- The Washington Times - Tuesday, November 29, 2011



It’s only a matter of time before Europe’s euro currency capsizes. Too many eurozone economies are drowning in red ink, and all of them cannot be bailed out by multinational institutions. The International Monetary Fund announced over the weekend that it was readying an $800 billion lifeline for Italy. The IMF can’t rescue everybody, which has other nations scrambling to find ways to avoid going down with the sinking ship.

European eyes are keenly focused on what will be done to address the European financial crisis in London. With numerous major European nations unable to pay off their debts and serious speculation about the euro not making it to the end of next year, there is justifiable temptation for the British government to take further steps to distance itself from the European Union (EU) and its meddling bureaucracy in Brussels. Unemployment in Britain is above 8.5 percent but the Organization of Cooperation and Development (OECD) projects that to rise to 9.1 percent by 2013. That’s not the only bad news from the OECD, which predicts the British economy will grow only 0.5 percent next year and could slide into a double-dip recession by the end of this quarter. Old Blighty hardly needs the EU anchor dragging it down even more.

The OECD estimates that the eurozone as a whole will grow at a paltry 0.2 percent in 2012, and that is considered to be a wildly optimistic forecast by many economists who point out that the collapse of any of Europe’s teetering economies would spell doom for the entire unified market. The United Kingdom cannot completely insulate itself from trouble on the continent because the financial links are too strong, but London can go its own way and resist the EU’s knee-jerk, big-government-centric reaction to try to spend its way out of a recession. The end results of this course are only more deficits and more debt, which are the causes of the meltdown to begin with. Governments are all spending cash they don’t have. The only solution to the fiscal crunch is to dramatically change directions and spend less.

George Osborne, the UK’s chancellor of the Exchequer, had a responsible plan to cut spending to reduce the deficit and chip away at the nation’s suffocating debt position. This included capping pay for government employees, limiting the rise of welfare payments to below inflation, cutting the gasoline tax, stopping the planned expansion of some national health-care programs, reducing red tape on businesses and even minimizing corporate liability from trial-lawyer suits over skyrocketing and frequently frivolous worker-compensation claims. These are all positive steps to revitalize the private sector and curtail the public sector, but pushback is growing - especially from powerful labor unions. The Conservative Cabinet partly caved to pressure and now is promoting more government-directed spending on huge infrastructure projects to try to artificially prop up employment. Like in its former colony America, Britain’s attempt at government stimulus only delays recovery by robbing resources from the private sector, which is the real engine of economic growth and job creation.

Economies need less bureaucratic meddling so markets can breathe freely. The Conservative-led British government partly understands this but is having a hard time deciding what government goodies it is willing to ask the people to give up. Time is slipping away for Conservatives to make good on their promise to turn around the economy as polls show the left-wing Labour Party growing in popularity. Prime Minister David Cameron needs to push more substantive change or risk losing public support. It’s a familiar political dynamic playing out on both sides of the pond: Cut bureaucracy or face voter wrath.

Brett M. Decker is editorial page editor of The Washington Times. He is coauthor of the new book “Bowing to Beijing” (Regnery, 2011).

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