EURO ERM New Chapter with both France and Germany's budget deficits exceeding the limits set up for the EURO

 

The days of the Exchange Rate Mechanism come back to haunt both France and Germany whose budget deficits have gone beyond the limits set up for the EURO. 

We remember both John Major and Norman Lamont making desperate efforst and selling British gold reserves as it there was no tomorrow to try and keep the value of the Pound that was collapsing. 

Now, the French political crisis is also an economic crisis and the fact that from now on there might be no government or a government kept hostage by a fragmented French Assembly says a lot. 

Only in July 2025 could President Emmanuel Macron dissolve the French Assembly and call new Parliamentary Elections. Although on a speech made the day after the vote that defeated the government and marked the end of Michel Barnier as Prime Minister the President promised to stay for the whole duration of his mandate that ends in 2027, doubts remain about what will happen in France until 2027 in terms of real governance. The question is 'who will actually rule France?' The country should not until 2027 be run by decree because of the President's lack of support in the French Assembly. And what does this mean for the European Union?

In January 2025 there should be a vote in the German Parliament to decide the fate of Olaf Scholz, followed by a Federal Election in February 2025. Once again, what happens to German budgets? Rule by decree? Germany represents 24 per cent of the European Union economy.

Both Germany and France need stable governance and the EU itself will be in great difficulty when two major players face such uncertainty.

On January 20th 2024, new challenges to the European Union economy could rise. Who will then be the negotiators. The Axe Berlin/Paris is in trouble.  

Britain: What happens after the General Election? The package of promises falls apart when confronted with reality.

 

A few days ago came the news that life for 4 million people in the UK will turn into a nightmare if they don´t manage to regularize their visas turning paper visas into digital visas. 4 million people? How much can the state apparatus do from now until 31 December 2024? 

How many people are needed to locate and process 4 millon visas in such a short period? But this is a minute dot in terms of things that will need to be done. Shadow Chancellor Rachel Reeves has formally committed a new Labour government to increase salaries across the entire public sector and Unions are already on a war footing to keep the now Shadow Chacellor of the Exchequer accountable.

The promise about getting rid of Zero Hour Contracts might erode even more public services in an attempt to improve working conditions in the UK and the effect in the private sector must not be underestimated. Faced with the prospect of having to issue regular contracts with all legal requirements, both the public sector and the private sector will struggle.

Grant Shapps as Defence Secretary has been struggling to explain where he is going to find more than 70 billion Pound to beef up the Armed Forces. The same questions will be asked to a new Defense Secretary since Grant Shapps has publicly acknowledged that he believes that the Conservative Party will lose the General Election.

The clock is ticking and many of the faces we see today as symbols of power and decision making will vanish and probably soon to be forgotten. Should announcements made about critical issues be postponed until we know who is going to be in command? Whatever the present authorities say today could be absolutely irrelevant in a few days time. It is a tradition that a new Parliament is not bound to follow what the outgoing Parliament decides.

With a new Parliament, today´s points of reference will vanish. There will be a new political reality. Rachel Reeves has already announced that there will be a new relationship with the European Union. Does this mean the end of Brexit? Reform´s campaign might have a lot to do not with destroying the Conservative Party but with assurances regarding the present relationship with the European Union. the irony is that freedom from any budgetary restrictions gives Britain the necessary flexibility to increase public deficits. We known what happened with the ERM, precursor of the EURO. Will a government headed by Keir Starmer want to fall into the same trap John Major and his government were in before finally deciding to step out of the ERM? What did Tony Blair and Gordon Brown avoid joining the EURO? Precisely because of what happened with the ERM?  

  

Michael Heseltine: I side with Lord Tebbit. Michael Heseltine must go.

Michael Heseltine: I side with Lord Tebbit. Michael Heseltine must go.

Those who remember what led to the debacle in the Conservative Party that lost the 1997 General Election must surely remember the role Michael Heseltine played as a member of a team of conspirators that included John Major and Ken Clarke and what followed after they destroyed Margaret Thatcher.

John Major, Ken Clarke and Michael Heseltine were the protagonist of a very sad and very tragic saga that could have bankrupted Britain. The ERM (Exchange Rate Mechanism, precursor of the EURO) was a complete and utter disaster. No matter how many efforts the then Chancellor of the Exchequer Norman Lamont made to protect the Pound, Britain was forced to sell massive amounts of Gold reserves that incidentally ended up in German hands.

The Trio that could hardly ask for any Oath of Allegiance since they have behaved as traitors went on to lead a Conservative Party that was de-facto four political parties in one. The ERM, like the EURO, is not an economic idea. It is an ideological idea and even the most ardent supporters of the EU like Tony Blair and Gordon Brown stayed well away from the EURO. They knew the potential for disaster.

The latest statement made by Michael Heseltine - now Lord Heseltine - saying that he prefers a government headed by a Marxist is yet another example of Michael Heseltine's Conservatism. But he is not alone. His co-conspirator Ken Clarke should also be given his marching orders. John Major is doing his best to undermine the Conservative government and those who stand for Britain and made it plainly clear at a speech he made as a host of the Church of England.