Socialist Worker

The new euro deal - your questions answered

Socialist Worker looks at some of the key questions around the latest EU deal

Issue No. 2283

What is the “eurozone”?

There are 27 countries in the European Union (EU). Of these, 17 have the euro as their national currency. These make up the eurozone.

What’s this new deal that Britain has refused to sign?

Europe’s leaders met in Brussels and agreed a pact to force governments to cut deficits—and impose more cuts on ordinary people.

Now 26 of the 27 European Union (EU) countries have signed the pact. Britain is the only one not to sign.

The deal commits countries to coordinating their budgets more closely. And signatories will aim to keep their deficits to lower than 0.5 percent of gross domestic product (GDP).

Countries with deficits of more than 3 percent of GDP will face “sanctions”.

EU leaders also plan to hand up to 200 billion euros to the International Monetary Fund (IMF). This will finance bailouts with severe austerity strings attached—hitting ordinary people.

David Cameron doesn’t mind attacking workers to bail out the rich. So why didn’t he sign the pact?

Europe’s leaders agree workers should pay for a bosses’ crisis. But they are divided about how to bring this about—and each is fighting to get the best deal for their national bosses.

Cameron wants to protect the City. He wanted Britain to be exempt from any tax on financial transactions—but other governments refused.

There are divisions within Britain’s ruling class as well as within Europe’s.

Many Tories oppose Britain being part of Europe outright. Cameron is wary of any deal that could spark a bigger crisis within the Tory party.

But don’t deficits have to be cut?

Europe’s leaders see the market as the only way to organise economies. This dictates what “solutions” they think are viable to resolve the crisis.

So they are terrified of credit ratings agencies that threaten to downgrade their currencies.

Agencies like Standard & Poor’s are threatening to downgrade all European countries—and the EU itself.

Downgrades make it more expensive for governments to borrow money and hit their ability to trade.

This is one reason why governments are desperate to cut their deficits and appear more creditworthy.

But deficits exist because governments chose to throw billions at the banks.

The crisis has flowed from the system they continue to defend. Budget deficits are a consequence of economic crisis.

Austerity budgets won’t solve the crisis—they will simply drive down workers’ living standards.

The deal sounds awful. Wouldn’t things be better for workers if Britain pulled out of the EU?

Socialist Worker is against Britain being part of a bosses’ Europe and is against the latest treaty. But not for the same reasons as the Tories.

The EU is a neoliberal bosses’ club which aims to protect profits by attacking workers and public services.

The Lisbon Treaty enshrined this vision of a neoliberal Europe. It centralised a host of powers within the European Council and European Commission.

But withdrawing from the EU wouldn’t guarantee workers’ rights—the Tories remain committed to attacking us.

They talk about protecting Britain’s “national interest”.

But there isn’t a national interest—what they mean is they want to protect the bosses’ interests.

Some in the Tory party bemoan so called “Eurocrats” dictating what Britain’s government can and can’t do. But the Tories don’t worry about imposing austerity measures when they want to.

Any Tory claiming to care about democracy is a hypocrite.

Click here to subscribe to our daily morning email newsletter 'Breakfast in red'

Mobile users! Don't forget to add Socialist Worker to your home screen.