Sunday, 11 December 2011

The top ranks of the Government are now coming to the conclusion that the break-up of the euro is inevitable.


 I understand that Hague, like the Chancellor, now believes this will happen soon. Osborne told Cabinet colleagues on Monday that the Merkel-Sarkozy plan for greater fiscal discipline within the eurozone was no solution to the current  crisis. Rather, he said, ‘it was like standing over a man having a heart attack and telling him that to avoid one in future he should do more exercise and cut down on cholesterol’. This view that the euro is unlikely to survive is why there are, so far, few worries about Britain being isolated by the eurozone bloc and its allies. The Government is also confident that the differences between the countries in the single currency will remain – that the Netherlands and Finland will continue to take a more liberal attitude to financial services and the single market than the French and the Italians. But there’s little doubt that Cameron’s decision to wield the veto changes Britain’s relationship with the other members of the European Union. The days of Britain carrying on down the same route as the rest of Europe, just at a slower pace, are now over. As one of Cameron’s closest allies says: ‘We are now, inevitably, en route to a very different destiny.’ ... but one rift is healing, at least Labour’s failure to capitalise on the weakening economy has led to renewed tensions within the party’s ranks. Ed Balls, the Shadow Chancellor, is the target of much of this backbiting. Shadow Cabinet sources complain he is more interested in justifying his record in office than winning the argument about what to do now. Balls’ detractors argue that his bellicose statements are drowning out Ed Miliband’s message.


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