Europe’s debt mountains, Osborne’s Plan B and turning Greece into a debtors’ prison

Vicky Pryce on UKIP's respectable friends and Prisonomics.

Ukip’s respectable friends

 
Debates on whether the UK should leave the European Union are a growth industry. Of course we shouldn’t – and there shouldn’t be a referendum either, unless other like-minded countries ask to have powers given back to them, too, so that a new treaty would then need to be voted on.
 
Withdrawal makes no economic sense, given our trade and other ties with 500 million fellow Europeans and the EU’s £11trn market. That didn’t stop more than a thousand people meeting at the Guildhall for the in/out debate co-hosted by the Evening Standardand the Centre for London on 9 September. On the pro-Europe side were Vince Cable, Martin Sorrell of the advertising company WPP and me. The antis were the Labour MP Gisela Stuart, the businessman Luke Johnson and Jesse Norman, the last of these recently sacked as a government adviser by David Cameron for showing independence on the Syria vote.
 
I was shocked at the number of people who declared they were pro-Ukip. Still, I think the majority wanted us to stay in.

 

Choppy waters ahead

 
On the subject of the eurozone, I recently attended a conference organised by Professors Richard Portes and Hélène Rey at the London Business School to discuss how sustainable current debt levels are. Yes, a number of the periphery countries of Europe have managed to improve their current account balances and to move to primary surpluses in their public finances. However, the reason is mainly that they have stopped spending. Growth is minimal and debts of 120 per centplus of GDP are unsustainable.
 
The crisis has not gone away – many of the banks are in deep trouble and the latest data suggests that lending has been declining in most countries. There are some tentative signs of a pick-up but the debt overhang is bound to bring in more crises soon.
 
Steering the eurozone through the continuing turbulence will require a master helmsman or helmswoman. 

 

Ignoring our neighbours

 
The most important political event of the year is coming later this month. Yet if you read most newspapers, you would not know that there will be an election in Germany. Compare this to the year-long, day-by-day coverage of any US election and our indifference to politics across the Channel seems almost 1930s-esque in its frivolousness.
 
The only story here seems to be whether Angela Merkel will back the Prime Minister’s wish for a massive renegotiation and repatriation deal with the EU. My German friends say Keine Chance – “no way”. At the Guildhall debate, Cable said that the Lib Dems would support a referendum if it was warranted by a substantial change in our relationship with Europe. It didn’t sound like backing for a referendum come what may.

 

Balancing act

 
George Osborne has proclaimed that the UK’s cuts strategy was right after all and that he has been vindicated. In my view, the reason for any success is not austerity – the government has already implemented Plan B, as it has acknowledged some growth is better than none. Target dates for fiscal consolidation have been pushed back. The governor of the Bank of England, Mark Carney, indicates interest rates will stay low as long as possible. A huge injection of cash into the banking system through what is known as “Funding for Lending” and the additional increase in taxpayer-funded mortgage availability are boosting demand and construction. Growth is sustained by consumers borrowing more and more government spending. Nothing wrong with that – but where’s the rebalancing?
 

Greek encounter

 
Great relief. My forthcoming book, Prisonomics, looking at the costs and benefits of the prison system in England and Wales, has just gone through the last of its many edits with my editors and will be out in a few weeks’ time. Iain Dale of Biteback has revolutionised political publishing by cutting the year-long delays between writing and publication. I have also been updating Greekonomics, my book from last year on the eurozone crisis.
 
My research included a wonderful fish dinner near Athens recently with, among others, Mark Lowen, the BBC correspondent there. His lineage is amazing. One grandmother was a Jewish concert pianist in wartime Poland who played for Nazi brutes and lived for another day. His grandfather George Lowen was a young Jewish left-wing barrister in Berlin who worked in the defence team in the Reichstag trial in 1933. He fled to South Africa, where he had to learn English. He requalified and became a well-known QC and defended anti-apartheid militants at the Rivonia trial, in which Nelson Mandela was imprisoned. The Reichstag and Rivonia trials were two of the 20th century’s greatest court cases. The grandson is now reporting on extremist right-wingers in Athens.
 
Greece remains weak, if resilient, and urgently needs more of its debt written off. Unemployment is at record levels and tensions are high. Yet we prefer to keep entire nations in a kind of debtors’ prison. It’s not so much 1930s politics but the return of 19thcentury economics that is worrying.
 

Milk moustache

 
Back from my parents’ home near Athens to chilly Clapham. I spent most of my holiday in front of a computer at the wonderfully named Everyday Café in Varkiza, a seaside suburb outside Athens. My chief writing aids were countless café frappés – a glamorous name given to Nescafé mixed with cold water from the fridge and ice cubes, shaken like a cocktail until a thick layer of froth comes out on top and then poured into a tall glass.
 
It looks like a pint of Guinness but it’s spoiled by how you have to drink it through a straw – unless you don’t mind the ignominy of having a thick layer of froth settling around your mouth like a moustache.
 
Vicky Pryce is a former joint head of the Government Economic Service. Her books “Prisonomics” (£16.99) and an updated edition of “Greekonomics” (£12.99) will be published by Biteback later this month 
UKIP party posters for a local election. Image: Getty

This article first appeared in the 16 September 2013 issue of the New Statesman, Syria: The deadly stalemate

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
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Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

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