04 December 2012

グラハム・ビショップのフィナンシャル・ワールドへの寄稿：見ざる聞かざる

In mid-December, the EU’s top brass is scheduled to take a decision on Towards a Genuine Economic and Monetary Union, the report by Herman Van Rompuy, president of the European Council. However, the UK political class seems to be adopting a classical “Bretherton at Messina, 1955” approach.

According to legend, the telegram sent back to London by Russell Bretherton, the UK representative, about the conference that founded the EU, said: “They will not agree; if they do, it will not work; if it does, it will not matter". Unfortunately, though it will be difficult to set up a banking union in Europe, if there is agreement it will indeed matter for the City.

It will also matter to the financial world more widely because consensus would underpin the continued existence of the euro and buttress the euro area as one of sound money. This would make for an interesting contrast with the behaviour of the political managers of the world’s reserve currency. For, at the same moment as the bigwigs meet, US authorities will be engaged in trying to avoid falling off a fiscal cliff as they swerve around tough decisions.

Financial markets need to think carefully about the potential for a significant rise in the euro area’s competitiveness in the next few years – reminiscent of the surge after Margaret Thatcher’s reform of UK labour markets in the early 1980s. That would cast a very different light on the cohesion of the euro area and the riskiness of the public debt of many euro area states.

Set in this context of a shift towards a much higher degree of overall integration, the moves to a far–reaching banking union should be seen as a series of (quite significant) steps along the agreed road rather than as an extraordinary, stand-alone policy choice.

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