Europe outlaws Keynesian economics

EU members agree to outlaw Keynesian economics by writing into law a requirement on governments not to run budget deficits

By Graham Watson, on Friday, February 3, 2012

After 10 years of campaigning, Sir Graham Watson and David Hogg have won a campaign for justice in a teachers' pay dispute

Monday this week saw the heads of state and government of the EU member states meeting in Brussels at an ‘informal’ European Council meeting. They agreed one treaty setting up the European Stability Mechanism (ESM), a ‘bailout fund’ available to countries which sign the second treaty, outlawing Keynesian economics by writing into law a requirement on governments not to run budget deficits.

The European Court of Justice will be able to fine countries who break the latter treaty, paying the fine into the ESM. They also agreed that when items of business exclusively to do with eurozone issues are on the agenda in future, only the countries which have adopted the euro will participate, though this merely formalises a practice which has become the norm.

The national leaders, some just back from the World Economic Forum, agreed on measures to create economic growth and jobs. Having failed to respond to the blandishments of WTO Director General Pascal Lamy in Davos and resolve to agree a new world trade agreement (which would require cutting subsidies to farmers) they agreed to try to boost inter-EU trade by improving the EU’s single market and to use €82 billion in unspent EU structural funds to get young people in to work.

I hosted a supper that evening in honour of Lord Steel, who was visiting Brussels as a member of the UK Parliament’s all party Africa Group. At 73 years he is still going strong, despite the slings and arrows of nearly 50 years in politics during which he secured for the UK Liberals their highest share of the vote in any general election since the 1930s.

The European Commission published a working paper on Monday describing as ‘feasible, beneficial and much cheaper than previously thought’ a move to cut carbon emissions by 30% by 2020 rather than 20%. On Tuesday parliament’s environment committee adopted a report by my colleague Chris Davies MEP proposing precisely that. Meanwhile, Chris and Marian Harkin MEP and I used a committee debate about health claims on foodstuffs to fire a shot across the Commission’s bows, since they are not assessing the claims in the way we instructed them to in the legislation.

The UK Liberal Democrat MEPs bid farewell to two of our number – West Midlands MEP Liz Lynne and Yorkshire and the Humber MEP Diana Wallis – who have each chosen the mid point of our current parliamentary mandate to step down after 12-and-a-half years of service.

On Wednesday I addressed a conference on Egypt one year after the revolution. That evening I presented to the House my report on a consistent EU policy towards dictators, which – by denying them the right to launder their money through our banking and property markets and to enjoy leisure activities in the EU – should prevent us helping people like Mubarak and Gaddafi remain in power in future. The report was adopted yesterday on the floor of the House as a Recommendation to the European Council.

Last night I addressed the Chinese Liberal Democrats, an associated body of the party, at their New Year celebration supper in London. I spoke of the growing unrest in China and the likelihood of fire in this Year of the Dragon. Today I entertain constituents to tea in Bournemouth at lunchtime and in Exmouth in the evening before addressing a LibDem supper in Paignton. Tomorrow I address Lib Dem councillors in Trowbridge before attending the party’s western counties regional executive meeting in Freshford.

To end on a happy note: after nearly 10 years of campaigning with constituent David Hogg for justice in a teachers’ pay dispute, the European Court of Justice has found in our favour!