The Lib Dems might have moved on from Rennard, but the public haven't

Ask any "ordinary" person what the Lib Dems have been up to in recent weeks and they'll mention the scandal.

Being a mere Lib Dem activist, rather than a professional politician, means I actually have friends who don’t "do" politics – you know, folk who spend their Saturdays doing things other than getting their hands stuck in dodgy letterboxes when out leafleting, writing furious letters to the local paper or haranguing the council via enraged blog posts.

Yesterday was one of those rare occasions when I managed to raise my head from my hands long enough see one such friend. But guess what. He wanted to talk politics. So what great matter of state did he want to discuss? The economy? The debate over the top rate of tax? Crisis in the health service? Michael Gove? Nope. He wanted to talk Rennard. And more precisely, how on earth a professional political organisation made such a 24 carat balls up of the whole thing.

Raising this topic is not going to make me many friends in Great George Street, now it's been kicked into the long grass and is the subject of yet another investigation. But in many ways of course, that’s the problem. Sure the party leadership may want the world to move on – after all, the main media storm was three weeks ago. But I’m afraid the public haven’t moved along. 

Ask any "ordinary" person what the Lib Dems have been up to in recent weeks, and you won’t find anyone talking about campaigns on mental health initiatives, Danny Alexander saying no to cutting the top rate of tax, or David Laws sticking it Michael Gove. No, their overriding concern is why can’t the party sort out the sort of human resources issue that would have been resolved one way or another in a matter of days in any average-sized business. And – unlike other inquiries we’re currently holding– this isn’t an issue anyone is likely to forget about.

So while I suspect the leadership may be quietly congratulating themselves that the Rennard affair is no longer gracing the front pages (and cursing me for raising it again), it’s still the thing most front of mind for the wider electorate.

We may wish it weren’t so and we can media manage all we like, but better to grasp the nettle, hold the inquiry quickly, accept its findings, act appropriately and then move on. Because if you ask the public they’ll tell you – it’s not going away. And I’d quite like them to be thinking of some of the other things we’re doing – but which, while this festers on, we'll get no credit for.

Richard Morris blogs at A View From Ham Common, which was named Best New Blog at the 2011 Lib Dem Conference

Chris Rennard with Ming Campbell at the Liberal Democrat conference in 2006. Photograph: Getty Images.

Richard Morris blogs at A View From Ham Common, which was named Best New Blog at the 2011 Lib Dem Conference

Getty
Show Hide image

Leader: The unresolved Eurozone crisis

The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving.

The eurozone crisis was never resolved. It was merely conveniently forgotten. The vote for Brexit, the terrible war in Syria and Donald Trump’s election as US president all distracted from the single currency’s woes. Yet its contradictions endure, a permanent threat to continental European stability and the future cohesion of the European Union.

The resignation of the Italian prime minister Matteo Renzi, following defeat in a constitutional referendum on 4 December, was the moment at which some believed that Europe would be overwhelmed. Among the champions of the No campaign were the anti-euro Five Star Movement (which has led in some recent opinion polls) and the separatist Lega Nord. Opponents of the EU, such as Nigel Farage, hailed the result as a rejection of the single currency.

An Italian exit, if not unthinkable, is far from inevitable, however. The No campaign comprised not only Eurosceptics but pro-Europeans such as the former prime minister Mario Monti and members of Mr Renzi’s liberal-centrist Democratic Party. Few voters treated the referendum as a judgement on the monetary union.

To achieve withdrawal from the euro, the populist Five Star Movement would need first to form a government (no easy task under Italy’s complex multiparty system), then amend the constitution to allow a public vote on Italy’s membership of the currency. Opinion polls continue to show a majority opposed to the return of the lira.

But Europe faces far more immediate dangers. Italy’s fragile banking system has been imperilled by the referendum result and the accompanying fall in investor confidence. In the absence of state aid, the Banca Monte dei Paschi di Siena, the world’s oldest bank, could soon face ruin. Italy’s national debt stands at 132 per cent of GDP, severely limiting its firepower, and its financial sector has amassed $360bn of bad loans. The risk is of a new financial crisis that spreads across the eurozone.

EU leaders’ record to date does not encourage optimism. Seven years after the Greek crisis began, the German government is continuing to advocate the failed path of austerity. On 4 December, Germany’s finance minister, Wolfgang Schäuble, declared that Greece must choose between unpopular “structural reforms” (a euphemism for austerity) or withdrawal from the euro. He insisted that debt relief “would not help” the immiserated country.

Yet the argument that austerity is unsustainable is now heard far beyond the Syriza government. The International Monetary Fund is among those that have demanded “unconditional” debt relief. Under the current bailout terms, Greece’s interest payments on its debt (roughly €330bn) will continually rise, consuming 60 per cent of its budget by 2060. The IMF has rightly proposed an extended repayment period and a fixed interest rate of 1.5 per cent. Faced with German intransigence, it is refusing to provide further funding.

Ever since the European Central Bank president, Mario Draghi, declared in 2012 that he was prepared to do “whatever it takes” to preserve the single currency, EU member states have relied on monetary policy to contain the crisis. This complacent approach could unravel. From the euro’s inception, economists have warned of the dangers of a monetary union that is unmatched by fiscal and political union. The UK, partly for these reasons, wisely rejected membership, but other states have been condemned to stagnation. As Felix Martin writes on page 15, “Italy today is worse off than it was not just in 2007, but in 1997. National output per head has stagnated for 20 years – an astonishing . . . statistic.”

Germany’s refusal to support demand (having benefited from a fixed exchange rate) undermined the principles of European solidarity and shared prosperity. German unemployment has fallen to 4.1 per cent, the lowest level since 1981, but joblessness is at 23.4 per cent in Greece, 19 per cent in Spain and 11.6 per cent in Italy. The youngest have suffered most. Youth unemployment is 46.5 per cent in Greece, 42.6 per cent in Spain and 36.4 per cent in Italy. No social model should tolerate such waste.

“If the euro fails, then Europe fails,” the German chancellor, Angela Merkel, has often asserted. Yet it does not follow that Europe will succeed if the euro survives. The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving. In these circumstances, the surprise has been not voters’ intemperance, but their patience.

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump