The Bear’s Lair: Brexit Could Unshackle Britain From A Corpse

Portugal has joined Greece and Cyprus among countries demanding bailouts while rejecting utterly the fiscal self-discipline necessary to get back on its economic feet. Spain has for the moment rejected the siren song of fiscal ruin, but even so it along with Portugal is about to be “sanctioned” by the European Commission for violating previous agreements on budget discipline.

The sanctions will presumably be nominal – they would otherwise make the budget problems worse – at which point it will become clear that there is in fact no central budgetary discipline mechanism in the EU. This discovery, together with the enthusiasm of the European Central Bank for financing even the wildest and most unjustified budget deficits through government bond purchases at ultra-low rates, will drive more and more countries to discover a hidden populism and imitate Greece. Italy and France are both ripe candidates for such a political turn, and who can suppose that the hitherto admirable budget discipline in Eastern Europe will not break down under this temptation?

The European Single Market is not all that attractive even now, and it would not take much more fiscal and monetary indiscipline to turn it into an economic corpse. Defoe’s farmers and traders would have scorned to involve themselves in such a parochial and sclerotic market, but would have wanted to spread their net wider, among the whole universe of buyers. Thus even in principle the European Single Market would not have appealed to them. Instead they would have wanted the ability to make the best possible trade agreements with the most dynamic possible markets, including India, China, the United States and the faster growing countries of the Commonwealth.

Britain’s character is as it was in 1724-27, when Defoe wrote, and in 1815, when its most successful administration set the country on the road to long-term prosperity. It requires full independence of the European Union, not continued partial attachment to an entity that is already showing signs of rigor mortis.

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(The Bear's Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of "sell" ...

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