I went out with an old friend from Scotland last night. It’s not that he told me anything I hadn't already heard or thought about, but the sense of alarm he instilled was perhaps the result of his accent (anyone who watched Dad’s Army in their youth is hard wired to associate Scottish accents with doom).
So now I am seriously worried. Everyone who knows anything seems to agree that one way or another something either very terrible or very radical has to happen to save the Eurozone. But radical action requires European co-ordination and charity from the better-off countries towards the most indebted. If anything the tide of public opinion in Europe is running in the opposite direction. Take Holland - once one of the most enthusiastic supporters of European integration - now firmly among the sceptics. Europe is also facing a backlash in many countries against open borders within the Union, previously seen as a great achievement. The Greeks are already on the streets but if leaked EU plans to, in effect, take over their country’s economic policy are enacted this is just the beginning of a popular tide of revolt which could sweep the fringes of the continent.
Here at home most of the economic indicators are terrible (more bad news of manufacturing and mortgage borrowing today) and this is before families have borne the full brunt of lost services, jobs and for most families declining living standards. We appear to be closing in on a crisis where either the Coalition has to soften its austerity package (which could risk a loss of international confidence in the country), or we could slide into a long period of stagnation or worse (apparently the next quarter’s GDP figures will be given a lift by the Olympic ticket sales but that really is a blip). Meanwhile the deficit in America is big enough to see from outside the solar system, the Japanese economy has been stagnant for years and is now coping with the terrible consequences of the earthquake, the Chinese economy is being unbalanced by a housing bubble, and so it goes on.
In the twenties there was a crash, a lull and then the full depression with its terrible social costs and its contribution to political volatility, extremism and war. It feels now like Europe and the US are like cartoon characters, the credit crunch was the cliff, but we just kept running and now we are looking down, and down.
So what apart from running around in circles and hiding our savings under the bed can ordinary people like us do? To be honest I haven’t a clue, but because doing something – however futile - is one way of dealing with a rising sense of panic here are some random thoughts:
Even if, like me, you don;t normally read - or in my case understand - economics, it's worth keeping up with the unfolding events in Europe; I suspect they will affect our lives for some time to come (it seems there’s another scary column in the FT every day).
Contribute to the sense that radical problems require radical action. This is not a time for petty minded nationalism or political point scoring. If, for example, the Coalition decided to soften the austerity package (as Will Hutton predicted on Sunday) it should be applauded not attacked.
Encourage dialogue. As my colleague Adam Lent said in his post yesterday, moderate parties of the left and right need to find common ground in the face of the economic challenges and the risks of extremist populism
Celebrate those who take risks in the real economy. In the end the best way to get us and other countries out of the mire of debt is economic growth. But uncertainty and deficit reduction make growth less likely. So we desperately need people and companies that buck the trend and take a gamble on a better tomorrow by creating new enterprises and jobs.
All of which is, of course, hot air. But after listening to Private Frazer last night I’m not even inclined to echo the catchphrase of Corporal Jones.
The public are ahead of policy-makers and, indeed, most of the business world. COP26 is an enormous opportunity to catch up. Global leaders should take it.
Al Mathers Anthony Painter
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