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Submitted by jessonerik on Wed, 10/14/2009 - 08:00.
One of Britain’s leading economic commentators, Professor Tim Congdon, looks into the Northern Rock fiasco and asks if the EU played any part in the way in which Britain governed itself. Fundamental to the crisis was the way in which the FSA, the Bank and the Treasury were crippled by limitations on their power, and uncertainties about exactly what their powers were, which arose from the UK’s membership of the EU unsecured loans. The Northern Rock fiasco illustrated, with remarkable clarity, the damage that EU membership has done to Britain’s ability to govern itself.
Shocking though it may seem – Parliament is no longer supreme in our own nation. Instead, because of the UK’s membership of the European Union, ‘competences’ over large areas of national life have been ceded to EU institutions, particularly the European Commission. Government and Parliament cannot always respond – sensibly forex, pragmatically and successfully – to new policy challenges because the EU has issued directives or regulations which are binding in this country. Powers and responsibilities that were once exercised freely and effectively by agencies of the British state have been taken away, and instead belong to the EU.
The transfer of competences has been gradual and, relative to the fundamental nature of the power realignment under way, it has also received surprisingly little comment in the British media. Of course the so-called acquis communitaire has encroached on British law-making since the UK joined the European Economic Community (as it then was) in 1973. But at first its impact was marginal, and largely confined to farming, fisheries and matters very narrowly related to trade policy. It is only since the Single European Act of 1986 that the acquis has come to influence virtually all areas of national economic life.
Nowadays, when there is a clash between national interest and legal principle, it takes a form very different from that before the late 1980s. Policy-makers have to check the answer to the question ‘is the proposed policy compatible with European law (and not just the law of England/Scotland) secured credit cards?’ before they consider the question ‘what policy is most in the interests of the British nation?’. The insidious effect is that policy-makers put the requirements of European law ahead of our own national interest. Although they believe themselves to be ‘doing the right thing’ because they have taken legal advice and behaved accordingly, they end up supporting actions which are against their fellow citizens’ best interests.
By common consent the British state’s handling of the Northern Rock affair in late 2007 and early 2008 was a fiasco. Part of the trouble was that banking regulation was split between three bodies, the Financial Services Authority, the Bank of England and the Treasury which together formed ‘the Tripartite Authorities’, leading to much confusion. The contrast between the Bank of England’s student loan skilful handling of previous financial crises and the Tripartite Authorities’ bungling of the Northern Rock problem could hardly have been more extreme. But also fundamental was that the FSA, the Bank and the Treasury were crippled by limitations on their power, and uncertainties about exactly what their powers were, which arose from the UK’s membership of the EU. The Northern Rock fiasco illustrated, with remarkable clarity, the damage that EU membership has done to Britain’s ability to govern itself.
Are the Bank of England and the Treasury able
to regulate the British financial system, and to
support banking institutions if they run into
difficulties? 40 years ago the answer would
have be ...
One of Britain’s leading economic commentators, Professor Tim Congdon, looks into the Northern Rock fiasco and asks if the EU played any part in the way in which Britain governed itself. Fundamental to the crisis was the way in which the FSA, the Bank and the Treasury were crippled by limitations on their power, and uncertainties about exactly what their powers were, which arose from the UK’s membership of the EU unsecured loans. The Northern Rock fiasco illustrated, with remarkable clarity, the damage that EU membership has done to Britain’s ability to govern itself.
Shocking though it may seem – Parliament is no longer supreme in our own nation. Instead, because of the UK’s membership of the European Union, ‘competences’ over large areas of national life have been ceded to EU institutions, particularly the European Commission. Government and Parliament cannot always respond – sensibly forex, pragmatically and successfully – to new policy challenges because the EU has issued directives or regulations which are binding in this country. Powers and responsibilities that were once exercised freely and effectively by agencies of the British state have been taken away, and instead belong to the EU.
The transfer of competences has been gradual and, relative to the fundamental nature of the power realignment under way, it has also received surprisingly little comment in the British media. Of course the so-called acquis communitaire has encroached on British law-making since the UK joined the European Economic Community (as it then was) in 1973. But at first its impact was marginal, and largely confined to farming, fisheries and matters very narrowly related to trade policy. It is only since the Single European Act of 1986 that the acquis has come to influence virtually all areas of national economic life.
Nowadays, when there is a clash between national interest and legal principle, it takes a form very different from that before the late 1980s. Policy-makers have to check the answer to the question ‘is the proposed policy compatible with European law (and not just the law of England/Scotland) secured credit cards?’ before they consider the question ‘what policy is most in the interests of the British nation?’. The insidious effect is that policy-makers put the requirements of European law ahead of our own national interest. Although they believe themselves to be ‘doing the right thing’ because they have taken legal advice and behaved accordingly, they end up supporting actions which are against their fellow citizens’ best interests.
By common consent the British state’s handling of the Northern Rock affair in late 2007 and early 2008 was a fiasco. Part of the trouble was that banking regulation was split between three bodies, the Financial Services Authority, the Bank of England and the Treasury which together formed ‘the Tripartite Authorities’, leading to much confusion. The contrast between the Bank of England’s student loan skilful handling of previous financial crises and the Tripartite Authorities’ bungling of the Northern Rock problem could hardly have been more extreme. But also fundamental was that the FSA, the Bank and the Treasury were crippled by limitations on their power, and uncertainties about exactly what their powers were, which arose from the UK’s membership of the EU. The Northern Rock fiasco illustrated, with remarkable clarity, the damage that EU membership has done to Britain’s ability to govern itself.