Coffee House

Olli Rehn bosses George Osborne around

10 April 2013

Olli Rehn, the European Commissioner who is in charge of economic affairs, called in the Brussels press corps this afternoon to announce the conclusion of his ‘in-depth review of the macroeconomic imbalances in 13 member states.’ I sat through the launch, and the questions and answers, noting that at no time did Rehn or any of the reporters approach the fundamental question: what exactly is a macroeconomic imbalance and why do we think that Rehn – whose full title includes European Commissioner for the Euro – is the man anyone would trust with analysis of anything macroeconomic?

And before you ask, the reason I didn’t ask is that I ration any questions that I know the spokesmen who run these press conferences will consider obnoxious. I have to deal with these people long term.

Still, I could have pointed out that the corpses of what were once red-blooded European countries are now piled up and oozing around Rehn’s desk. It is absurd he should now give his analysis of the state of any kind of ‘imbalances’ in countries both inside and outside the euro – indeed, today he had a list of Britain’s ‘imbalances.’  He said he was presenting his analysis as ‘raw material’ to the British for when they draw up their next economic plan. The British, like the rest of the 27, must draw up a plan which will meet the approval in the economic policy coordination of this year’s European Semester. Otherwise known as the economic government of the EU.

Yes, the Cameron-Clegg government has colluded in the establishment of an EU economic government. Rehn now has increased powers to boss around the Chancellor. This particular bit of bossiness comes from the Alert Mechanism Report  of November 2012, which has led to this In-Depth Review under the Macroeconomic Imbalances Procedure, and yes it’s dull and makes you snooze, but all I can say is: guess what happened while you were sleeping? More power went from Britain to Brussels.

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So here are some of what is wrong in Britain, according to the European Commissioner for the Euro: household debt is likely to remain high. There is deterioration in external competitiveness, with negative trade balance mainly as the result of a chronic deficit in goods trade. The government deficit, although decreasing, remains elevated while government debt is high and increasing. The stock of UK corporate debt is moderately high and there are signs of less-than-viable companies being kept in business through low interest rates and bank forbearance. Structural weaknesses. Shortages in airport and seaport capacity. The challenge linked to deleveraging.

And on and on, a list of things we all knew anyway, from the commissioner who helped create the disasters in Italy, Greece, Spain, Portugal, Cyprus, Ireland and stand by for France and Slovenia.

In the end, I slid in next to one of the top eurocrats who prepared this review for Rehn, and asked him what exactly was the definition of ‘macroeconomic imbalance’ anyway, especially since the commission seemed to think Britain was riddled with it.

He told me: ‘A macroeconomic imbalance is anything that could put a country in trouble, that can lead to booms and busts.  For example, excessive credit growth, excessive housing boom, excessive government debt. It is a term that is so wide that we do not have operational criteria. It is a matter of judgement.’

So ‘macroeconomic imbalances’ are anything the eurocrats say they are, and once the macroeconomic imbalances are identified by the commission, Rehn can jump in and tell George Osborne, or any other finance minister, what he needs to do to meet EU demands.

The eurocrat assured me: ‘We do this as a service.’

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Show comments
  • Barbara Stevens

    He should come here and say it, he’d get booted back to the airport. Not that we take any notice, we’re not in the euro so he can stuff his micro=_)& up is where it hurts. I hate these fellows, and hate this govenment more for lack of moral fibre to tell them to shut up and walk away.

  • John

    If only this man was wrong!!!!

  • Hookeslaw

    The ‘European Commissioner for the Euro’ can say what it wants of course but the UK is not in the Euro and has an independent economic policy. Hard to see what the point of this post is

    The EU lambasted France and Spain amongst others.

    • M.E. Synon

      You might want to read the post more carefully. I wrote about Rehn ‘whose full title includes European Commissioner for the Euro.’ His full title, as I indicated in the first line, puts him in charge of economic affairs: he is European Commissioner for Economic and Monetary Affairs and the Euro, and that is for the full 27 member states of the EU.

      • Makroon

        As I understand it, Olli is a nice amiable sort of bloke, given an impossible job, and floundering a bit. He usually manages to say the wrong thing at the wrong time.

  • faustiesblog

    Am I just cynical, or did Olli Rehn decide to announce this while this country is mourning the magnificent Mrs T? I.e., burying bad news.

    • Hookeslaw

      its a report from the commissioner for the Euro
      it lambasts France and Spain and about a dozen other countries.

  • James Willby

    Except of course that to a country outside the eurozone these are only recommendations with as little/much clout as a report from the OECD. The UK cannot be subject to an excessive deficit procedure, so the idea any actual power has been transferred to Brussels is rubbish, as the author should know. Silly piece really.

    • M.E. Synon

      Perhaps read the post again. I did not mention, nor did I refer to, the excessive deficit procedure. What I was writing about was what Rehn yesterday bragged was ‘our transformed economic governance [which] enables us to address macroeconomic imbalances pre-emptively.’ In particular, he was dealing procedures related to the European Semester, the yearly cycle of economic policy coordination to which Britain and all the other EU member states are now subject.

      • Hookeslaw

        You should make all these things clear because you are dealing I am afraid with nutjobs who see in only one dimension.

        Mr Willby is really commenting for the nutjobs benefit when he points out no power is being transferred.

  • ECinLondonMark

    The real facts are that the UK welcomes this process and that it gives the UK government leverage to influence economic policy elsewhere in Europe – because the final decisions on the recommendations for each country are taken by national leaders, not bureaucrats. Obviously EU economies are interconnected so it makes perfect sense for them to work together to prevent problems in one country spilling over to others, so as to bring the crisis to an end and to undertake structural reforms to allow a return to sustainable growth.

  • Archimedes

    Silly little man says something in Brussels: World Keeps Turning. These people torpedoed our banking industry out of spite; there’s nothing in Brussels for Britain, but misery.

    Britain doesn’t strut the world stage telling the US or Chile how to run their economies — Europe should stop telling Britain how we should run ours. The EU is just a tin-pot little European country.

    • Tom Tom

      It most certainly does

    • liamsmith

      So…Cameron hasn’t been telling the EU how to spend it’s money? Because I believe he has.

      • Archimedes

        No, he has been telling the EU how to spend our money. The differences are, I know, subtle but many.

  • liamsmith

    I truly wonder why people moan over having power in Brussels. For one moment, just think of if we came out of the EU this year. We’d have the tories pulling us out of the European Court of Human Rights, taking away workers rights and excellerating their plans to make the rich richer and the poor poorer, fewer stronger trading partners, isolation, and little interference from Europe at a time when we need to be integrated to some degree so that the Eurocrats can help our economy to maintain some levels of growth by repeatedly telling our downgraded, part time chancellor that his plan is not working and that it’s a time to go onto plan B. I wish some people would just wake up to reality.

    • chudsmania

      Are you Ken Clarke in disguise ? By the way , hows that mickey mouse euro currency working out for you #bailoutsgalore

      • liamsmith

        This isn’t Twitter, so why use the hashtag? And I was commenting on the European Politicians, not the currency, which is going through some tough times.

    • Fergus Pickering

      I just loe that word ‘excellerate’ Does it mean to get more excellent, as one does when one is governed by a sound left wing junta? Perhaps after 2015 we will just excellerate out of sight.

    • Colonel Mustard

      Ah, that old starry-eyed look towards the socialist EU to save you from the wicked Tories. It was the same with you lot during the Cold War. Only then it was the Soviet Union that you saw as your saviour.

      • liamsmith

        Well if it stops the Tories from ruining the country, then yes the EU is a necessary evil to some, or part of the greater unionisation of the western world to advocate peace, harmony and social tranquillity to others. And I can’t comment on the cold war, as I wasn’t around in that era.

      • dalai guevara

        Hate to brake it to you: the ‘Soviet Union’ was our saviour, colonel – at least twice. 1812 and 1943.

        • liamsmith

          Just so you know, the Soviet Union wasn’t around in 1812.

          • dalai guevara

            that’s why it’s in inverted commas.

            • liamsmith

              Ahh, sorry.

    • Nicholas chuzzlewit

      Then I strongly suggest that you purchase an alarm clock. Turning aside the infantile cliches such as “rich richer, poor poorer” for a moment, the suggestion that we integrate further with an economically sclerotic bloc that is wholly preoccupied with shoring up a doomed currency does not seem to be a formula for economic invigoration. Eurocrats cannot “help our economy” because they have no experience of business and how to make businesses grow. It is no more sensible a suggestion than seeking advice from a cake seller on how to run a nuclear power station. We need to cut public expenditure, cut taxes and thereby allowing companies to produce and people to buy what they produce. That is how you attain economic growth and not by placing faith in bureaucrats with no practical knowledge of business economics.

      • liamsmith

        I think you failed to see the point of what I was saying. The bureaucrats do not create growth, but their advise does have weight in the international community whether you see that or not. By using there political standing they can persuade, to some degree, our chancellor from refraining from doing certain things. Alongside being able to have strong links with other European countries, which will allow us to crack down on tax evasion in the end, which will bring back money to the treasury.
        However, you pointed out cutting expenditure. To grow, you should not cut expenditure. You should simply re-adjust your spending by make cut backs in areas that can handle the cuts, and spend the savings to invest in the growing area’s, whether its housing, infrastructure, construction or manufacturing (…etc…etc…), and then invest in the small businesses to maintain competition between the businesses, and then promote initiatives which promote growth.

        • Nicholas chuzzlewit

          It is simply not the role of Unions make the Chancellor “refrain from doing things” that is the role of our duly elected representatives in Parliament. They are not some kind of convenient left-wing alternative to democracy however much you may want them to be. Second, investment means that you achieve a return that exceeds the original costs of making that investment, something governments are not good at. Investment in infrastructure, small businesses, construction and manufacturing etc is a role for the private sector which understands the needs to make a positive return. Thus governments should cut spending which would allow lower taxation thereby freeing up capital for businesses to invest profitably thereby creating growth and lo and behold, a higher tax take..

  • dalai guevara

    Waffle waffle waffle. I don’t need Oli Rehn to tell me that something is wrong with Britain – we sport a world class 8% annual deficit for God’s sake.
    But after a 25%+ devaluation to all major currencies, the most distressing bit is this – I quote from the link below:

    ‘ The largest fall in exports was in goods to non-EU countries (4.7 percent), which included a £329 million fall in exports to the USA. This fall in overall exports continued the downward pattern that started in October 2011…’

  • 2trueblue

    How well the Eu has managed their own finances within the euro? Hardly in a position to lecture us.

    • Tom Tom

      Forget the Eurozone, the EU itself has a €217 billion deficit

      • Hookeslaw

        Deficit? The total EU budget is about 130 billion. the recent agreement cut the EU budget in real terms – about 4%.
        How is the EU financing this deficit you give?

  • R2-D2

    Mr Rehn’s analysis is spot on. Couldn’t we have him as Chancellor?

    • petermorris

      He couldn’t be any worse! And perhaps he has opened an economics textbook at some stage.

      • Tom Tom

        Hardly think so with his Journalism degree from the USA

        • petermorris

          Perhaps he did with his economics and international relations studies at University, which you failed to mention!

        • R2-D2

          He’s got a PhD in international political economy from Oxford.

          • Makroon

            QED then
            He kno’ nuttin !

  • Andrew Paul Shakespeare

    “guess what happened while you were sleeping? More power went from Britain to Brussels.”

    So where’s our referendum then? You know, that triple-lock thingummyjig?

    • Count Dooku

      I’m as anti-EU as the next libertarian but anyone that can stop the govt from its current spending and debt binge gets my support.

    • Hookeslaw

      This report is from ‘the European Commissioner for the Euro’ we are not in the Euro.
      Any new treat taking power from the UK to the EU will require a referendum.

  • Daniel Maris

    Surely shome mishtake -shouldn’t this be about Mrs Thatcher?

  • lgrundy

    “the Alert Mechanism Report of November 2012”

    I presume then that when the 2014 version of this document is published, with a Labour government in the UK only weeks away, it’ll be called “The Red Alert with Flashing Lights, Sirens and Klaxons Report”.

    After all, if there “is anything that could put a country in trouble, that can lead to booms and busts, for example, excessive credit growth, excessive housing boom, excessive government debt”, it’s a Labour government.

    • telemachus

      I presume then that when the 2014 version of this document is published, with a Labour government in the UK only weeks away
      But worry not
      The pound in your pocket will be safe

    • In2minds

      Don’t forget that Nick Boles is keen to start a housing boom!

  • Chris lancashire

    Whilst this may represent unwarranted intrusion to some from what you have reported Mr Rehn didn’t say anything that wasn’t true about the British economy.

    • ButcombeMan

      Indeed and Red Ed & Balls should pay attention, this is the effect of the The Big Brown Mess which they helped put in place.

      • salieri

        Yes, indeed. But the poor dears can’t be to blame because they weren’t told (by the experts in ruination) at the time. No-one in Yerp uttered a peep ahout macroeconomic imbalances between 1997 and 2010.

    • Makroon

      Really ?
      So you agree that ‘external competitiveness’ has deteriorated ?

      • Tom Tom

        Look at the IMPORTS

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