he sincerely believes that Britain should be at the heart of Europe; indeed, he says Britain will probably join the euro one day, when the eurozone has sorted out its problems and, alas, the UK is experiencing its own. It is worth reminding ourselves that it was a Tory peer and Commissioner, Lord Cockfield, who largely designed the Single Market and persuaded Margaret Thatcher to endorse it. And of course it was another Conservative, Ted Heath, who took Britain into the EU in the first place. The Europhobic headbangers of the Tory right should ponder on that more often. Interestingly, the Chair of the European Parliament’s Internal Markert and Consumer Protection Committee, Malcolm Harbour, is also a British Conservative; he spoke constructively this morning too. But I’ll leave the final word to Leon Brittan who declared that ‘we have to sell the EU of consumers and citizens and that is done through stories’. We pro-Europeans have some very good stories to tell and it would be good to hear more of them out in public discourse.

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The EU’s Nobel Prize

Posted by jonathanfryer on Friday, 12th October, 2012

I confess that when I heard that the European Union had been nominated for this year’s Nobel Peace Prize I was somewhat surprised — and I was even more taken aback today when I learnt that it had won it, against competition from over 100 other organizations and individuals. Predictably Nigel Farage, UKIP and the Tory Euro-sceptics immediately went on the offensive, and they got far more coverage in the British media than they deserve. But such is the nature of the UK tabloid Press (and the Daily Telegraph). The more I thought about the award, however, the more I realised how well deserved it is. The EU and its various predecessors have made war between France and Germany unthinkable, which was the prime motivation of the founding fathers. And even more remarkably, the EU has enabled formerly Communist countries of central and eastern Europe to glide back into the mainstream of Europe where they belong, with astonishing speed. Of course the eurozone is going through a difficult patch, but let’s not forget that the global financial crisis began with the sub-prime mortgages in the United States, the collapse of Lehman Brothers and irresponsible practices by bankers, not least in the City of London. That is not the EU’s fault; on the contrary, a more cohesive EU offers the best possible route out of the current problems. It is also notable that the Peace Prize is decided by the Norwegian Nobel committee and that Norway is not a member of the EU. That is basically because Norway has a relatively tiny population and an enormous sovereign wealth fund based on its huge earnings from hydrocarbons extraction. But that did not stop the committee understanding what has been happening in the wider Europe. And I can see Norway one day joining the EU, just as one day Britain will probably be forced to join the euro, after the pound sterling slides into oblivion. But in the meantime, what the Norwegians have said is: ‘the EU has brought peace and stability to our often war-torn continent, and shows every sign of continuing to do so, once the current troubles are over.’

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Germany’s Despair at Cameron

Posted by jonathanfryer on Tuesday, 13th December, 2011

When Angela Merkel met David Cameron 10 days ago, she told him, ‘I want to help you!’ She understood that he had problems with his Europhobic backbenchers and was offering to work with him quietly to help sort out some way that last week’s EU summit in Brussels could help find a structure in which to strengthen the euro (and the eurozone with it) while meeting some of Britain’s particular concerns. But instead of welcoming this offer, when the summit’s opening dinner went on well into the night, the British Prime Minister threw his toys out of the pram, actually jeopardising Britain’s best interests in the process. He had of course already marginalised his party from the European mainstream by pulling it out of the EPP — to which Merkel, Nicolas Sarkozy and many of the EU’s other big hitters belong — so he wasn’t even present at the crucial EPP Leaders’ pre-meeting in Marseilles, or even properly plugged in to what was happening on the Continent in recent weeks. The Germans were aghast at his behaviour, I am reliably informed from the highest source — and not especially delighted that this allowed Sarkozy to prance around crowing like a cockerel ruling the roost. Nonetheless, the Germans have decided to keep schtum, as they believe that openly attacking Cameron would only make matters worse. They will remain silent while praying that Nick Clegg and the Liberal Democrats manage to row the Coalition Government at least a little way back from the disastrous place that Cameron has landed us in. German banks based in the City are horrified by the way things are going; far from helping the City of London, they say, the PM risks undermining it. And a final comment from my high-level source from Berlin (with which I can only concur): ‘Those politicians and newspapers in Britain who describe themselves as Eurosceptics are not sceptical at all. Scepticism implies a healthy determination not to accept something until one has examined it thoroughly. They are actually Europhobes, who blatantly ignore or distort the truth unless it happens to fit in with their own prejudices.’

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Romania, the EU and the Euro

Posted by jonathanfryer on Friday, 30th September, 2011

Despite all the woes the Eurozone has been going through, Romania is still keen on changing to the single currency and anticipates it will be ready by 2015. That point was made clear by Ambassador Ion Jinga at a Federal Trust seminar on the EU Economy: Lessons Learned by a Newcomer, held at the Romanian Cultural Institute in London’s Belgrave Square. The newest (along with Bulgaria) of the EU’s 27 member states, Romania has made giant strides since joining in 2007, as Radu Serban, one of the key speakers at the seminar, underlined. Wages are still low compared with the rest of the Union, but the country has rich resources, not least agriculture, which could become increasingly important if the world experiences a food crisis in a few years time, as some experts predict. A new EU member state has to be proactive, Mr Serban argued, explaining his country’s assertiveness. But he was advised by another speaker, the financial pundit David Marsh, that it might be prudent for Romania to wait a little longer before pressing its case to join the euro. ‘The euro is a type of seduction machine,’ David warned — though the Romanians present still seemed ready to be seduced.

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Iceland, the EU and the Euro-elections

Posted by jonathanfryer on Friday, 30th January, 2009

Iceland is now seriously considering applying for membership of the European Union, having followed a ‘go it alone’ policy for many years (mainly to try to keep control over its fishing grounds). The country metaphorically sank when the tide of the global financial crisis washed over it, making not just politicians but also the general public realise that at times of crisis,  it is maybe wiser to be inside a big tent rather than outside on one’s own. As all prospective members of the EU have to agree to adopt the euro, the Eurozone is therefore likely soon to absorb Iceland and reach up into the northern Atlantic, leaving Britain sticking out like a sore thumb. This is bound to reignite debate about the UK’s eventual adoption of the single currency.

In a recent Europe policy paper, passed by the last Liberal Democrat autumn conference in Bournemouth, the party reiterated its belief that Britain should join the euro in due course. That does not mean we will be campaigning in this year’s Euro-elections for immediate Eurozone membership — indeed, the pound sterling needs to recover quite a bit before it would be at an appropriate level for that to happen — but we should not ignore the issue. Informed opinion is beginning to shift on the desirability of Eurozone membership and I believe British public attitudes on the matter are starting to change.

Yesterday afternoon, I participated in a meeting at the European Parliament in Brussels between British MEPs, some of their staff and the London-based European elections manifesto team, chaired by Danny Alexander, MP. It would be improper of me to divulge details of the discussions, but suffice it to say that the elections are indeed going to be fought on European issues, notably the way that Europe can work together better to tackle current economic challenges, as well as climate change and other environmental priorities, and cross-border security issues. It will doubtless be a huge relief to all those who were embarassed by the party’s  failure to pin its European colours to the mast in previous European elections that this time there is to be no ambiguity. The Liberal Deùocrats have a unique selling point on this in the UK context and at least 30 per cent of the British electorate agrees with us, so let’s go for it!

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10 Years of the Euro

Posted by jonathanfryer on Sunday, 11th January, 2009

1-euro     The European Movement held a day conference on 10 Years of the Euro at University College London yesterday, though any sense of celebration was overshadowed by a deep feeling of frustration that Britain has failed to ‘opt in’ to the single currency, and that the mood of such a large proportion of the British public remains Euro-sceptic. The media were mainly blamed for that, though there was a ray of hope on that front offered by one of the keynote speakers, Graham Bishop, when he pointed out that increasingly people get their news and views from the Internet, rather than from newspapers, so the Rupert Murdochs of this world are losing influence.

However, national governments are as much to blame as the media for giving a distorted view of what the EU is all about. As the former Conservative MEP Ben Patterson said — in a paper ‘The Euro: Success or Failure’, tabled at the conference — ‘All EU governments are tempted to blame “Europe” for difficulties of their own making. Electorates generally have little idea how EU decisions are taken, and are only too willing to believe that there is  vast, unelected Eurocracy in Brussels, imposing absurd regulations out of the blue.’ In other words, if in a pickle, blame Brussels.

The second keynote speaker, another former Conservative MEP (and now active Liberal Democrat) John Stevens asserted that that the Eurozone is not going to collapse, nor will any country leave it. On the contrary, it has just acquired its 16th. member, Slovakia, and others are in transition. The Danish Prime Minister, Anders Fogh Rasmussen, told me a few months ago that he was going to do what he could to persuade the Danish public to join the euro, and similar moves are afoot in Sweden. Which just leaves Britain as the last bastion of euro-scepticism. But as John Stevens said yesterday, ‘If Britain were to join the euro, the euro would be made.’  The EU is proving that it is possible to have an international currency, which can be a model for other parts of the world and help ensure that European political values have clout in changing global geopolitics.


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