Greeks bearing debts

The euro was a bad idea in 1999, and it's a disaster now.

I have a long memory, and a thin skin, and often lie awake at night, grinding my teeth, reliving the insults born by Tories in our wilderness decades. I suppose it's too much to expect an apology from the politicians who were pro-Euro hysterics at our general elections, until quite recently? People like, ooh I don't know, Chris Huhne?

If we get rid of sterling and adopt the euro, we will also get rid of sterling crises and sterling overvaluations. This will give us a real control over our economic environment. (Chris Huhne, 2004).

Substitute "Greek drachma" for "Sterling", and that sentence reads really well now, doesn't it Chris? (Hat tip to Dan Hannan for a list of many similar, delicious-with-hindsight comments).

Setting Huhne's points aside, it's worth recalling the argument repeatedly made by those of us who didn't want to join the euro, because -- with respect to the Greek tragedy currently unfolding -- it was all so entirely predictable.

We said that a monetary union couldn't work, because a single interest rate for a continent of such disparate economies could not be suited to them all. Since the interest rate was likely to be set low to suit the productive Germans, it would spell inflationary doom for countries like Ireland and Greece.

No-one ever had an answer to the single interest rate dilemma. Part of the reason it was so compelling to most Conservatives (Ken Clarke, as ever, an honourable exception) was that we had lived through two examples where UK interest rates led to devastating domestic outcomes. The ERM fiasco of Black Wednesday is well-rehearsed. Less commented on is that we had all lived through what happened in the north of the UK in the 1980s, when an interest rate was necessarily set to control inflation in the south. If it's hard enough to make one rate suitable for a single state, it beggars belief that anyone imagined that a single rate could suit economies stretching from Dublin to Athens via Berlin.

As of course, it could not. The banking crises only exacerbated what was already evident: some countries had embarked on uncontrolled (by the ECB's central rate) inflationary bubbles of debt-funded spending. When the credit dried up, the crises set in. Now Greek government debt is worthless, and its people are rioting against the austerity measures imposed on them by the IMF, and the obvious route open to a country in such a terrible situation -- devalue your currency and hope for growth in exports -- is shut off from them, while they remain locked into the euro.

William Hague was derided in 2001 for likening the eurozone to being locked into a burning building with no exits. With apologies to the late, great Bob Monkhouse: they laughed when we said we didn't want to join the euro. They're not laughing now.

Not that being right in 2001 is any cause for cheer ten years later. In the morose phraseology of Douglas Carswell MP, we may have avoided the trap of monetary union, but we appear to have signed up for the accompanying debt union regardless. Still: leaving the euro must be Greece's least worst option. I know that exposure to Greek debt is worldwide, but (I'm sure an economist will tell me otherwise) would suffering that exposure be worse than throwing more good money after bad? Until which point?

Fans of the euro used to insist that it wouldn't, it couldn't be allowed to fail. I wonder how much of a soaraway success it feels to the people of Athens, today?

Graeme Archer is the 2011 Orwell Prize winner for blogging.

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Cabinet audit: what does the appointment of Andrea Leadsom as Environment Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for Environment, Food and Rural Affairs.

A little over a week into Andrea Leadsom’s new role as Secretary of State for Environment, Food and Rural Affairs (Defra), and senior industry figures are already questioning her credentials. A growing list of campaigners have called for her resignation, and even the Cabinet Office implied that her department's responsibilities will be downgraded.

So far, so bad.

The appointment would appear to be something of a consolation prize, coming just days after Leadsom pulled out of the Conservative leadership race and allowed Theresa May to enter No 10 unopposed.

Yet while Leadsom may have been able to twist the truth on her CV in the City, no amount of tampering will improve the agriculture-related side to her record: one barely exists. In fact, recent statements made on the subject have only added to her reputation for vacuous opinion: “It would make so much more sense if those with the big fields do the sheep, and those with the hill farms do the butterflies,” she told an audience assembled for a referendum debate. No matter the livelihoods of thousands of the UK’s hilltop sheep farmers, then? No need for butterflies outside of national parks?

Normally such a lack of experience is unsurprising. The department has gained a reputation as something of a ministerial backwater; a useful place to send problematic colleagues for some sobering time-out.

But these are not normal times.

As Brexit negotiations unfold, Defra will be central to establishing new, domestic policies for UK food and farming; sectors worth around £108bn to the economy and responsible for employing one in eight of the population.

In this context, Leadsom’s appointment seems, at best, a misguided attempt to make the architects of Brexit either live up to their promises or be seen to fail in the attempt.

At worst, May might actually think she is a good fit for the job. Leadsom’s one, water-tight credential – her commitment to opposing restraints on industry – certainly has its upsides for a Prime Minister in need of an alternative to the EU’s Common Agricultural Policy (CAP); a policy responsible for around 40 per cent the entire EU budget.

Why not leave such a daunting task in the hands of someone with an instinct for “abolishing” subsidies  thus freeing up money to spend elsewhere?

As with most things to do with the EU, CAP has some major cons and some equally compelling pros. Take the fact that 80 per cent of CAP aid is paid out to the richest 25 per cent of farmers (most of whom are either landed gentry or vast, industrialised, mega-farmers). But then offset this against the provision of vital lifelines for some of the UK’s most conscientious, local and insecure of food producers.

The NFU told the New Statesman that there are many issues in need of urgent attention; from an improved Basic Payment Scheme, to guarantees for agri-environment funding, and a commitment to the 25-year TB eradication strategy. But that they also hope, above all, “that Mrs Leadsom will champion British food and farming. Our industry has a great story to tell”.

The construction of a new domestic agricultural policy is a once-in-a-generation opportunity for Britain to truly decide where its priorities for food and environment lie, as well as to which kind of farmers (as well as which countries) it wants to delegate their delivery.

In the context of so much uncertainty and such great opportunity, Leadsom has a tough job ahead of her. And no amount of “speaking as a mother” will change that.

India Bourke is the New Statesman's editorial assistant.