GFTU BGCM Minutes 2017

without there being serious debt relief. The second thing you could do to solve

the problems of Europe would be for the Germans, for whom the system works

and their trade surplus is a mirror image of ours, so while we run a huge trade

deficit, the German trade surplus is something like 8% of GDP, which is

essentially sucking demand out of the Eurozone, so if you want the rest of the

Eurozone to work a bit better, the Germans should spend more money,

increase consumer spending, invest more in their infrastructure and run down

their surplus, which would be to the great benefit of the rest of the Eurozone or

you can just wait for a country much bigger than Greece to have a crisis and

that would precipitate the breakup of the euro. That is what I think may well

happen with Italy. I just do not think it is sustainable. I think they have had 4%

increase in living standards over the last two decades. That is an economy

which is not going to sustain itself inside the Eurozone and Italy exemplifies the

problem of the overvalued lire against the undervalued mark. In the old days

the Italians would have regained their competitiveness by devaluing and now

they cannot do that, so essentially they are losing competitiveness to the

Germans year after year after year and their economy is suffering and sooner

or later a party is going to come to power in Italy and say, “You know what,

we’ve had enough. We’ve had enough, we’re going to leave” and they will hold

a referendum and the referendum will be won and that will precipitate a crisis in

the Eurozone, I think, which will be incredibly messy, because there are people

who would say that there is only one thing worse than creating the Eurozone,

which is to destroy the Eurozone. I am a long term critic and I really do not like

the single currency, as you have probably realised, but you have to realise that

the break-up of the Eurozone would be like the subprime crisis all over again

except probably worse.

Jane, I totally agree with you, for too long in this country economic policy has

been about how can we boost demand? If you think about what Osborne did in

2012/13, he came into power saying that he was going to recalibrate the

economy, we were going to have better balanced growth, but he killed off the

growth that was there by spending cuts and he got to 2012/13, two years away

from a General Election, and realised that the economy was barely growing, so

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