David Cameron's stance in Brussels: smart or stubborn?

More Nick Beecroft, 12 hours ago16 December 2011 Non-Independent Investment Research David Cameron’s refusal to vote for EU Treaty changes at last week’s summit has since been the subject of many column-metres of comment in the press - well, here’s my input.

He had little choice
The first point to understand is that Cameron probably had little choice from a political perspective-had he rolled over and signed up for what is essentially the start of a United States of Europe, then it is highly possible that he would have faced a rebellion of such magnitude from his own MP’s that it might well have culminated in a refendum on the UK’s continued EU membership, which stood every chance of leading to the UK’s withdrawal. This would have been a disaster for Britain. It is also definitely the case that the majority of British voters would have supported Cameron’s stance; why on earth would the man in the street want to jump aboard a bus which seems to be heading for a very dangerous stretch of road?

The big picture
From an economic perspective, the important consideration is not so much the narrow point of freedom for the City of London’s financial empires from excessive regulation and taxation, it is the big picture that the UK currently enjoys safe-haven status, as a major, politically stable economy, which has vigorously embraced fiscal probity and which has the marvellous luxury of a flexible exchange rate to act as a shock absorber for economic troubles; automatically preserving her international competitive position, if necessary. Why would she ever voluntarily give up either of these advantages? Much better to keep a dignified distance.

Commercial sense will prevail
I also find it difficult to imagine the Prime Minister’s stance will have a long-term negative effect for British trade; we live in a global market, where the quality of goods or services and their relative prices determine the success or failure of trading businesses - not votes around a table in Brussels. Once the dust has settled, Britain's continued membership of the EU will in all probability not be in question, as the loss of Europe's third-largest economy would be as large a blow for the EU as the economic consequences would be for Britain-so commercial sense will prevail.

This was a high stakes gamble, but may yet turn out to be a very savvy political and economic move. Tags: EURUSD, GBPUSD, EURGBP, GBPJPY, Balance of Trade, Gross Domestic Product, Gross National Debt 93 Views 1 Like! 0 Comments 0 Follow In order to like something, you need to be a member.
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