The phrase "Fog in Channel – Continent Cut Off" was allegedly a newspaper headline in Britain in the 1930s.
Prime Minister Cameron decided not to join measures the European Union is trying to implement to consolidate budgets and to get better control of the banks:
Arguing he had to protect the City of London, Cameron demanded that any transfer of power from national regulators to an EU regulator on financial services be subject to a veto; the UK be free to place higher capital requirements on banks; that the European Banking Authority remain in London; and the European Central Bank be rebuffed in its attempts to rule that euro-denominated transactions take place within the eurozone.He also argued that non-EU institutions operating in the City but not in the eurozone, such as American banks, should be exempt from EU regulation.
The banks who own the City of London, a medieval and unaccountable corporation, are obviously more important to Britain than the project of a united and fiscally sound Europe. (Bagehot at the Economist has a good background piece on the British and European politics behind this.)
I do not agree with the austerity policies the ECB, Merkel and Sarkozy are pushing onto the smaller European countries in financial troubles. Their debt should be erased and a big Keynesian program should be set up to help them to regain competitiveness.
But I do agree to better control and stronger regulations for the financial sector. It is obvious that it was the fraud and greed of this sector that brought us the second world depression we are now living through. It is also obvious that mostly British and American financial firms are currently causing a lot of trouble and pain by speculating on European bonds.
If Britain does not want stronger regulation of its financial sector it should have no further role in the European project. Unlike some individual leaders Europe as a whole is not into watersports.
This was the second time Cameron snubbed Europe in recent days. After the IAEA released its strongly politicized report, Britain defied common European foreign policy and was the only country to announce and implement a boycott of the Iranian Central Bank. The southern European countries who buy a lot and depend on Iranian oil were not amused.
A third strike and Britain will be out.
It obviously never liked the European project. It never paid its full share and in European conflicts with the United States often sided with its former colony.
So there will be fog in the channel and the continent will be cut off. But the continent, with its hinterlands ranging up the pacific, will survive that much better than the British island.