United Kingdom: Brown’s dilemma a sign of things to come for European union’s new members

After years of Euro-scepticism under Margaret Thatcher and then five years of confusion under John Major, the United Kingdom’s Conservative party spent long stretches with its back turned to Europe and faced instead the “prodigal son” across the Atlantic. Under Tony Blair, New Labour has tried to construct a more balanced approach towards European integration, while fomenting a friendly relationship with the USA and at the same time, tentative movements towards full collaboration in Eastern Europe through Chambers of Commerce and Industry and bilateral agreements. Now that the first signs have been made that Britain might make a move to join the Euro, Brussels’ inflexible bureaucracy means that the Chancellor (Finance Minister), Gordon Brown, will have to revise his plans, a revision which would not be politically expedient. Basically, Brussels states that because Mr. Brown’s public spending and taxation measures will lead to a budget deficit in three years, his plans are illegal and he will therefore have to raise taxation (political suicide) or cut public spending (political suicide). The EU growth and stability pact requires countries to keep their economies balanced but this time, the UK government’s Public Sector Borrowing Requirement policies put it on a collision course with Brussels. Mr. Brown has always maintained that he prefers to borrow money to pay for public sector investment projects. The Chancellor’s policies would give Britain a budget deficit of just over one per cent, within the 3% allowed by the EU for Euroland members, but since the UK is outside the Euro area, this single percentage rise would give rise to a heavy fine. To prove the difference between the two positions, Mr. Brown was planning to increase spending by 41 billion GBP by 2004/5, whereas the EU rules will force him to reduce spending by 10 to 12 billion GBP. The economic and political damage would be dramatic, especially in this parliamentary election year. Brussels’ inflexibility may be necessary to forge a union between Europe’s diversified EU Members but the gymnastics which Mr. Brown is forced to perform to reach agreement is a sign of things to come for Europe’s would-be members. It would seem that Brussels would prefer Margaret Thatcher to re-emerge as a clone.


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