George Osborne: We will definitely prop up Europe’s banks

Gideon’s been doing writing! I’ve spruced it up a bit.

Original article:

We are approaching a moment of truth for the eurozone. After more than two years of uncertainty, instability and slow growth, decisions taken over the next few months could determine the economic future of the whole European continent for the next decade and beyond.

Sweeping yet pleasingly vague intro: check.

Despite our huge budget deficit and massive banking system – I feel all gooey when I say massive banking system – , our economy is benefiting from safe-haven status because of this Government’s incredibly slapdash plan to deal with Britain’s debts – we have reduced the deficit by more than a quarter in just two years by selling literally everything we have, raiding small children’s pocket money and putting out Nick Clegg as a high class escort. Along with countries such as Germany and the US, investors are putting their money into the UK, driving down the interest rates on our government debt. Lower corporate tax rates and other reforms to make Britain open for business, like a greasy spoon, are also sharpening our competitive edge. But our recovery – already facing powerful headwinds from high oil prices and the debt burden left behind by the boom years – did I just use the phrase powerful headwinds? – is being killed off by the crisis on our doorstep.

This crisis, however, is providing a convenient smokescreen for our own fiscal ineptitude, so I’m going to skim over it a bit in the next couple of paragraphs and play down our involvement. Cool?

I know from watching the Apprenctice that our country is bursting with entrepreneurial spirit and exciting investment plans that are being held back because of uncertainty about the future. That’s why a resolution of the eurozone crisis would do more than anything else to give our economy a boost, and then we could turn the UK into a fucking massive call centre. Glorious.

The latest bout of uncertainty has been focused on the future of the Spanish banking system. Bloody Spaniards. Can’t trust them. There are already signs that a solution will be found, probably involving Germany buying another country. We should acknowledge that as each wave of the crisis has reached its peak, the countries of the eurozone have taken some very difficult decisions to defuse the pressure. But the lesson of the last two years is that treating the latest symptom does not cure the underlying condition. Cunningly, I’m not really going to explain what that condition is.

I have argued for a year now that the eurozone needs to follow the “remorseless logic” of monetary union towards much greater fiscal integration. These political implications were the main reason why I and many others, including The Sunday Telegraph, campaigned against UK membership of the euro. In countries such as the UK and the US we are familiar with the features of a stable single currency area. The solution in the eurozone doesn’t have to be a full-blown United States of the Eurozone, but if it is to be successful it is likely to include most of the mechanisms that make other currencies work: more support from stronger economies to help weaker economies adjust; more pooling of resources, whether through common eurobonds or Germany buying another country; a shared backstop for the banking system through a banking union; and as a consequence much closer collective oversight of fiscal and financial policy.

These are all decisions for the eurozone. The question for us in Britain is what approach we should take to these developments. I have spent the last few paragraphs preaching unity, and am now going to make one of the u-turns my government is so famous for.

The Government is clear that it is strongly in Britain’s interests for our biggest export market to succeed; the risks for us of a disorderly outcome are huge. We will also not stand in the way of further political integration among the eurozone countries that any successful solution will require, including a banking union. At the same time it’s entirely reasonable for us to seek safeguards that protect British taxpayers and preserve the single market for all EU members. Far from seeking opt-outs as some claim, we want to deepen and enhance the single market. An integrated single market, including in financial services, is strongly in Britain’s national interest, and indeed in Europe’s too. But the rules that govern it must continue to be determined by all 27 members of the EU.

Equally, further pooling of sovereignty – for example over fiscal policy and financial supervision – must be limited to the countries in the eurozone. If countries in the eurozone cannot meet their liabilities, for example to protect bank depositors, then it is natural for the other eurozone nations to stand behind them, as long as those countries don’t include us. In return, it is understandable that those countries would want a say in how banks across the eurozone are supervised and dealt with in a crisis. That is why a banking union is a natural extension of a single currency. If other non-eurozone countries in the EU, who unlike the UK have a legal obligation to join the euro, want to opt in to a banking union then that is up to them. But we are clear that Britain will not take part, because it is entirely reasonable to demand all the benefits of the Eurozone without taking on any responsibility. Solidarity brothers! British taxpayers will not stand behind eurozone banks, and British voters want their government to be in charge of supervising our own banks, especially in a crisis. I assume.

Who am I kidding, we’ll definitely help them out. Merkel will hit me if we don’t.

I know that the British people have been let down in the past by governments that promised them a say before more power was transferred to Brussels. I can’t give specific examples of course, but this is the Telegraph so it needed saying. Thanks to this Government that cannot happen again. One of our first and most important acts was to pass into a law a referendum lock, so that any politician proposing to give up more power over our own affairs in any new treaty will have to put that choice to the people. Whatever may lie ahead I find that extremely reassuring, and will continue to do so even when I’m eating my own knees after the food runs out.

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