Cameron seizes on euro crisis to deflect from domestic troubles


LONDON LETTER:No longer at EU top table, Cameron paints himself as a safe hand on the tiller at home

FACED WITH troubles at home, politicians have sometimes looked to foreign wars to deflect attention and to portray themselves in a Churchillian way.

Yesterday David Cameron did the opposite, seizing upon an economic crisis to portray himself as the man who can keep the UK safe from the euro’s woes.

Much of his rhetoric, while it may upset some in Brussels and Berlin, is not directed at them but rather at the home audience.

On Wednesday, Cameron, in reply to a question from a Conservative MP, spoke about the euro zone’s need to “make up or break up”.

In Manchester yesterday he went further, saying: “The euro zone is at a crossroads. It either has to make up or it is looking at a potential break-up. Make up or break up, whichever path is chosen, I am prepared to do whatever is necessary to protect this country and secure our economy and financial system.”

Such remarks from a euro zone leader could have been expected to lead to bank withdrawals and worse. Instead Cameron’s remarks, while they were highlighted at home, show up his irrelevance in the current crisis.

His Conservative predecessors, Margaret Thatcher and John Major – neither of whom were Europhiles – ensured, for the most part, that the UK remained at the EU’s top table.

Since December the UK has fallen away, following Cameron’s decision not to take part in the negotiations on the EU fiscal treaty.

The decision delighted his backbenchers, who suspected Cameron on the issue, and it also delivered a short-term bounce in the opinion polls. Since March, however, his reputation and that of the chancellor of the exchequer, George Osborne, has fallen off a cliff, their competence questioned.

The change in mood, particularly on foot of the result in local elections, has led to quiet dreams of No 10 for Labour’s leader, Ed Miliband. Meanwhile, his pessimistic backbenchers’ belief that they are destined for multiple terms in opposition has started to wane.

Despite the difficulties, the basic tenet of the Conservatives-Liberal Democrats coalition – that the UK needs to live within its means – is still accepted by the majority of the voting public, if not the public as a whole.

However, growth has not revived, nor does it look like it will be possible to achieve it in a significant way before the 2015 elections.

The difficulties have led to deepening divisions between Conservative MPs and to increasing ruptures between them and the Liberal Democrats.

Meanwhile, an atmosphere of aimlessness, mixed with panic, has begun to enclose No 10, which lacks experienced hands.

The threat from an external force such as the euro that is dangerous, if not aggressive, thus offers the opportunity to create a narrative that can be communicated to the public.

“We are living in perilous economic times. Turn on the TV news and you see the return of a crisis that never really went away. Greece on the brink; the survival of the euro in question. Faced with this, I have a clear task: to keep Britain safe. Not to take the easy course but the right course. Not to dodge responsibility for dealing with a debt crisis but to lead our country through this to better times,” he declared yesterday.

In truth, there is little that Cameron can do to put himself centre stage in the crisis, even if euro zone leaders were to allow it – unless he is prepared to commit billions.

Meanwhile, Conservative MPs rejoice. One of them, Douglas Carswell, yesterday happily quoted Lord Melbourne’s dictum: “What all the wise men promised has not happened and what all the dammed fools said would happen has come to pass.”

However, Conservatives seem unable or unwilling to comprehend that a worsening of the euro crisis could cause near-irreparable damage to the UK’s economy, even if the euro survives without losing the Greeks or anyone else.

Events so far have been damaging enough. Sterling is rising in value, with no end in sight, damaging the assumptions made by the treasury and Bank of England for export-led growth, even if import prices will ease.

For now, Cameron has moved to downplay differences with the newly elected French president, François Hollande, insisting that both are agreed on the need for growth, even if they differ on the means to achieve it.

Already, those close to him are emphasising that the British-led statement last autumn, signed by 10 other countries, will be central to a new growth pact, thus highlighting Cameron’s ability to show the way to others.

The creation of a single market in services and digital is one of Cameron’s key ambitions, though progress, even if accelerated, will still come too slowly to do much to alleviate the immediate crisis. In addition, a push for a single market in services failed before.

Progress on the issue, however, could offer a triple benefit to Cameron, offering the chance to repair bridges with the German chancellor, Merkel, to build ties with Hollande, while countering Labour’s demand for action.

Following months on the back foot, Cameron is seeking to paint himself as a leader at home, with a safe hand on the tiller in turbulent waters. Each TV news clip of trouble in Greece, Spain, or elsewhere will feed that image.