The quarrel about stabilizing the Eurozone: why is Britain opposing Germany and France?
The problem of the Eurozone and the continuous decline of the Euro have maintained its position in the headlines since many Euro countries are now succumbing to debt and high inflation rates. The original members of the European Union have constantly debated solutions, proposals, and projects that they believe would lessen the strain of the Euro to the remaining members of the community. France and Germany have taken the position as the leaders of the Eurozone to prevent possible bailouts from Euro-practicing countries and re-establish Eurozone stability. However, the United Kingdom finds these proposals of the two leading countries to be ineffective in stabilizing the Eurozone. Considering Britain’s refusal to apply the Euro, its arguments against the joint French and German action plans raises eyebrows as the country presses what it wants in the Eurozone. What are the reasons for Britain’s continuous opposition against Germany and France? With the United Kingdom under the European Union, any form of community policy and stability issue would also affect the United Kingdom in some form. In terms of the Eurozone, the crisis would ultimately affect UK’s economy and stability as it would need to support the remaining members of the EU, and suffer the effects of the Eurozone to the outlook of many international investors.
Britain’s position over the stability on the Eurozone and the German-French administration of the Euro crisis can be sorted out in a couple of reasons. The first reason is Britain’s perspective of the German- French administration if they really have the capacity to push for policies that would rescue governments in crisis such as Greece, Italy and Spain. Germany, in its position, has constantly changed its attitudes over the policies enforced in the EU and in the Eurozone. At first, Berlin did not want to continue partnering with Paris with regards to the policies they continuously promote together. Both German Chancellor Angela Merkel and French President Nicolas Sarkozy both had issues over their concepts as to how they could resolve the economic crisis in the Eurozone. Despite Merkel’s constant correspondence with Sarkozy, they often find each other to be arguing as to what would be the efficient management scheme to direct the Eurozone and its economy. There is also a problem in terms of their political styles, which often is seen by many countries such as Britain, as one of the major flaws of the Franco-German leadership. Merkel favours a cold and cautious analysis of the crisis, beginning from the final objective then focus on the possible solutions they can offer. She also tends to over-deliver in her policies. This style works perfectly in Germany’s own domestic problems, but with the EU level, Merkel’s style contrasts with Sarkozy’s impulsive style of preferring ambitious objectives without much planning. Despite these changes, both countries agree that they cannot find a solution for the Euro crisis if they continue arguing over their styles and proposals.
Another reason to Britain’s utmost refusal of all the proposals by the French-German leadership is the nature of the policies that would ultimately drive Britain to seclusion from the rest of the EMU-member states. When the EMU was first introduced in 1999, the French government began calling for the founding of a Euro Council that would comprise finance ministers from member states practicing the single currency. Germany has accepted these meetings if it takes place at an ad hoc basis. For the non-Euro practicing countries, this kind of council would ultimately push them into seclusion from the rest of the Eurozone countries. The Euro Council would also tackle on important agendas beyond the normal economic monitoring and fiscal rules that would be implemented. These meetings would then weaken the voice of the remaining non-Euro countries like Britain from important economic issues such as financial market regulations, competition policy, and trade agreements. Without a voice in this council, they may not be able to add provisions to ensure lesser losses when Eurozone countries trade and bargain with them. With Britain as one of EU’s largest economies, a rift would divide the EU nations and enforce less liberal economic policies that would not be as self-sufficient when it comes to a crisis.
Seclusion would also bring Britain enough risks that may cause the country to think twice in reassessing its position in the Eurozone, or the methods they can use to maintain their influence in the Eurozone. For the past 200 years, Britain has maintained its stance as a trading nation. Upon the country’s induction of the EU, Britain had access to its closest trading partner. Most of British export goes to EU member countries and at least 750,000 British companies work in partnership with the Eurozone countries. When the EMU came into the picture, the state of British trade with the EMU countries have changed as only 35% from its usual 60% shares of British exports are now transmitted around the Eurozone. Tariff has also been removed, which now gives Britain additional benefit. The EMU also enabled members of the Eurozone to gain more benefit from trading. Germany and France had experienced an increase of imports and exports by the time the EMU was applied; they both gained a GDP increase up to 32%. Britain’s imports and exports have dwindled slightly to 23%. Many British experts have noted that if they joined the Euro then, they would have experienced the same trade benefits happening in the Eurozone. It would also experience fewer problems in transacting with the other member countries as compared to its current state wherein they have to change their currency to fit the Eurozone standards and currency rate.
However, joining the EMU would cause Britain’s economy to begin in square one as they will use another currency, unlike the current Sterling Pound. As the Sterling Pound has a higher selling rate than that of the Euro and its position as Britain’s mark of its image, losing it would not only cause losses in many businesses, but many would also lose a symbol that tells the story of Britain’s rich history and culture. With Britain’s position in the Eurozone uncertain as it continuous to resist membership in the Euro, it puts itself in the risk of losing trade, investment, and unemployment. Price levels in major commodities and trading would bring the public complaining that they can no longer keep up with the expensive items. With the crisis still unresolved due to the various proposals placed by France and Germany, Britain and other non-Euro practicing countries would eventually follow in recession as they are depended with the Eurozone’s position. Many economists and politicians have noted that the Euro crisis caused the slowdown of development in the UK economy and the increase of unemployment values in the region. If the Eurozone leaders do not act, the country would be affected drastically. Britain sees the actions of the Eurozone leaders as ineffective and considering the state of Greece is at now, a possible solution from the current leadership would most likely take years before they can restore the ailing Eurozone nations. Recovery would also mean British exports and imports to dwindle in number. Many Eurozone countries would have to cut down spending for exports, which may cause British firms to cut down their workforce. Almost eight million Britons depend on export to the Eurozone nations and if the Eurozone continues to cut back, they may lose their jobs .
The change in the European region is also one factor that causes Britain to be concerned over the decisions that will be implemented to sustain the EMU. For Britain, the change in Europe would present the government with various changes that would constitute to consequences that may affect Britain’s position in the EU. For the government, the changes from the EMU policy to the development of EU governance would most likely cause Britain to deal with a Europe that is experimental in terms of its governance with an unsettled environment due to the confusion over the changed policies. Currently, the EMU moves to an uncoordinated system that deters any possibility for British entry to the Eurozone and creation of stable economic policies. There is also the uncertainty that the Eurozone may not be able to resolve the problem of immediate deflation due to the change in the European market once proposals are already applied. The single monetary policy may also be politically unstable, especially in terms of its performance capacity and exposure. Despite the Euro’s market value to many economies outside the region, governing the flow of the Euro is still being experimented. This uncertainty causes British leaders to doubt the capacity of the current Eurozone administration to revive the Eurozone without its help or opinion .
Britain’s continuous decline over Franco-German leadership in the Eurozone presents a dilemma that is important for the EMU states to resolve and taken into account. On the one hand, the Franco-German leadership presents an uncertainty to many nations connected to the EMU economy if they can resolve the current crisis and find a solution in preventing EMU countries from succumbing to debt and bankruptcy. Britain has presented Germany’s forced compliance over the leadership and France’s proposals over a new EMU that would remove non-Euro countries from the economy as evidences that would explain why they keep on complaining on the rulings they have passed. There is also the current position of both countries over the bail-out proposals over suffering member countries like Greece. On the other hand, with Britain still owning its own currency, its constant debate with the Franco-Germany leadership presents that it is unwilling to have the Euro surpass its currency if a possible revision to the EMU would transpire. With France and Germany lamenting on the possible EMU revisions, Britain may find itself isolated alongside other non-Euro from the Eurozone, thereby creating a misunderstanding that the new EMU would remove the other EU countries out of the picture.
References
Kupchan, C. 2012. No One's World: The West, the Rising Rest, and the Coming Global Turn. New York: Oxford University Press.
Markesinis, B. 2002. The British Contribution to the Europe of the Twenty-first Century: The British Academy Centenary Lectures. Portland: Hart Publishing.
Patrick, S. 2010. Crisis in the Eurozone: Transatlantic Perspective. New York: Council on Foreign Relations.
