Chancellor George Osborne with PM David Cameron. Photo Photo credit: Andrew Parsons/Conservative Party
Despite the Chancellor’s worrying forecasts in the autumn statement on November 29 and the urgent Eurozone liquidity action taken the following day by the Federal Reserve, the Bank of England, the ECB and other senior central banks, there are several reasons why the UK should not feel negative and resigned.
One of the most encouraging ideas to be launched recently is Michael Gove’s intention, as Andy Bloxham reported on November 24 in the Telegraph, to push an ” unashamedly elitist” approach in academies and in free schools, now bolstered by £600 million from the Treasury for 100 new facilities. The idea delivers high quality education, where students and teachers respect each other and fulfill their potential, where being gifted in whatever way is acknowledged and most importantly, where students leave school, knowing how to learn, how to behave in a structured environment and how to contribute; essentially, how to be employable.
Such educational facilities would aim for excellence. They would have a seize your opportunities ethos, similar to the grammar schools, when those important ladders out of frustration and deprivation were the building blocks of an improved society. What is wrong with combining the comprehensive policy of no one’s left out with the grammar school concept of high quality? No matter the students’ origins, this would raise their morale and in time – and make them more employable, as the business world has requested.
So where would these business friendly school leavers go? A significant proportion would go on to university, increasing numbers into apprenticeships and others would seek work. The apprenticeship option has recently been enhanced by the creation of 20,000 new places, but with 1 million young people out of work, the seeking work option is naturally difficult. To meet this challenge, the autumn statement contained a billion pound programme to aid the young unemployed with 410,000 work places. Moreover, they will also be helped by the autumn statement’s credit easing for small businesses of £40 billion because small businesses are likely to employ school leavers in their areas. In addition, there is another £25 billion for infrastructure projects, a significant measure designed to stimulate growth and raise employment.
All this action and vision is encouraging. It points the way forward. The ’90s recession, although not global, inflicted great misery on the UK, but we got through that decade as we will this one. However, no great changes in society resulted from the years of suffering and austerity. Considerable work was done to ameliorate inequity; I was one of those lobbying for it, but society’s structure stayed generally the same.
All this action and vision is encouraging. It points the way forward.
Now we have another opportunity to use adversity and sacrifice to improve society so that it takes us not only through the present difficulties, but builds the basis for a thriving 2020s, where generations of the unemployed are a thing of the past and those in education see themselves as future citizens with the right to lead fair, fulfilled, productive lives.
All this can happen if our present financial situation does not deteriorate so much it makes survival the main item on the agenda. Which brings us to the heart of the present crisis and the possibility the Eurozone’s problems may get completely out of hand. Now it is accepted that the UK is generally a euro skeptic nation with a Euro-sceptic Prime Minister. Euro scepticism seems to be based in a sense of fairness and even the debate on December 5 about the necessary equalising of extradition treaties has some euro skeptic flavor. Most sceptics are loath to take part in further EU integration and believe a number of powers, presently enjoyed by the EU, would be better off repatriated and the non-Eurozone sector firmly protected against caucusing.
The Eurozone is seeking to correct the effects of the one-size fits all policy, which has gone too far to be put right by simply saying it didn’t work.
For their part, the Eurozone is seeking to correct the effects of the one-size fits all policy, which has gone too far to be put right by simply saying it didn’t work, as Jacques Delors conceded on December 2. Too many nations would suffer if the markets caused the Eurozone to rupture in a disorderly way. So, to prevent a hard landing of huge proportions, the Eurozone leaders want a reasonable amount of treaty change to enable fiscal cohesion, leaving any new treaty for future consideration. There have been concerns that the UK might be ‘bounced’ into any treaty change or new treaty, but the country has its veto and option of a referendum, both of which would prevent this. The suggestion that treaty additions do not constitute change is semantics: any adding, subtracting or altering is change.
If the UK and the non-Eurozone sector of the EU, could meet the Eurozone half way by not vetoing the changes and the Eurozone reciprocated by agreeing to safeguards, particularly with regard to the City, single market regulation, and other non-Eurozone protection, the necessary degree of fiscal cohesion could actually be achievable. Then the two sides could approach the ECB with this agreement in principle, which potentially would allow the institution to cap yields. The EFSF should then become more fundable and the IMF, enhanced in capacity to some extent, possibly by Germany, could be encouraged to work alongside other institutions helping the Eurozone through its difficulties.
Treaty changes could also include the discussion of the proposed section in the ESM, which allows for countries to leave the single currency voluntarily. If the Eurozone eventually becomes smaller, it has to be done in an orderly, legal way. It will take concentrated negotiation and compromise to reach the key stage of unlocking all the financial facilities waiting to go to work in the Eurozone, but there is plenty of incentive, since there is less than a week to finalise proposals for the December 9 meeting.
The alternative is that the uncertainty in the Eurozone continues, it all gets very serious and there is rapidly spreading alarm in the markets; and because another global financial crisis is unacceptable, the possibility of external financial action.
We are, as Paul Tucker has said, living in perilous times, but we have the tools to deal with the severe difficulties swirling about the Eurozone, and not only in the financial system because extreme austerity, beyond what we have already seen, has far reaching consequences. Deal first with the Eurozone crisis and then plans to go forward purposefully into growth, like those in the UK, will have the opportunity to flourish.
