Europe

This is a balancing act Budget. At every stage and on almost every topic there's a bit of good news and a bit of bad news for taxpayers. Spending cuts are (finally) on the way, but at over £30 billion by 2014-15 they aren't large enough, and there is plenty of dead wood that the Coalition intends to leave in place. Similarly, the rise in the income tax threshold is extremely welcome, but the VAT hike will hit the poorest hardest of all. And so it goes down the list of Government financial activities. Indeed, the theme the Government are keen to communicate is one of leaving no stone unturned, looking at every item of expenditure and every tax for ways to raise or save money....except for one area.

I doubt David Cameron will have many better days in government than this. Considering the government cancelled a hospital project yesterday, today has passed as one long photo-op, free of incident. It began with Theresa May banning a radical Islamist cleric, Zakir Naik, displaying a resolve that eluded her immediate predecessors. The papers were full of Cameron’s ‘coup’ in Brussels yesterday; the only major news story that might have unnerved Cameron was the FT’s research into Tory immigration policy, which the FT calculates will hit growth and raise taxes. It was too esoteric to hit the TV screens, so too the cuts in arts funding. It must have been a happy breakfast in No 10 this morning.

Gerard Baker has written the cover piece for this week’s magazine and it’s a must read. In it, he explains why ‘closer fiscal union’, as Rompuy terms it, is not to Germany’s advantage: ‘Any attempted fiscal union might well yield to Germany the biggest single vote in how much to raise in taxes and how to spend it. But it could still be outvoted by an alliance of smaller countries. Such a set-up would become an institutionalised mechanism by which German taxes will be siphoned off permanently to weaker European states.

As expected Simon Hughes, has won the race to be Lib Dem deputy leader, congratulations. Both candidates pledged to assert the party’s independence within the context of supporting the coalition. Hughes intends to appoint Lib Dem spokesmen for all government departments to improve accountability in parliament. A renowned left-winger, Hughes’s inclination must run contrary to the Conservative dominated coalition, and I wonder how he will take Patrick Wintour’s news that the coalition is beginning to act as one politically, mastering a strategy to deflect Labour’s political assaults.

There’s been a lot said about Ed Balls’ Observer piece on immigration. But the most striking thing about it to my mind is that it shows that Balls has made the transition to an opposition mindset.   Take his proposal that ‘Europe's leaders need to revisit the Free Movement Directive’. This is classic opposition politics; suggest something that sounds good but it practically impossible. The other EU member states are unlikely to agree to agree to renegotiating this directive. But the Tories can hardly point this out; emphasising the UK government’s impotence when it comes to changing the rules of the game would hardly go down well with the Tory base. So Balls gets to make the weather on this point.

Last week, Europe’s foreign ministers gathered in Sarajevo under much fanfare – and did very little except issue a repetitive press release about the region’s future in the EU. The only highlight of the event was William Hague’s speech, which was excellent.   Enlargement, however, is deeply unpopular among European elites, and the gathered foreign ministers seemed to be acutely aware of how little the market will bear by way of new ideas and initiatives.   So the ideas I put out in a brief in the run-up to the summit for improving the EU’s accession process went nowhere. Only Austria and Estonia openly defended proposals at the meeting. Germany joined France as a major opponent of any change in enlargement policy.

Well, well. Simon Hughes has just made firm Eurosceptic comments in the Commons. He said: ‘I'm also clear...that we need to revisit some of the decisions like the working time directive where I think we made a mistake, and there have been mistakes in the European Union. "And my great enthusiasm for the European Union and for better collaboration across Euope doesn't make me blind to things that have not gone well and where we need to do better. And overly prescriptive regulation such as the working time directive is one of those. "I don't take the view that there's only ever a one-way traffic of power from this parliament and this country [to the EU].

It’s John Prescott’s birthday – or Lord Prescott, as he will soon be. How odd of JP to don the ermine, given that he is on record saying that he hates titles, flunkery and ‘flooding’ the House of Lords with appointees - a practice in which he and Blair excelled as it happens.  He appeared on the Today programme this morning to defend his lordly person and was emphatically unintelligible. Listen to it; it’s a classic. You know Prescott’s the EU's environment ‘rapporteur’? Terrifying.   John Humphrys objected to Prescott’s hypocrisy, but if Prescott doesn’t want to retire from public life then he must sit in the Lords.

Recent events in the Eurozone have led a number of commentators to suggest that we are nearing some repeat of the financial crisis that followed the nationalisation of Fannie Mae and Freddie Mac in August 2008 and the subsequent (and consequent) bankruptcy of Lehman's. In my view, the current situation is rather different from that in 2008, but matters could turn out much worse.

I would like to defend the coalition from allegations that there has been a deplorable Tory concession on the Human Rights Act. Tearing it up was never in the Tory manifesto. Dominic Grieve, who drafted the Tory plan, is one of those lawyers who is rather passionate about the European Convention of Human Rights (ECHR) and praised it in his maiden speech. I had many conversations with him about this: for Britain to pull out of it, he said, would send an “odd” signal to the countries on the fringes of Europe whom we were trying to pull into our orbit. Grieve’s plan was to propose a Bill of Rights which would look and sound like something that would supplant the ECHR (put into British law by the Human Rights Act).

One of the things that critics of the LibCon coalition keep coming back to is the question of what will happen in European, local and other elections. Will the two governing parties stand against each other? And how can they differentiate themselves when they support the same policies? To many, it seems like David Cameron and Nick Clegg are suggesting that we all walk backwards – odd, uncomfortable and unlikely to ensure progress. But why is this so odd? This kind of electioneering happens in many other countries. Take Denmark. There, a Liberal-Conservative government has been in power for almost a decade and across several elections, yet the two governing parties have gone to elections as separate parties, each with their own platform.

A week in, and I am loving the Conservative-led government. The new line-up of Secretaries of State is very impressive and, though a few solid Tory politicians missed out on Cabinet posts, the inclusion of the Liberal Democrat bench has swelled the government’s talent quota. David Cameron has infused No 10 with energy and purpose. You can just feel the umpf. As the former MP John Gummer said, there is now “smile on the face of Britain”. Foreign Secretary William Hague’s trip to the US set the right tone by calling the UK-US link “an unbreakable alliance”.