As the head of the European Central Bank is called to the European Parliament to explain options to halt the spread of debt contagion across the European Union and Euro area, the question to ask is what are the options available to them and how does it impact on the UK with its own currency but membership of the European Union..These are my best guesses as to what can be done:
1) More Quantitative Easing, but this would erode the value of assets in states that have them and cause inflation in those that don’t if spent in the same way as previous issues in certain European states. As such a further segregation between retail, investment, NGO and speculative / multinational investment is desirable and required. In effect the Queen would still have the deeds of Sandringham and the millions in Coutts but they’d potentially be worth a lot less if this further segregation didn’t happen.
2) Split the Euro in two so that those that can support the others remain economically competitive so in effect there are three main currencies in the EU (including Pound sterling). The danger with that is that in its creation or implementation, currency speculation could destabilise the economy even more than keeping the Euro together. However currency separation for Greece, Italy and Portugal, with Ireland having some form of economic cooperation with the UK could be an option if for political and international reasons Uk joining the Euro is not an option.
3) Creating investment bond framework for Europe wide infrastructure projects (such as electrifying rail Line Holyhead- Crewe / Chester) for when more of the deficit is paid back and investment is encouraged.4) Encourage EU and UN member states that have a high enough credit rating (such as the UK) to do 3) on a state by state basis subject to preceding obligations (eg to IMF / World Bank) and present international commitments to help new democracies. Whether that requires the ECB or European Parliament to set targets or that is left to the nation states I do not know the precise answer.
If left to the ECB for the Euro and member states for the rest then federal states outside of the Euro such as the UK can set their treasury guidelines to maintain their international obligations so that their devolved governments can invest in infrastructure such as the Cardiff rail up grade or a passenger service from the East of Anglesey via Llandudno Junction to Balenau Ffestiniog, and a Aberystwyth to Holyhead rail service Via Barmouth and a new line on the Pwlhelli Peninsular and bridge across the Menai or the Glasgow airport rail link or Scotland –Leeds High speed rail line if that distinct legal jurisdiction can set up government bonds for Transport Scotland (its devolved transport body). In the case of London and England these devolved assemblies and at present counties (until England gets her own Parliament) have similar schemes such as Phase Two of the East London Line extension to Clapham and its possible looping via Balham.
The additional rolling stock from Bombardier as an add on to the existing order of that is allowed under EU competition and tendering law. Another one to occur after that is the Croxley rail link proposal to extend the Metropolitan Line to Watford Junction.
Other states of similar size to the EU such as Russia, China, India and USA could potentially have similar devolved fiscal issues unless there is an attempt for sovereign debt restructuring similar to that done for the developing world by the G20 in 2005 in case unexpected events such as weather disturbances upset economic plans and targets and the necessary need to help the poor and aid the new democracies in the Medditeranean, East Africa and elsewhere in the world.
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