Approaches announced. The overhaul of the way global economic activity is managed will bring about at least partial revision of the United Kingdom's national economic model, especially in the capital. According to experts, City of London bonuses, which amounted to £8.8 billion in 2006, will fall to around £3.6 billion this year, and 62,000 jobs will be lost by the end of 2009, with the inevitable knock-on effect on countless related activities. The discipline that will be required of the financial world in future means new economic and political directions, and this is where the British government's current attitude to European integration (see this column in yesterday's newsletter) is to be found. Even the inanities delivered previously by financial wizards are no longer acceptable. Prime Minister Gordon Brown would appear to be acting to bring about better balance in his country's economic activity. The production of goods (including agricultural) must once again take on the role it has to play.
These are not suppositions but already stated intentions. Secretary of State for Business Peter Mandelson, has, according to leaks published in the Sunday Telegraph, said in a memo that the financial sector will not contribute as much to the UK's national product as it has over the last decade. The country must see a fundamental shift towards manufacturing industry, which has been in decline for some 20 years. The UK will, then, align itself with the approach decided on by the Community institutions following fascinating and instructive debate in 2002 and 2003. The European Commission, under then President Romano Prodi, said in a communication that the production of material goods was “the source of European prosperity,” rejecting “the widespread, but incorrect, idea that manufacturing industry would not have a key role in the knowledge economy” - on the contrary, it is industry that applies the technological innovations creating economic value and employment.
Mandelson development. The Mandelson memo once again shows that a “stay in Brussels” has a beneficial effect on most people. Scarcely a few weeks ago, Peter Mandelson was European Trade Commissioner. Permanent contact with the other Commissioners and member states with various points of view and interests depending on the issue has, no doubt, helped him to develop his ideas on the economic problems and to better understand the European notion of “common” interest. The rough ride in trade relations with China probably helped extend his understanding of reality: expansion of trade links and financial transactions is not the only criterion to be taken into account, other factors and other values are just as important.
A first step. It is, however, clear that the rebalancing of the British economic model and its role in the EU is not something simply to be improvised: the way is long. Britain's close involvement in drawing up the EU strategy to deal with the financial crisis is a first step. Gordon Brown was one of the most active and effective participants in meetings convened by Nicolas Sarkozy, to which he was invited along with the heads of government of the euro area countries and Messrs Juncker and Trichet, presidents of the Eurogroup and the European Central Bank respectively. It is probable that the United Kingdom hopes to be not simply the guest at one set of meetings, but to be part of the body that decides policy on the euro. Gordon Brown's demeanour as Chancellor of the Exchequer was very revealing: it was clear that simply being informed, after the event, of Eurogroup conclusions and ECB deliberations annoyed him, and the information procedure within the Ecofin Council was not enough for him. In practice, he was not really involved in the discussions of that Council. It is obvious what has to be done to go beyond this situation: join the euro area. This, however, is not a decision to be taken lightly, it relates to full British involvement in Community ambitions and achievements, which presupposes changes with regard to the Schengen area, the Charter of Fundamental Rights, the review of the rules on funding Community spending. We are not yet at that point.
Shift needed in public opinion. The closer alignment of the United Kingdom and Europe is still fragile. It will depend on how public opinion and the stances of the political parties develop. The change of tack shown by leaders is not enough. Tomorrow, this column will consider the conditions and obstacles.
(F.R./transl.rt)