Start as I mean to go on...

Hello Readers,

I'm not sure if anyone will take any interest in this blog whatsoever, but it saves my poor Facebook friends and family from my rantings on British and world politics today! Whenever something in the news gets the cogs in my mind turning, I'll share what I'm thinking here. You may think I'm right, you may think it's codswallop, but as long you spend at least some time thinking about issues in the UK and beyond- I've achieved my goal!


Firstly- BRITAIN'S VETO ON THE EUROPEAN TREATY, INSPIRED BY THE FINANCIAL TRANSACTION TAX

I'd like to begin this new blog for this (relatively) new year by congratulating the Prime Minister, David Cameron, on what I consider to be a great act that should benefit not only Britain, but set a precedent that could also benefit the European Union in the long-term. Mr Cameron's primary objection to a new European treaty was the idea of a new tax on the finance sector. At the moment, it's quite fashionable to criticise the finance sector for causing the current recession. In my opinion however, the world's economic problems are the result of two major issues: the actions of investment bankers is undoubtedly one, but the other main issue is debt accumulated by various governments around the world. The two issues have combined caused prolonged economic issues. So it doesn't seem right to focus public anger on the finance sector alone, when governments seem to have just as much to answer for.

Secondly, punishing the finance sector can be counter-productive, particularly in Britain, where (if I've heard rightly) the finance sector represents about 10% of the country's economic output, meaning it produces £1 in every £10 earned in this country. Therefore, by punishing the finance sector, we could jeopardise that 10% of our income, at a time when the economy is already vulnerable. A new exclusively-European tax on the finance sector would thus undermine Europe's finance sector, damaging Britain disproportionately due to that sector's importance here.

Thus, by vetoing this proposal, Cameron has deterred such a damaging tax on Britain, which would also affect the rest of Europe. Whilst it would satisfy some public desire to punish the finance sector for its contribution to the recession, and would also add some money to European government finances, I believe the negatives would outweigh the positives. As Mr Cameron has said, if this were a global financial transaction tax, then it would be less damaging. This is because, if a financial tax were imposed only on Europe, then it would provide the major banks of Europe with a big incentive to emigrate from Europe to the likes of the USA or the Far East. Given the economic instability of Europe at the moment, and stronger short and long-term growth outside Europe, banks would probably not need too much encouragement to leave.

If a financial transactions tax is imposed across Europe, I think it would be like the turkeys voting for Christmas: Europeans would give wealth-producing financiers a good reason to boost other economies elsewhere around the world- at Europe's expense.

DOWNGRADING OF FRANCE'S CREDIT RATING

Though I'm not usually an advocate of Schadenfreude, I'm willing to make an exception as France's credit rating has been downgraded. I may eat these words if Britain later this year is also downgraded, but I'm grateful that France has experienced it at least. I never used to be an advocate of traditional British hostility towards the French, but comments from leading Frenchmen last year changed my mind. When Britain vetoed the proposed European treaty at the end of last year, and there was then talk of a downgrade of France's credit rating; instead of setting an apparently "good example" by demonstrating European solidarity when Britain seemed to divide it, French leaders and the leader of the French central bank instead said that Britain's economy was in worse shape than France's, so our credit rating should be downgraded instead! So much for European unity: recommending one of their fellow European Union members for a downgrade! Now that France's rating has been downgraded, even though Europe's problems tend to affect us too, I can't help feeling a little chuffed at the news anyway!