UK and Europe on a collision course

 
Allister Heath
IT is the elephant in the room, the issue nobody wants to talk about. But the growing, irreconcilable gulf between what UK voters and their continental counterparts want from European integration will eventually become as important a question as the fallout from the economic crisis. The scale of the challenge is laid bare by YouGov-Cambridge in the most sophisticated polling on European attitudes yet to be conducted and based on a cross-country, nationally representative survey of 11,000 people. The findings are dramatic.

No fewer than 60 per cent of Brits want a referendum to decide on Britain’s relationship with the EU; 60 per cent want a looser relationship or to leave altogether; only 14 per cent want more integration with Europe and a further 13 per cent want to keep things as they are. Voters oppose European control in almost all policy-areas including immigration (79 per cent), agriculture (74 per cent), trade links with other countries (60 per cent), financial regulation (68 per cent), rights for workers (66 per cent), laws on trade unions/strikes (80 per cent) and crime and justice (85 per cent). The UK political establishment as a whole is entirely disconnected from what the public actually wants.

But while Brits want less integration, 63 per cent of Italians, nearly 40 per cent of French and over a third of Germans support turning the EU into a United States of Europe. Majorities of French, Germans and Italians want continued EU membership or more integration in many areas. The difference between what continental Europeans want and what UK voters would like is astonishing. Their political cultures are poles apart – and diverging, rather than getting closer. The status quo is untenable; the next big push for greater integration will trigger a referendum in the UK and hence the beginning of the end for the current set-up. At some point by the end of this decade, the EU will be torn apart – either because of an implosion of the euro, or because the UK will demand if not a divorce, at least a looser, more open relationship with Brussels. Nothing is inevitable in life – but this gets pretty close.

SUB-PRIME II
THIS government can be absurdly inconsistent. First, it backs banking rules and an activist FSA that discourage or ban high loan to value mortgages – then it produces its NewBuy scheme to subsidise these very same 95 per cent mortgages. The government intervenes to change banks’ behaviour – and then intervenes again to cancel out the effect of this change, without actually getting rid of the original rules. It would be comical if not so serious – taxpayers will guarantee a portion of the loans and will shoulder the risk. Do government departments not actually talk to each other? Or is the coalition so ideologically committed to adopting each and every international rule – such as the Basel III bank regulations – that it doesn’t dare openly criticise them and prefers instead to buy its way out of those parts it doesn’t want? If so, that would be cowardly, as well as wasteful.

Lenders need a cushion of 10-15 per cent at least as there is a very real possibility house prices could fall by that amount over the next few years, especially if the cost of borrowing continues to increase. The fact that the government has learnt nothing from the sub-prime crisis is depressing beyond belief.

allister.heath@cityam.com
Follow me on Twitter: @allisterheath