Will Crisis Oust Britain From the EU?

From the April 2010 Trumpet Print Edition

Forty years ago, amid great industrial upheaval and economic stagnation, Britain was branded as “the sick man of Europe.” Margaret Thatcher rose to the occasion, stared down Britain’s militant labor unions, privatized languishing state-run services and rescued the nation from crisis.

There simply is no 21st-century Thatcher to come to Britain’s aid amid a far greater crisis facing the nation today.

Britain risks overtaking Greece as the sickest economy in the EU. Yet it is faced with a greater problem than Greece. Greece, as a member of the eurozone, does have a lender of last resort with which to plead its case for a bailout: the European Central Bank. Britain, which refused membership of the euroclub in order to maintain its own pound sterling currency, can hardly seek favor with the Eurobank in times of crisis. It would probably have to turn to the International Monetary Fund, like the Third World nations that usually receive imf largesse. This would result in a tremendous loss of national prestige—that is, assuming embattled Britain has any remaining prestige to lose.

Writing for the Telegraph, Ambrose-Evans Pritchard mused, “The Greek crisis is a dress rehearsal for attacks on any sovereign state with public accounts in disarray. While Britain went in to this crisis with a much lower public debt than Greece or Italy (though higher total debt than either), it now has the highest budget deficit in the oecd [Organization for Economic Cooperation and Development] rich club—and perhaps the world—at 13 percent of gdp.

“I have a very nasty feeling that markets are about to pounce on Britain. … A disorderly fall in sterling at this stage (i.e. collapse) could prove as traumatic as default” (February 15).

A few days later, the Telegraph reported, “Britain’s public finances may end this year in a worse state than those of Greece, economists warned yesterday, raising serious fears over the economic stability of the country” (February 19).

Emphasizing the problem, the annual January surge in tax receipts that normally boost the British Treasury did not occur. Instead, for the first time in 17 years, public finances plunged into the red in the first month of the year. Official figures showed that the government actually borrowed £4.3 billion in January to keep the nation afloat. “The Office for National Statistics said the government had never before had to borrow cash in January, adding that the shortfall meant it had now borrowed £122 billion so far this financial year, equivalent to around £2,000 for every man, woman and child in the country” (ibid.).

The cost of such borrowing is proving more expensive to Britain than the cost of loans to the ailing Spanish and Italians. Added to this is the huge exposure of British banks to those EU nations presently in the greatest economic difficulty, the so-called Club Med, or pigs nations—Portugal, Italy, Greece and Spain. A consequence of all this, which just adds to Britain’s financial and economic woes, is that the market is not buying British bonds. Then there’s the bad news from the real-estate market, indicating that mortgage lending fell by 32 percent in January.

This all adds up to one sorry mess for Britain. It is not only that Britain risks the loss of its triple-A credit rating. Leading academics, economists and businessmen have warned that “without action on the public finances, Britain could face a crippling fiscal crisis” (ibid.).

Over the past 20 years, Britain has increasingly sold off not only crucial businesses but also numerous strategic assets. It has even yielded up the administration of some of its counties to foreign entities. Yet, despite retaining its beloved but battered pound sterling, Britain long ago began signing over its national sovereignty to the European Union. That action was consummated with the government signing the European constitution, thus virtually making Britain an EU vassal state subject to the whim of Brussels/Berlin.

Herbert Armstrong prophesied long ago that Britain would either opt out or be kicked out of the European Union. The day of that occurring may be closer than we think. If Berlin is prepared to play hardball with a fellow European nation like Greece when it is in a tough spot, what do you really think, based on the lessons of history alone, it might do to the offshore islands of Britain if faced with a similar situation there? Britain has placed its economy in a tenuous situation by allowing not only many of its top brand names to be taken over by EU member nations, in particular Germany, but too many of its strategic assets—and too much of its national debt, also.