Europe

Nick Clegg gave a speech on the economy earlier this morning. As Tim Montgomerie notes, Clegg came close to admitting that the economy is nearing crisis. He said, "The economic context is much worse than before. Yes, facts have changed" and added that the "government is not blind to deterioration in economic environment". These warnings tighten a knot in already sick stomachs; but, with the Eurozone mired in a crisis that is fast becoming existential, banks under mounting strain, rising unemployment, widespread talk of further Quantitative Easing and the very public internal debate in the coalition about the need for tax cuts, Clegg’s comments don’t come as a great surprise.

William Hague’s comments in an interview with The Times that the Liberal Democrats are restraining the Tories on Europe will increase the grumbling among Tory backbenchers about the power of the junior coalition partner. Hague tells the paper that ‘A point of difference in our manifesto was the aim to repatriate some powers. Clearly that’s something I’m in favour of, but that’s the area we had to compromise on in return for other compromises.’ (In many ways this is a statement of the obvious. But in the current uncertain European environment, his remarks are news). In an attempt to reassure euro-sceptics, Foreign Secretary stresses that the Conservative party ‘would like to see powers returned from the EU to the United Kingdom.

If Tony Blair thought that a meeting with Gordon Brown was like dental surgery without anaesthetic, one wonders how David Cameron would describe being questioned on Europe by Bill Cash and Bernard Jenkin. At the liaison committee, the two veteran eurosceptics pushed Cameron on why he was supporting far greater fiscal integration in the Eurozone. Cameron’s answer was, basically, that this was the only way the Eurozone could be made to work. But one can’t help but feel that greater fiscal integration is simply storing up problems for the medium term given that it will do nothing about the divergence in competitiveness between Eurozone members. The rest of the session was dominated by yet more questions about relations between politicians and the media.

Nick Clegg laughed-off the dousing of blue paint he received in Glasgow yesterday, like one of Noel Edmonds’ unwitting victims. Today, Clegg has turned into the grinning douser: drenching his coalition partners in yellow paint by saying that the European Convention on Human Rights will not be watered down. Writing in the Guardian, Clegg says that the Conservatives are right to seek operational reform of the European Court of Human Rights, but the common ground ends there. He says that “the Human Rights Act and the European convention on human rights have been instrumental” in preventing injustices from council snooping to the misuse of DNA records and that the incorporation of human rights into domestic law was a “hugely positive step”.

Angela Merkel must tire of repeating herself. Eurobonds are “exactly the wrong answer” to the European debt crisis, she said yesterday for the umpteenth time. She added that they would “lead us to a debt union not a stability union”, a free-for-all funded by German taxpayers. She concluded that “greater commitment” from the 27 member states of the European Union was required to stabilise the situation. Her comments would have, perhaps, placated her mutinous coalition in Germany, which is virulently opposed to Eurobonds and expensive integration.

It's no surprise that 70 Tory MPs have formed a Eurosceptic group, as the Sunday Telegraph reveals today. They are the modernisers now. The new Tory intake are strikingly robust on all this: by and large, their idea of political balance is a picture of Thatcher on the wall and Jacques Delors on the dartboard. The impending boundary review and thinner-than-they-expected majorities mean they worry more about their constituency (and constituency associations) than the whips. But I'm told today that this rebellion isn't quite as fierce as it may seem. One Tory backbencher tells me the Tory whips have actually encouraged this group to call for renegotiation of the UK terms of EU membership.

What’s the most important geo-political event of this century? Most people would say 9/11. The Foreign Secretary believes that it is the Arab Spring. But in The Times today (£), Emma Duncan makes a persuasive case for it being the collapse of Lehman Brothers. Duncan argues that Lehman Brothers’ fall has three claims to be an epoch-making event. The first is its contribution to the financial crisis and subsequent economic stagnation. The second is the way that it has catalysed China’s economic rise vis-à-vis the US, with China now predicted to become the world’s largest economy within this decade.