In the wake of London’s decision to block tighter fiscal integration in the European Union, French officials have launched a series of attacks on the British economy. Christian Noyer, the chairman of the French central bank, insisted that the UK had “more deficits, as much debt, more inflation, less growth than us”. Finance minister Francois Baroin followed this up by commenting: “The economic situation in Britain today is very worrying”. What triggered these statements was not fraternal concern for the UK’s economic health but rather anger at British opposition to the euro rescue deal and the threatened downgrade of France’s credit rating. Continue reading
On 9 December, most members of the European Union reached an agreement designed to secure the long-term future of the single currency. All 17 members of the Eurozone agreed to the new deal, as did six non-Eurozone EU member states. There will now be binding limits on spending and borrowing, forcing the harmonisation of fiscal policy. Budget deficits of more than 3% of GDP will trigger punitive sanctions.
However, British prime minister David Cameroon refused to accept some of the planned financial services’ regulations. The UK delegation therefore used its veto to prevent the introduction of a full-blown EU treaty, thereby guaranteeing its opt out. As a result, the agreement will be implemented on an inter-governmental basis. On the positive side, this should enable the settlement to be implemented much more quickly, without the need for national consultation in most states. Continue reading
International investors have long taken the view that economic growth and energy consumption go hand in hand. More rapid growth is considered to be dependent on access to energy resources; figures from the past 200 years bear this out. Levels of economic growth were closely correlated with those for coal consumption for the period 1800-1950 and with oil consumption for the decades since then. As a result, the construction of dozens of new coal-fired power plants in China is regarded as a sign of that country’s economic prowess. Similarly, the development of large hydro schemes in Brazil and gas-fired plants in India is given as evidence of optimism in the world’s biggest emerging markets. Continue reading