Douglas Carswell's Blog

After the Euro

Today is budget day, and all eyes will be on what the Chancellor has in his box. Or on his twitter account.  But perhaps we should be watching what is happening on a small island in the eastern Mediterranean instead?

Back in 1931 no doubt everyone in Westminster was discussing what the then Chancellor Philip Snowden would or would not tax. They should have paid attention to an Austrian bank called Creditanstal instead.

We know that the banks in Cyprus are shut – and that if they were to open without a bailout of some kind, they would be bust. I can think of only four possible outcomes.

1. Firstly, there is an EU bailout of some kind, and the banks reopen.

2. Secondly, there is a bailout by a third party – Russia perhaps, or the IMF, or perhaps some other country – and the banks reopen.

3. Thirdly, the banks reopen, but after stamping each note with a mark to convert the Euro notes into Cyprus Euros. In other words, Cyprus leaves the Euro with its own currency.

4. Or fourthly, that the banks do not reopen.

Each one of these options has big implications – and I do not just mean the possibility of the end of the Euro.

If Cyprus were to become – in effect – a fiscal satellite of Russia, it has massive geo political implications. What would Turkey think of it? What would it mean for the West? It is a very big deal in global terms. Anything apart from option 1 means that the Euro system is falling apart.

Up to now, the European project has been seen as a process of consolidation. A way of strengthening Europe's position in the world. Only a few cranky Eurosceptics pointed out that integration was an act of weakness – and would only further weaken Europe.

But perhaps we now need to see the European Union as a twenty first century version of the Austro-Hungarian Empire. Sclerotic. Feeble. Incapable of change. In other words, doomed.

What, I wonder, is a post-EU Europe going to look like?

Now, about that tax exemption for widgets ....

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