MP Tristram Hunt: Greece's cash crisis is closer to home than we might think
IN THE old days, a currency dispute in Greece could be safely filed under the Neville Chamberlain excuse of, 'a quarrel in a faraway country between people of whom we know nothing.'
Not any more.
The exit of Greece from the Euro currency – so-called 'Grexit' –would soon hit business and homeowners here in North Staffordshire.
British banks exposed to Greek debt will prove even more reluctant to lend to local companies, export orders could crumble, stock exchange investments would slide, while rising inter-bank lending rates could push up mortgage costs.
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So just as we try to edge our way out of a double-dip recession, the costly 'Grexit' could send us back into negative growth.
And the terrible reality is that no one really knows how this is going to end: will a political determination to keep the Eurozone together win out against the economic realities threatening to push Greece out of the single currency?
Whatever the case, we need to be prepared. Truth be told, the situation in Greece looks close to unsolvable.
The crippling austerity programme inflicted on Athens by the European Union has made any attempt to grow the Greek economy impossible.
Yet, the Germans continue to demand that Greece follows its rules if it wants to receive more bail-out funds.
On one hand this is the right approach. It makes no sense to keep showering Greece with loans that it has no chance of ever paying back. But focusing just on Greece leaves the bigger questions unanswered.
Because the crisis is not just about spending or the Euro. After all, before the crash, Spain, one of the countries that may be next in line for emergency loans, had the lowest deficit in the European Union, lower even than Germany.
The reality is the crisis is also caused by a cluster of other problems.
One is personal indebtedness. Another is bank weakness and the over-reliance on financial services and a property bubble to boost our economies.
And, for the countries locked into the currency, the strength of Germany at trading goods has created damaging imbalances. At the same time, Germany is unwilling to finance the kind of transfer payments to the likes of Portugal and Greece, which would be required to retain a common EU currency, as these would amount to billions and billions of Euros.
But the European Union's problems do not end with the currency crisis. Though the amount of interference is often unfairly exaggerated, existing EU legislation can sometimes get in the way of our interests.
For example, competition laws make it more difficult to actively support some of our manufacturing industries.
Such problems inevitably lead us to question our role in Europe. And rightly so. Our relationship with Europe is always changing and in constant need of reflection.
I do not support plans for an in-out referendum at this moment in time; with markets in such turmoil, it would be a damaging diversion.
Equally, I do not think it is unreasonable to suggest that the current European model needs improvement.
After all, if the aim of the European Union is to spread prosperity and international harmony, then by any measurement it is currently failing.
But I believe we should be thinking about how we can reform the EU, not about how to leave it.
During a recession, and with a European elite that has not prioritised the need for growth with the urgency it demands, it is easy to forget how much we depend on our European neighbours for trade.
EU countries still account for 45 per cent of our exports. We sell more goods to the Netherlands than we do to Brazil, Russia, India and China combined.
Of course, we need to expand our global export trade. But that doesn't mean turning our back on our allies in Europe. Not least, because being a member of the EU trading block also enhances our offer to such countries in the first place.
The coming months are critical for the future of Europe. But they are important for Britain too.
Our jobs and business investment depend on Europe's leaders choosing the right course. Our politicians and diplomats need to be at the table in Brussels helping to find a way forward for the single currency, or an orderly 'Grexit' if that is the end option.
But, in Stoke-on-Trent, businesses should be under no illusions that choppy waters lie ahead. This is an important quarrel in a land just three hours by aeroplane, in which our future prosperity stands at stake.
Sentinel Business: From Page 18