The coming showdown

17 November 2012

Angela Merkel is running out of nice things to say about David Cameron and the Tory rebels who are dictating his European policy. Der Spiegel magazine recently compared the British to ‘at best spectators in the gallery like Statler and Waldorf, the two old men on The Muppet Show’. This was apparently after a briefing from Merkel’s office.

If she thinks the Tories are bad, the public are much worse. Over the summer, the European Commission asked 32,000 people across the continent what they thought about the EU. The Poles are still enthusiastic, the austerity-stricken Irish less so. The Italians are smarting from having lost their prime minister and the Greeks are a bit raw over the sado-austerity. But the most hostile EU member state, by a clear margin, is Britain. Barely a third of us regard EU membership as a benefit and just one in six of us take a ‘positive view’ of it.

As Merkel will know, there is only so long a democracy can be kept in a club against the wishes of its people. The EU model has so far depended on the collusion of elites, but in Britain this model is failing. Public opinion has found a way into the debate, being regularly and elegantly expressed through parliamentary rebellions. The most recent one saw the House of Commons tell the Prime Minister not to come back from next week’s summit with an EU budget for 2014-20 that involves spending increases. Having already portrayed himself as a veto-wielding Boudicca, it would be hard for Mr Cameron to defy them.

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As one senior diplomat puts it, ‘a ruction is now far closer than we think’, but not because of British exasperation. The ruction could come from Merkel and others who are thinking of ways to circumvent Britain, cutting us out of the important decisions while keeping our £8 billion-a-year membership fees.

If Cameron wants a frozen EU budget, all he needs to do is wield his veto and one will be imposed automatically. But he’d face bitter resentment from the smaller, newer EU member states that have been promised far more subsidy.

So when it comes to the next big debate — banking regulation — the other EU member states may simply seek to cut Britain out of the equation and agree a deal among themselves, just as they did last December. In this way, Merkel would have set up a new power bloc, formalising the group that carried on when Cameron found himself edged out last Christmas. The new banking regulator would be free to regulate business out of the City of London, ignoring British complaints.

Unacceptable, Cameron may say. He’d be right. But what is his alternative? To withdraw from the European Union involves a battle for which his coalition government is utterly unprepared. This leaves him vulnerable, and Mrs Merkel knows it. The Brits may be heckling already, but things could get a lot worse — and her Muppet Show has a long while left to run.

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  • Latimer Alder

    ‘ The new banking regulator would be free to regulate business out of the City of London, ignoring British complaints.’

    Forgive me for being naive here, but how exactly would this work? Why should a regulator for a deal we have not signed up for have any powers over the City of London…any more than such a regulator in New York or Hong Kong or Pyongyang?

    I can quite see that they would have powers over Frankfurt and Paris and the other EU finance centres, but I’m blessed if I can see how they could prevent a British company doing business in EC1…or an American or Tanzanian or North Korean one for that matter.

    • FF42

      They would be able to regulate financial transactions within the Eurozone so as to disadvantage London for euro denominated transactions. More business is transacted in euros in London than the rest of Europe combined.

      It wouldn’t of itself be the death knell of London as a financial centre but it would dent its critical mass as one of three or four world class centres and the pre-eminent one in Europe.

      • Noa

        If they do so the pressure to leave the EU will become irresistible.

  • commentator

    It really is time we focussed much harder on Merkel’s dubious antecedents in the GDR. She is hard as nails, an amoral megalomaniac as far as I can tell and her family appears to have colluded heavily with the very nasty Stalinist clique who ruled East Germany until 1990. One person who seems to know a lot about her airbrushed past is the new German Federal President whom Merkel cordially dislikes….no doubt for good reasons.
    As for her sidekick Shauble, it is hard to imagine a figure who better resembles Doctor Strangelove.
    I love Germany as a country but what is it about Germany that enables power-mad elites hell bent on a crazed destiny, paid for by ordinary people, to hijack the system with such ease?

    • dalai guevara

      You are clearly tiptoeing blindfolded in the dark – only today Gauck spoke out to remind business of their moral obligations not to ‘cross the red lines for profits’, whilst Merkel will most certainly end up being the only reelected PM/Chancellor in the western world since Lehmann folded.

      Which head of state here would dare to comment on business say of the Square Mile? Why do we need to fall back onto the Archbishop of Canterbury to do this sort of thing, I wonder (I don’t really).

  • Barry

    “..like Statler and Waldorf, the two old men on The Muppet Show’”

    Better to be observing from a box than taking part in the farce onstage.

  • johnrobertray

    If we pull out of the EU the money we save could be used to slash taxes and VAT, this would regenerate business and create jobs. Britain would thrive if we cut loose from the EUssr.

  • JMckechnie

    It’s the 1 in 6 who ‘take a “positive view” of it’ I’m worried about!

    • xDemosthenesx

      Polish workers here for the summer JM, don’t fret.

  • Sarah

    The British public think what the British free press agrees it should think.

  • spectator

    Just heard you on AQ.
    You are a tedious bore.

  • http://www.facebook.com/mark.lockett.925 Mark Lockett

    Ask why we have a negative view of the E.U. and you wont get many sensible answers about it’s internal democracy or the refusal to do anything about the CAP and other important questions, but what you get is the dumb “we want powers back” sloganeering.

    Ask what powers and it’s mostly mumbling about human rights and fisheries.

    This attitude is almost entirely tabloid driven.

    No one is telling the public about any positive aspects of E.U. membership, at least no where near as forcefully or as often as the tabloids rant about, square tomatoes and straight bananas, metric measurements, sausages and an endless variety of silly crap.

    The “mood music” about Europe has been left entirely to the hacks.

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