Six Days to Armageddon
The other two items are related, as the City and Business generally have noticed that the government has ceased to govern. In consequence they are becoming frantic with anxiety.
What the govdernment is doing is ‘spinning’. The end of the recession has arrived it seems according to the headlined stories. But the inevitable cuts are brushed aside and the debris of vast borrowing is swept under the carpet.
This is probably the most serious issue the country faces - our whole future prosperity is at stake. There are a mere Six Days to Armageddon
Christina Speight
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TELEGRAPH 12.6.09
1. Calls for Brown to go nuclear in City battle with EU [web headline]
++ Government can’t fudge EU assault on the City [paper]
=As Europe's leaders prepare to strip Britain of ultimate control over finance, insurance, and securities, defenders of the City have begun to talk darkly of the nuclear option – known in EU lore as the "Luxembourg Compromise".
=‘Empty chair’ nuclear option may be only choice to resist emasculation
By Ambrose Evans-Pritchard
Britain cannot veto the massive shift in regulatory power to Brussels now under way. Internal market laws are decided by qualified majority voting (QMV), and London has few friends in this fight.
What Gordon Brown can do at next week's EU summit it to play the Luxembourg card by invoking "vital national interest", if he is willing to risk a showdown with fellow leaders. This has no legal status. It is the political equivalent of a stamping bull, or a viper's rattle. It means back off, or we strike.
"This is an extremely serious crisis," said David Heathcote-Amory, former Europe Minister and now a key Tory MP on the European Scrutiny Committee.
"Once we lose of control over the City of London we will never get it back, and the consequences could be catastrophic. I think we are in 'Luxembourg terrritory'. If the City was in Paris you could be pretty sure that French would fight like tigers to save it," he said.
"The Continental countries have no interest in the health of the City, and some want to turn the tourniquet tighter. I fear the Commission is going to get its way since we have such a weak government," he said.
Downing Street has given no hint that Mr Brown intends to put up serious resistance. City leaders doubt he will go to the wall for the sake of detested bankers. It is easier to claim a cosmetic victory on fiscal sovereignty, letting the killer detail go through.
One British minister admitted privately that UK strategy is to play for time in the hope that "other governments start getting cold feet about giving new powers to the EU". Some might, but our ally Ireland remained silent at a meeting of EU finance ministers this week, unwilling to waste political capital on Dublin's Canary Dwarf. It relies on EU favour to survive its own desperate crisis.
France's Charles de Gaulle was the last EU leader to opt for a showdown in the "empty chair crisis" in 1965, withdrawing his officials from Brussels after the commission pushed its luck too far. It led to the Luxembourg
Compromise. No country since has ever pulled the trigger on vital interests. Disputes have always been resolved in time.
Lord Turner, the head of the Financial Services Authority, said in April that the banking crisis would either lead to "more Europe, or less Europe" since the current half-way house is unworkable.
Brussels has seized on events to offer more Europe. "It's now or never: if we cannot reform the financial sector when we have a real crisis, when will we?", said Commission president Jose Manuel Barroso.
While earlier talk of an EU super-regulator has been dropped, the same goal is being achieved by other means. The plan is to create three "authorities" with a permanent staff and powers to impose "binding" decisions on states. Appeals go to the European Court. There is to be a European Banking Authority in London, an Insurance Authority in Frankfurt, and a Securities Authority in Paris.
Lord Turner fired a warning shot on Thursday, questioning plans to bring London's securities houses under EU oversight. "Frankly, this is an area that when it gets Europeanized you sometimes get things that are not actually to do with good regulation. If one was absolutely confident that European supervision was going to be completely politics-free, in a neutral, technocratic fashion, we would be more relaxed," he said.
There is little doubt that Brussels is exploiting the backlash against finance to bring the City under its thumb. Its own Larosiere Report concluded that hedge funds were marginal players in the credit crisis. Yet that has not stopped it drafting draconian rules for hedge funds as well, with chunks copied from French law. What is the purpose, if not to hobble a successful British industry?
Christen Thomson from the Alternative Investment Management Association said 80pc of Europe's hedge funds are in Britain, supporting 40,000 jobs, and are already regulated by the FSA. "A whole galaxy of hedge fund strategies would be impossible under this law and it is not necessary. The FSA tracks the top 40 funds and knows the level of systemic risk, and it keeps the cowboys out," he said.
Britain has long fudged matters in dealings with the EU, hoping that common sense will prevail, as it often does. But the assault on the City may be a line too far. London has been the centre of global finance for three hundred years. Either the British government controls the City, or the EU apparatus controls it. This cannot be fudged.
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2. CBI tells politicians to 'get a grip' for sake of UK economy
Britain's prospects for economic recovery are being hampered by politicians who have become obsessed by their own problems, according to Richard Lambert, the director general of the CBI.
By Louise Armitstead
The boss of the so-called "Voice of Business" speaking on Thursday at an annual CBI dinner, warned that policy-makers are worrying more about their own expenses scandal than "rising government debt to energy security, and fast-rising youth unemployment." He demanded that politicians "get a grip" and get back to tackling "the biggest economic, social and environmental challenges of our lifetime."
His renewed warnings follow a rising concern in the City that the European authorities are going to unleash rafts of regulation in response to the financial crisis. Bosses are worried that London's position as the global financial centre is not being defended properly because politicians are too distracted by domestic problems.
Mr Lambert was scathing of the government's plans to introduce electoral reform as a response to the current crisis engulfing parliament. He said: "Politicians are airily throwing around ideas for constitutional reform - ideas which may be desirable in themselves and will need serious discussion in calmer times - but which are a massive diversion at a time when so many urgent policy decisions have to be agreed and implemented."
The level of distraction in government could result in long-term and drastic damage to economy, he warned. "Britain finds itself at what you might call a burning platform moment," said Mr Lambert. "We can either take the bold steps that will be necessary to take us forward to a prosperous but different kind of future. Or we can pretend to ignore the need for change, and risk going down with the ship."
He added: "But instead of focusing on this big picture, politicians appear wholly preoccupied with what's going on within the Westminster village, and in doing what they can to strengthen their own positions over the short term."
The government denies it is distracted. A spokesman for the department of Business, Innovation and skills said: : "The Government will continue to lead the country out of recession. Many initiatives had been announced and more will follow in the coming weeks."
London's powerful private equity and hedge fund industry are particularly concerned after the recent European Commission directive that proposed radical legislation. Antonio Borges, chairman of the Hedge Fund Standards Board, described the directive as a "blatant attack on the UK and US financial systems by continental countries that neither have a tradition of alternative investments nor a proper understanding of them."
Philip Hammond, Shadow Chief Secretary to the Treasury, told The Daily Telegraph: "Mr Lambert's comments should come as a powerful wake-up call to Ministers who have been more worried about protecting their own jobs than saving other people's, and to a Prime Minister who refuses to acknowledge the extent of the challenges we face. It's clear the only solution is a general election." [and even that will come too late for next Friday! -cs]
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3.CBI frustration underlines why UK business needs early elections
The silent fury of business over the inability of politicians to handle their own affairs, never mind those of the state, was admirably articulated on Thursday by Richard Lambert, the director-general of the CBI.
By Damian Reece
The private sector has been getting on, coping with recession and working hard to reposition businesses for a recovery.
But an intensifying frustration with Westminster has been fermenting within the beating heart of business, one of this country's few organs that's still got life in it.
Lambert personifies a growing bewilderment among intelligent, hard-working people at the behaviour of politicians on all sides. The nagging question is who have MPs been putting first, themselves or their country? The Telegraph's story about MPs' expenses is just one, admittedly egregious, example of how MPs put themselves first, a habit that helps paralyse the development and execution of important policies.
Politicians put themselves first by routinely refusing to take tough decisions because the measures that ensue might be unpopular with sections of the electorate, which might in turn put at risk their individual seat and their party's occupation of the Government benches.
They put themselves first by supporting ever-bigger government to create the jobs that generate the red tape that blights our lives. They put themselves first by playing protracted games of infighting, spending huge amounts of time plotting against each other rather than plotting the path to a healthier, wealthier future for the country. And then, of course, they put themselves first by abusing the trust of voters and milking the system of parliamentary allowances for all they can get.
Things are coming to a head when the CBI says Britain is a "burning platform" and that politicians must "get a grip ".
Lambert was right to ring the alarm bells over several policy areas. We need a coherent strategy to fix the public finances, including public sector reform to save money while improving services. We need a clear and funded policy on energy security so that we can build the generating capacity we're short of and avoid relying on expensive imports from unstable regions. Our environmental targets must be hit but they must come second behind making sure the lights stay on and at affordable prices. Our economy must be protected from ideologically naive regulation from the EU.
This applies particularly to the financial services industry, which must be allowed to expand again to help fund recovery, and industrial policy should be implemented, not just talked about, to secure the skills at risk of being lost through the collapse of businesses such as LDV.
All these policy issues require tough decisions and I can guarantee the CBI that none of them will be taken by a government whose own executive is at war with itself while the legislative has lost all moral authority to act. On Lambert's first issue, for instance, public debt: how can the electorate be expected to accept higher taxes, or cuts in services, enforced by a House of Commons intent on wasting our money on porn films and phantom mortgages?
Even in more normal circumstances, the year before a general election would generally involve the usual inertia involved with a likely transfer of power. Nothing gets done and nothing will get done this time either. We have the long parliamentary recess ahead, party conference season to follow and then the start of the phoney war before the official campaign battle begins ahead of an election in 12 months time.
But as Lambert implies, the stakes are much higher this time. The platform is burning. There is no time to waste, certainly not another year with this lame and limping parliament. All the more reason then to have an early general election because until that happens we won't have the parliament we deserve to deal with the acute policy issues we face.
Lambert, unfortunately, felt unable to call for that because he's paid to represent business on what he calls "policies, not politics".
But as business must realise, you can't have policies without politics. Business would benefit from an early election, which is what those with a voice should be calling for loud and clear.
Otherwise their talk will remain just words.
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