Europe in crisis – Sussex experts speak out
The collapse of the Euro, a UK exit from Europe, the end of the coalition and even the political disintegration of the UK – these are still possible outcomes of the Euro-crisis, according to experts in the Sussex European Institute (SEI) at the University of Sussex.
As events in Europe continue to unravel at dramatic speed, academics in European politics at Sussex have stepped up their efforts to provide scholarly analysis of the latest developments as they occur. Now their commentaries are available as online articles - a month ahead of planned publication of their views in the Institute’s termly newsletter, Euroscope.
The articles, all by leading academics in the field with a proven track record of commentary on European politics, cover the EU and the euro zone crisis, Cameron’s stance at last week’s EU summit and the subsequent fall-out in British politics.
Some of the conclusions are:
- Failure in Brussels: The European summit has not solved the Euro-crisis and the Euro may still collapse, in which case the bust-up in Brussels may not matter quite as much as it seems to right now. The recent European Council meeting announced a plan to negotiate a treaty on fiscal discipline by March 2012 and provided small amounts of additional funding, partly via the International Monetary Fund, to help indebted states. But it failed to convince the European Central Bank (ECB) to expand its so-called 'quantitative easing' to buy up bonds of Italy and Spain and others. With Italy needing to roll-over debt in early 2012, the monetary union could still collapse.
- Global impact of any Euro collapse: A collapse of the Euro would throw not just Europe but much of the rest of the world into severe recession.
- The Cameron effect: The Prime Minister’s decision not to work with the other 26 member states to solve the crisis may be a historical turning point in British politics, leaving the country isolated and ultimately destroying not just the current coalition but, if it increases support for independence in Scotland, the UK itself.
Here, the authors share their various opinions on how the Euro drama might play out.
Q How has the UK’s position in Europe been affected by economic crises in Europe?
A The new treaty proposed by the European Council will be intergovernmental and stand outside existing EU treaties. The UK will remain a member of the European Union (EU), which is governed by constitutional rules set out in the European treaties. No one can force the UK to leave the EU. However, the UK is now regarded by the other 26 members, even former friends such as Poland and the Scandinavian countries, as being unreliable, lacking in solidarity and destructive. Continental Europe thinks that Mr Cameron tried to undermine efforts to save the Euro – even though this probably was the last thing he wanted to do. So it is unlikely that anyone would move to stop the UK's exit if that is what the government wants. Critics of Cameron’s stance argue that the UK has thrown away in a few days the political capital and credibility that governments of both parties have spent years building up.
Q How will events in Europe impact the UK’s coalition government?
A Crisis or no crisis, Europe would have had the potential to cause the coalition government a headache. But Mr Cameron's 'veto' – and Deputy Prime Minister Nick Clegg's reaction to it – has turned an international crisis into a domestic drama that could spell the beginning of the end for a coalition that, even to many Liberal Democrats and Conservatives, was always somewhat counter-intuitive. On the other hand, the junior partner in that coalition has faced humiliation before (on tuition fees and electoral reform, for instance) without showing any serious inclination to walk away. Whether they grumble but stay right where they are will depend on whether the bust-up in Brussels is merely a temporary blip or, as many Conservatives hope, an irreparable tear in the fabric of the UK's relationship with its EU partners.
Q What would be the consequences of a Euro collapse for the UK?
A If the Euro goes down, all bets are off. Although UK banks may not be as exposed as some of their continental European counterparts, they still stand to lose billions. If that happens, the credit crunch will get a whole lot 'crunchier'. Exports and output in the 'real economy' will also dip dramatically, offering the prospect that the incipient recession may even turn into a depression. If that happens, the government's aspiration of reducing the deficit in four or five years will be a distant memory. Whether it suffers politically, however, will depend on the extent to which it can blame Europe for all our woes and whether Labour can come up with a credible alternative – something of which there is as yet little sign.
Q Why should the UK be answerable for the problems of other EU states?
A The UK's financial services industry is actually responsible for much of the country's debt and deficit. In seeking to protect the industry Mr Cameron – by weakening Britain's position in Europe more generally – may actually end up damaging precisely those interests he sought to stand up for. We also need to consider the paradox that Britain's (and Denmark and Sweden's) insistence on staying out of the single currency may have made it easier for the rules to be bent by those countries that did adopt the Euro – and it was the bending of those rules that led in no small part to the current crisis. Semi-detachment, or even complete separation, may seem like an attractive position to some but given geographical and economic realities it may be a self-defeating stance.
Notes for Editors
The Sussex European Institute (SEI) was founded in 1992. SEI is the leading research and postgraduate training centre on contemporary European issues, with a distinctive philosophy built on interdisciplinarity, a broad and inclusive approach to Europe, policy-relevance at the academic cutting edge, and an integrated approach to the European and the domestic levels of analysis.
SEI was designated a Jean Monnet Centre of Excellence in 1998 and works in close collaboration with pre-eminent research centres in Europe and the wider world. SEI acts as the hub of a large range of networks for the academics, researchers and practitioners who teach on our programmes, supervise our doctoral students and collaborate with us on research projects.
SEI was ranked second in European Studies research in Britain in the Research Assessment Exercise (RAE) of 2008.
Academics in SEI continue to analyse developments in Europe via weekly research-in-progress seminars and a working paper series. There are also plans for a conference on the future of Europe next September as one of the events marking SEI's twentieth anniversary.
The Euro crisis articles online:
- Emeritus Professor Jim Rollo: After the Party: what next for the EU and the Euro Area after the Cameron Veto
- Dr Peter Holmes: Blundering slowly to the wrong solution to the wrong problem
- Dr Martine Huberty Is the Eurozone crisis turning into a crisis of legitimacy?
- Dr Lucia Quaglia (with Dr Kenneth Dyson, University of Cardiff) : The politics of the Eurocrisis
- Professor Alan Mayhew Will Germany save the Euro: Moral Hazard and the ECB
- Professor Tim Bale A 26:1 outsider? David Cameron, the UK, and the Eurozone Crisis
- Professor Jörg Monar The EU in crisis – testing the limits and potential of solidarity
For interviews contact the University of Sussex Press office.
University of Sussex Press office contacts: Maggie Clune and Jacqui Bealing. Tel: 01273 678 888. Email: email@example.com
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