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April 16, 2024

Cameron’s course causes economic uncertainty

By KAUSHIK RAO | January 31, 2013

The European Union is teetering on survival as the member nations  decide the fates of their fellow debt-ridden countries. Another blow to the unsteady Union came from Prime Minister David Cameron’s government in the U.K.

Last week, Cameron gave a speech in which he indicated that his government would be ambivalent to the prospects of Britain remaining a member of the E.U. This was largely done as a political move to please the British public, which is unhappy with the state of the E.U. and would rather opt out of the dysfunctional economic agreements that are reached every couple of months.

Granted, turmoil in Greece, Spain, France and Poland would give any nation pause before entering into an economic union with these countries. Since the Labour Party is currently ahead of the Tories in the polls, it was almost necessary for Cameron to appease the public with a negative stance on the E.U.

More specifically, Cameron acknowledged that Britain would lose economic benefits with its largest trading partner if it were to withdraw its membership, but he also claimed that he would prefer for the E.U. to be a looser union of countries with less regulation. He subsequently stated that Britain could have it either way when it comes to membership in the Union. He proclaimed that if his party were to win the next elections, he would create a revised membership status for Britain in the E.U. This would then be put up for a vote in a 2017 or 2018 referendum which would then determine whether Britain actually removes itself from the Union of which it has been a member since 1973.

Again, this stance by Cameron has provided him with much needed political support and a boost in the polls. But the long-term consequences are going to be much more drastic. This stance creates five years of uncertainty in Britain’s foreign markets. Therefore, willing investors are now less likely to invest money in the E.U. and the United Kingdom. Britain’s economy is already sluggish and this announcement will only further cloud the ability for the economy in Europe to recover.

The bottom line is that this referendum may or may not happen. If the referendum does not happen, then Cameron will have unnecessarily caused five years of economic downturn which could have been used for economic recovery. With the upcoming elections in Germany and Italy, it may not even matter whether Britain remains a part of the E.U.

And if Cameron wants to affect change in the E.U., he would be better off doing it as a member of the Union rather than an outsider who voluntarily left the compact. His current tactics will only cause further problems for the European economy and won’t do anything to alleviate the sluggish economies of Europe.

The ambivalence shown by the British government was just another disappointing action taken by European governments, which should be entirely focused on regaining solvency and lowering borrowing rates. If Cameron was trying to create more political or economic stability with this announcement, he ended up doing the opposite. The world economy does not need any more self-inflicted wounds from austerity movements. The only proper course of action at this point is to continue to support investment and economic growth in Europe.

Kaushik Rao is a sophomore Political Science and Economics double major from Yorba Linda, Calif. He is a staff writer for TheNews-Letter.

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