Cameron goes hard on the euro – but is this a sensible strategy?

Blame-shifting may be politically expedient, but burning bridges with the eurozone is not going to h

It all started with PMQs on Wednesday, when David Cameron said that the eurozone should “make up or it is looking at a potential break up”. In a speech yesterday, he reiterated the message, telling business leaders that “the return of a crisis that never really went away” should end the current dithering. Now, for the third time in 24 hours, the Prime Minister has pushed the issue of a eurozone break up, this time during a conference call with EU leaders.

Speaking to Angela Merkel, Francois Hollande, Mario Monti, Herman Van Rompuy (president of the European Council), and Jose Manuel Barroso (president of the European Commission), the Prime Minister said that Germany should do more to prevent the single currency from unravelling.

It’s unlikely that this will go down well with Merkel, the German chancellor. Indeed, it’s unlikely that any of it will go down well with EU power-brokers. The fact that Cameron is repeatedly stoking fears of a eurozone break up will probably sour relations ahead of this weekend’s G8 summit. Cameron has defended his aggressive approach on the grounds that Britain’s future is so tied up in the eurozone that it is necessary to put diplomatic niceties to one side. Yet given his unwillingness to help broker a deal, this seems counter-productive.

As the Labour MEP Mary Honeyball put it in a strongly worded blog yesterday:

Cameron’s arrogance and unwillingness to engage with European leaders does not even come from a position of strength. Britain is struggling with a double-dip recession thanks to the Tory-led coalition. What is it that makes Cameron believe he can attack the Eurozone when his own and Chancellor George Osborne’s economic competence is so severely lacking?

. . .

It is becoming ever clearer that the UK   cannot go it alone. Our economy is well and truly tied up with the Eurozone. To believe anything else is to regress to some kind of post imperial cloud-cuckoo land when the EU did not exist and Britain was great.

Of course, it is obvious what the Prime Minister is doing. The country is back in recession and Labour are now neck and neck with the Conservatives on economic competence for the first time in this government, even overtaking them in some polls. No 10 has decided to go big on the single currency. The reasons for this are two-fold. Firstly, it detracts attention from their own floundering economic policy, and a show of strength over Europe may give Cameron a short term popularity boost with his own backbenchers and the public. Secondly, it is an attempt to redefine the debate on the economy – a debate which the government has lost control of in recent weeks – by casting the eurozone as the main factor in Britain’s continued economic woes. It is not a new approach – the first two years of coalition have been defined by an emphasis on the “mess left by Labour” – but it is a shifting of the blame.

There is some logic to this strategy – there is certainly no shortage of struggling foreign economies at which to point the finger. But ultimately, it is unhelpful. As a Guardian editorial argues today:

Britain is not uniquely virtuous in the face of global economic downturn and institutional failure. In fact, Britain is not particularly virtuous at all. We are in recession again because that is the logical outcome of the policies followed by this, not any other, government.

Blame-shifting may be politically expedient, but burning bridges with the eurozone is not going to help find solutions.
 

Angela Merkel and David Cameron, Berlin, Germany, November 2011. Photograph: Getty Images

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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North Yorkshire has approved the UK’s first fracking tests in five years. What does this mean?

Is fracking the answer to the UK's energy future? Or a serious risk to the environment?

Shale gas operation has been approved in North Yorkshire, the first since a ban introduced after two minor earthquakes in 2011 were shown to be caused by fracking in the area. On Tuesday night, after two days of heated debate, North Yorkshire councillors finally granted an application to frack in the North York Moors National Park.

The vote by the Tory-dominated council was passed by seven votes to four, and sets an important precedent for the scores of other applications still awaiting decision across the country. It also gives a much-needed boost to David Cameron’s 2014 promise to “go all out for shale”. But with regional authorities pitted against local communities, and national government in dispute with global NGOs, what is the wider verdict on the industry?

What is fracking?

Fracking, or “hydraulic fracturing”, is the extraction of shale gas from deep underground. A mixture of water, sand and chemicals is pumped into the earth at such high pressure that it literally fractures the rocks and releases the gas trapped inside.

Opponents claim that the side effects include earthquakes, polluted ground water, and noise and traffic pollution. The image the industry would least like you to associate with the process is this clip of a man setting fire to a running tap, from the 2010 US documentary Gasland

Advocates dispute the above criticisms, and instead argue that shale gas extraction will create jobs, help the UK transition to a carbon-neutral world, reduce reliance on imports and boost tax revenues.

So do these claims stands up? Let’s take each in turn...

Will it create jobs? Yes, but mostly in the short-term.

Industry experts imply that job creation in the UK could reflect that seen in the US, while the medium-sized production company Cuadrilla claims that shale gas production would create 1,700 jobs in Lancashire alone.

But claims about employment may be exaggerated. A US study overseen by Penn State University showed that only one in seven of the jobs projected in an industry forecast actually materialised. In the UK, a Friends of the Earth report contends that the majority of jobs to be created by fracking in Lancashire would only be short-term – with under 200 surviving the initial construction burst.

Environmentalists, in contrast, point to evidence that green energy creates more jobs than similar-sized fossil fuel investments.  And it’s not just climate campaigners who don’t buy the employment promise. Trade union members also have their doubts. Ian Gallagher, Secretary of Blackburn and District Trade Unions Council, told Friends of the Earth that: “Investment in the areas identified by the Million Climate Jobs Campaign [...] is a far more certain way of addressing both climate change and economic growth than drilling for shale gas.”

Will it deliver cleaner energy? Not as completely as renewables would.

America’s “shale revolution” has been credited with reversing the country’s reliance on dirty coal and helping them lead the world in carbon-emissions reduction. Thanks to the relatively low carbon dioxide content of natural gas (emitting half the amount of coal to generate the same amount of electricity), fracking helped the US reduce its annual emissions of carbon dioxide by 556 million metric tons between 2007 and 2014. Banning it, advocates argue, would “immediately increase the use of coal”.

Yet a new report from the Royal Society for the Protection of Birds (previously known for its opposition to wind farm applications), has laid out a number of ways that the UK government can meet its target of 80 per cent emissions reduction by 2050 without necessarily introducing fracking and without harming the natural world. Renewable, home-produced, energy, they argue, could in theory cover the UK’s energy needs three times over. They’ve even included some handy maps:


Map of UK land available for renewable technologies. Source: RSPB’s 2050 Energy Vision.

Will it deliver secure energy? Yes, up to a point.

For energy to be “sustainable” it also has to be secure; it has to be available on demand and not threatened by international upheaval. Gas-fired “peaking” plants can be used to even-out input into the electricity grid when the sun doesn’t shine or the wind is not so blowy. The government thus claims that natural gas is an essential part of the UK’s future “energy mix”, which, if produced domestically through fracking, will also free us from reliance on imports tarnished by volatile Russian politics.

But, time is running out. Recent analysis by Carbon Brief suggests that we only have five years left of current CO2 emission levels before we blow the carbon budget and risk breaching the climate’s crucial 1.5°C tipping point. Whichever energy choices we make now need to starting brining down the carbon over-spend immediately.

Will it help stablise the wider economy? Yes, but not forever.

With so many “Yes, buts...” in the above list, you might wonder why the government is still pressing so hard for fracking’s expansion? Part of the answer may lie in their vested interest in supporting the wider industry.

Tax revenues from UK oil and gas generate a large portion of the government’s income. In 2013-14, the revenue from license fees, petroleum revenue tax, corporation tax and the supplementary charge accounted for nearly £5bn of UK exchequer receipts. The Treasury cannot afford to lose these, as evidenced in the last budget when George Osborne further subsidied North Sea oil operations through increased tax breaks.

The more that the Conservatives support the industry, the more they can tax it. In 2012 DECC said it wanted to “guarantee... every last economic drop of oil and gas is produced for the benefit of the UK”. This sentiment was repeated yesterday by energy minister Andrea Leadsom, when she welcomed the North Yorkshire decision and described fracking as a “fantastic opportunity”.

Dependence on finite domestic fuel reserves, however, is not a long-term economic solution. Not least because they will either run out or force us to exceed international emissions treaties: “Pensions already have enough stranded assets as they are,” says Danielle Pafford from 350.org.

Is it worth it? Most European countries have decided it’s not.

There is currently no commercial shale-gas drilling in Europe. Sustained protests against the industry in Romania, combined with poor exploration results, have already caused energy giant Chevron to pull out of the country. Total has also abandonned explorations in Denmark, Poland is being referred to the European Court of Justice for failing to adequately assess fracking’s impact, and, in Germany, brewers have launched special bottle-caps with the slogan “Nein! Zu Fracking” to warn against the threat to their water supply.

Back in the UK, the government's latest survey of public attitudes to fracking found that 44 per cent neither supported nor opposed the practice, but also that opinion is gradually shifting out of favour. If the government doesn't come up with arguments that hold water soon, it seems likely that the UK's fracking future could still be blasted apart.

India Bourke is the New Statesman's editorial assistant.