Friday, August 05, 2011
Cameron and Clegg being on holiday is no crime even if there is a financial dustup.
It is not like Roy Jenkins (then Chancellor) being on holiday in a deeply rural part of France the day when France devalued the Franc and the French phone system at that time being less efficient than shouting and more expensive. It took days for him to get properly in touch with the Treasury in London to co-ordinate the UK response.
There is an UK minister at hand and in charge in London – and I am concerned by who that is. William Hague is a long term Euro-hater and the current gyrations require sensitive comments from EU countries outside the Eurozone. The situation may even require some government slapping down of jeers of triumph from Tories who want the Euro actually wrecked. Can Hague do what is necessary?
One point that does need to be made – we would be in an European currency crisis even if all the old currencies were still in place.
The crisis would be taking a different form though. There would be huge gyrations in the foreign exchange markets as hot money flowed from one currency to the other as speculators tried to arbitrage small differentials in perceived values. Germany would be in a crisis as the value of the ‘Deutchmark’ rocketed. The Irish Punt would have sunk a long time ago, throwing Northern Ireland into financial turmoil because of the intricate cross-border economy. The Drachma would be damned, the Peseta melted into a puddle and the Franc fried. Sterling would probably be doing a yo-yo with funds flowing in and out unpredictably.
The existence of the Euro provides important stability for the UK economy even though we are not part of the Eurozone. Whoever sets the tone for UK responses to today’s financial dances needs to believe in that truth and make it very clear to everyone that we live in respect to that truth. Can Hague do it?