David Cameron in Davos; Oh, So Lonely

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David Cameron

David Cameron, from Davos, has argued that the EU should push for necessary bold measures while Germany should spend more on the Eurozone in order to get out of the crisis, following the UK example.  In addition, he claimed that the Financial Transaction Tax (FTT) would cost billions in lost revenue and (high-end-banker) jobs.  Unfortunately this move, driven by domestic (party) politics and the need for increased FDI flows to balance the 2012-2013 government budget, is further pushing away the UK from the EU and putting the government and the Conservatives in a corner domestically.


The UK government is in a tough spot. On the one hand the economy has tanked and moved into a slight recession; a small yet observable 0.2%, which comes to contradict claims that the Conservative plan for the crisis is working.  Moreover, unemployment is at its highest levels ever recorded without signs of reductions in the short term.  To make matters worse Ken Livingstone the Labour candidate for Mayor of London is 2% ahead of Boris Johnson the Conservative incumbent, according to latest polls.  Amidst all this the hardliners and Eurosceptics of the party have been pushing the discourse more to the right and anti-EU.

This has caused more problems than good.  Vetoing a new EU Treaty, nearly 2 months ago, in the end was recognised as more of a blunder than a representation of UK interests.  The Eurosceptic conservatives were happy but everyone else wasn’t, the Liberals pointed this out.  On the European level France gained the most while the UK was pushed to the outer circles of the Union as a non-negotiable/ rational partner; even Denmark is seriously contemplating joining the accord that was set up.  Moreover, asking Germany to put in more money into the Eurozone while refusing to contribute additional funds is a bit cheeky, especially bearing in mind toxic UK assets in Spain (for example).

This tactic of openly opposing the EU however is more than just conservative politics.  Mr. Cameron with his “bold” speech hopes to point out to the welcoming/ stable UK economy and contrast it to what appears to be a more unstable and dangerous environment in the rest of the EU/ Eurozone.  However, the rhetoric used is problematic for two reasons.  Firstly, it makes the claim that everyone in the EU is bad with the exception of the UK.  This will make any remaining friends of the UK in the EU shy away; countries such as the Czech Republic or Denmark who often take similar positions in Council meetings will probably think twice next time about forming a common block. 

Secondly, investors that will look at the numbers might find little incentive in actually taking their business to the UK.  The economy is not doing particularly well and with the exception of financial products, anything else makes more sense to be produced in Western Europe (for example Germany) or cheap and cheerful Central Eastern Europe (even the Mediterranean).  Finally what is perhaps worst is that the UK does not seem to be diversifying its economy but moving for more finance.  This is not only problematic but also goes against the policy of the ex-chequer.  In addition the government will be further associated with the finance industry which politically speaking is not the best idea these days.

In a nutshell Mr. Cameron has most definitely defended the City’s interests in Davos that much is clear.  However, he is progressively putting his party in lonely spot.  Labour or investors only need to point to the data to show that in fact things are not as good as he claims, while betting large on the City might be too much of a risk.  Finally on the international level the UK appears as the bitter partner that is part of the problem, than the rational/ active actor it can be.  Unless the economy surprisingly jump-starts, David Cameron and the Conservatives are going to be in a lonely place with few friends.


IMAGE: the guardian

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