Britain’s uncertain place in ‘new Europe’

The word Europe is Greek, but right now the continent’s economic model seems to be unravelling from Athens. The European Union emerged from the signing of the Treaty of Rome, yet it is the economic fate of Italy that could yet rupture European politics. The euro single currency was born in Frankfurt, yet it it the changing currents of German politics that will determine its fate.

This eurozone crisis has lasted for over two years now. Nothing could more strongly illustrate the divides within this zone than the fact that many Germans believe there is no euro crisis. No, simply there is a debt crisis in profligate Mediterreanean nations.

Greece has been placed in a separate category. It is in the eurozone eject seat.

And in Germany the Bundesboom continues. German unemployment has halved in the last half-decade. Elsewhere in the eurozone it has more than doubled.

In Greece, and Ireland the people feel squeezed and are revolting against euro-austerity. In Spain and Italy, the knife is being sharpened. Greece has been placed in a separate category. It is in the eurozone eject seat. But it is the people of Greece themselves that must decide on whether to press the red button.

In the north of Europe, the fear is that letting Greece off the hook will be the ultimate “moral hazard”, causing a cascade of austerity avoidance throughout the south.

The longer term solution is pretty clear: “make up or break up” as David Cameron has said. That involves full financial, banking and political union to complete an imperfect monetary union. It involves Eurobonds, the sharing of public debts across national borders. It involves 16 or 17 nations turning the eurozone into something like a country.

The road to that solution is extremely fraught. Britain’s place in that new Europe is also uncertain. But as the uncertainty persists, our own economy remains in the doldrums.