One of the arguments used by Swedish advocates of the Euro for a vote in favor of the single European currency was that it would give Sweden a seat at the EU’s top table for economic decision-making. This was always a hopelessly naïve point of view, but all credit to the French for a recent demonstration of quite how naïve the ‘ja’ camp were being.
The cornerstone of the EU’s currency regime is something known as the ‘growth and stability pact’. Amongst its provisos are limits on public sector deficits as a percentage of GDP. In principle that’s fair enough for any number of reasons, but the pact’s limit (roughly speaking, three percent) underestimated the importance of counter cyclical spending, particularly in a climate where the worst threats are deflationary not inflationary. The French government has now said that it will ignore the limit until, ahem, ‘around’ 2006. As France’s prime minister explained, “my first duty is employment and not to solve accounting equations and do mathematical problems until some office or other in some country or other is satisfied.”
The longer term implications of France’s declaration of economic independence are uncertain, to say the least, and will, I suspect, make a lot of speculators very rich, but Raffarin is right to stress that, when it comes to economic self-interest, France should put its needs (even if we disagree with how Raffarin defines them) ahead of the gimcrack structures of Brussels’ corrupt, undemocratic and xenophobic ‘union’.
Other countries should follow suit.