Roger Bootle: Europe is a complete disaster – Britain must leave

Merryn Somerset Webb talks to economist and author Roger Bootle about Europe’s economic disaster zone, and the advantages to Britain in pulling out.

A “Make or Break” Time for Britain

Britain must leave the EU.

And we must do so at the earliest possible opportunity – before our country is imprisoned and stripped of its sovereignty for good.

In your free report – ‘A “Make or Break” Time for Britain’, you’ll discover the truth about what Brexit means for our country… and for your money.


• If you missed any of Merryn’s past interviews, you can see them all here.

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Merryn: I’m here today with Roger Bootle; he is the founder of Capital Economics and the author of many excellent books including the just released The Trouble with Europe, which we are going to talk about among other things today. So Roger, can we just start by talking about the premise of this book, what was it that prompted you to write it?

Roger: Well, I think I write books as a sort of public service, for a start; I don’t write them to make money. I also write them to try and get my ideas straight. I find I can’t usually think very clearly unless I’m writing about things, and this idea, writing the book, really grew out of the fact that I wasn’t sure what I really felt about this European issue.

Merryn: OK, so just to stop you there, you didn’t start writing this book as a Eurosceptic, because you are known to be pretty sceptical about the eurozone, so, but you started it, you feel, with a pretty open mind?

Roger: I wouldn’t quite say that. I’ve rarely been accused of that. I’ve always been Eurosceptic in the sense of being sceptical about the euro as a currency and there are a lot of things about the European Union that I, for ages, haven’t liked. But I hadn’t sat down and worked out fully what the costs and benefits would be of leaving the European Union. I hadn’t really got stuck into the arguments. So, in that sense I was open minded.

Merryn: OK. Right, so, started with an open mind and it ended with..?

Roger: Well it’s still open but it’s more decided in the sense that I find it extraordinary that all sorts of people on both sides of the debate are convinced that this is of major importance for the British economy in the sense that if we stay in or go out it’s going to cost us squillions and squillions and squillions and either wipe off or add 5%, 10% to our GDP. Yet there are so many studies of the issue that show actually the net balance of advantages and disadvantages is fairly small.

I think it’s in many of the less tangible things that the most important aspects of this issue are to be found and with regard to how things develop in the future. That’s to say: if you think for political and other reasons it would be a good thing for Britain not to be in the EU then I think one of the consequences of reading my book would be that you’d come away from my book thinking well actually there isn’t an economic case to say that that should be overruled. We can do it.

If Britain were outside the European Union, it could could deregulate quite a lot; that would bring a lot of advantages

Merryn: OK, so economically being in or out is marginal over the medium to long-term? Upheaval in the short term, obviously, but marginal over the medium to long term?

Roger: No, I think probably in the long term it’s not marginal. I think it could then be significant, because I see Europe going largely the wrong way: over-regulation, over-integration. I think the costs of that are going to grow over time; and similarly, Europe is fading in relative importance in the world. I think if Britain were outside the European Union it could take another direction. It could deregulate quite a lot, and, I think, bring quite a lot of advantages. So, I think it’s complex. Short-term: disruption, difficult. Medium-term, however long that is, I think the net balance is fairly marginal. Looking out longer-term, it could be substantially positive to be out.

Merryn: OK, interesting. So, the main economic negative as you see it now to being in the Eurozone is that we’ve essentially hitched ourselves to the wrong part of the world? The wrong horse, geographically?

Roger: I think that’s a substantial factor, but the really important thing, of course it’s so difficult to pin down how much this costs us, is the wave of regulation coming from Brussels. Now, the reason it’s so difficult to assess, is we don’t know what we would do in the absence of these regulations. We might impose the same regulations ourselves.

Merryn: We’re quite keen on regulation on in the UK, aren’t we?

Roger: We are, absolutely.

Merryn: We have a great tendency to put it in place.

Roger: You’re absolutely right. Of course it depends partly on who is in power, but you could imagine a scenario in which we could come out of the European Union, partly thinking we’re going to benefit from not having all these regulations and, let’s say, we’ve got a Labour government and it’s now got the power to rescind these European regulations but actually looks at this and says, “Funnily enough, we quite like all these, we’re not going to change them.” In which case one of the big positives simply doesn’t happen.

Merryn: And would it not be the case that in order to keep trading with Europe anyway we’d have to put a lot of the same regulations in place to maintain free trade agreements?

Roger: This is a tricky issue. I think one of the most important points in the case against staying in is that yes we have to have certain regulations in place if we’re trading with Europe but if we weren’t in the EU we’d only have to have those in place in those industries and businesses which were exporting to the EU. Of course, that’s a tiny minority in relation to the system as a whole. If you’re in the EU then you have to impose those regulations across the whole economy. So, little sandwich sellers in Dagenham have to comply with the regulations about working hours and all these other things, whereas if we weren’t in the EU that wouldn’t apply.

I think the eurozone is a complete disaster, and I’m not a Johnny-come-lately on this subject, I was saying it right from the beginning

Merryn: OK. Let’s look at the economic stagnation of Europe; the idea that we are hitched to the wrong horse. Is there any way that can end while the eurozone stands?

Roger: I think the eurozone is a complete disaster and I’m not a Johnny-come-lately on this subject I was saying it right from the beginning. The problem is really two-fold: firstly, you’ve got these countries on the southern periphery: Greece, of course, the most intense example, but also Italy, Spain and Portugal, which are uncompetitive. In the past, they would have depreciated their exchange rates and that would have kept them in the game. They can’t do that, so they are mired in a dreadful situation: low GDP, huge unemployment. Greece has lost 25% of its GDP during the last six or seven years. I mean horrendous, really horrendous. That’s problem number one.

But the second aspect which is not fully appreciated, and it is, I think, at least as important, and that is the tendency for Germany and The Netherlands and some other countries, but mainly those two, to do too much saving. They run their policies too tightly. The German companies sell all sorts of wonderful stuff across Europe and across the world, and then the income from that is not fully spent. Now, in the days – this is vital to the euro, it’s right at the centre of the euro question – in the days before the euro when the deutsche mark was in existence, the Germans were just as German then. They were wonderful at engineering and exporting and making things; they worked jolly hard; all that stuff. They had a natural tendency to run up surpluses, to save too much then. But the currency stopped that tendency from being fully realised.

They would do all this non-spending and working and up would go the deutsche mark and that would attenuate these tendencies to be able to export a lot. So, it’s the combination of those two things. So, what the euro has done is it’s locked together these two groups of countries that behave fundamentally differently. In the old days the exchange rate acted as a flex, a hinge, enabling those two sorts of countries to work together. Without out it well you’ve got this ghastly stagnation.

Merryn: So, without the common currency, if we just had a European Union without a common currency could that have lasted? Could that have worked better?

Roger: Oh, I think it would have worked much better. Most of what is wrong now in the European Union at the moment is, I think, the euro. But if you look at historical record it’s quite clear that Europe was not doing that well before the euro came into existence. I mean the gaps aren’t huge but they are there. Go back far enough, of course, right from the beginning and the European Union was very successful, which is the real reason why Britain joined. Those countries from the late 50s into the 60s and early 70s were growing very fast. We thought this was a miracle economic area and we’d better hitch ourselves to that wagon.

Then, more or less as soon as we joined, funnily enough, the relative growth performance started to deteriorate. Of course, the 70s were grim for Britain. Come the 80s we started to improve. The continent started to do a bit worse and then we got the emerging markets growing very strongly, and throughout the last 20 or 30 years the performance of the eurozone, compared to other countries around the world, has been deteriorating.

For Greece to leave the euro would be a good thing. If I were advising the Greek government, I would advise them to do precisely that

Merryn: In terms of countries possibly leaving the euro, you’re not particularly concerned about Greece are you? But you’re rather concerned about some of the other peripheral nations.

Roger: Well, I think for Greece to leave, it’s a huge step of course, I think it would be a good thing for Greece. If I were advising the Greek government I would advise them to do precisely that.

Merryn: Yes, you have to wonder who is advising them not to?

Roger: I think this is actually largely political, really. Very often, people say to me, “Why is it that the Greek government or the Greek people don’t want to leave the euro?” And I say to them, I think this is a bit like the economical equivalent of Stockholm syndrome. In the world of psychology, apparently, there’s this phenomenon where if someone is held captive in a cave, as it were, or a cage, they strike up a relationship with their captor and after so many months of all this when the door is opened they don’t want to leave.

I think this is a bit like that. If you go back in history you hardly ever find a case where a country locked in an unfavourable exchange-rate regime wants to leave: Britain 1992, forced out of the ERM. What happens, I mean the newsreaders that night, September 16th 1992, they were practically wearing black armbands! “Business survey… business optimism collapses, consumers are depressed. People are putting keys through the letterboxes.” You know, it was all falling apart. In fact, of course, we now know that was the beginning of our escape from recession.

In 1931, Britain came off the gold standard. Were there people clamouring to come off?  No, on the contrary, they were stuck there desperately trying to stay in, and only after they’d been forced out did they realise this was their salvation. So, I think Greece is similar.

Merryn: OK, and Italy?

Roger: Well, I think it’s intriguing. I think Italy is lucky to have Greece in the system in a way, because it’s deflected all the attention. The Greek case is more serious. It’s more extreme. The management of the public finances is terrible. In some ways almost primitive. It’s like third-world in the way that Greece has run its public finances.

But the fundamentals in Italy are not that much better actually. The debt ratio is above 130% nearly 140% of GDP, whereas Greece is pushing 180%. But not that far behind. The key thing about Italy is it’s had next to no growth since the euro began. Virtually none. When some countries had a boom – Spain and Ireland, you know, got into trouble but they had boom years. Italy didn’t have a boom year. That’s because the economy is essentially sclerotic. I think it massively needs reform. So, I would be worried about Italy actually. It’s not an immediate candidate for departure.

Merryn: Italy does have, at least, a good manufacturing base in the north, doesn’t it?

Roger: Absolutely. I think if Italy came out of the euro and the new currency, the new lira, or whatever fell 30% or 40%, I think you wouldn’t see Italian industry for dust. It would be shooting away: exports would soar; the economy would take off. Why aren’t they doing it?

Merryn: Have you told them this?

Roger: Yes.

Merryn: Hopefully they’ll read the book.

Roger: Well, hopefully they’ll read the book, but this is the sense in which a Greek departure I think is really, really important and most people taking part in this debate still haven’t got this quite right. They think the issue is about contagion from the Greek exit in terms of loss of confidence in the markets and all that sort of stuff. I think that’s completely wrong. I mean Greece is now so far on an extreme, if Greece were to leave I don’t think there would be any contagion in the markets really.

No, the real issue is whether the Greeks can make a success of it. If the sign – you know it would take about a year to tell – but if it looks as though Greece is making a success of it that’s the real danger to the eurozone. At that point the politics in Italy, Spain and Portugal will get to be really interesting. Then the people will turn round and say, “You know what you’ve been telling us to take Mrs Merkel’s medicine and if we don’t we’ll end up like Greece. Well looking over there I think actually we’d rather like to end up like Greece. Look they’re growing. You know, growing strongly.”

There are several countries that’ve experienced this: Argentina, beginning of the noughties. Iceland – no country was in a worse mess than Iceland. She zoomed back: strong exports, strong GDP performance, largely helped by a competitive exchange rate.

Merryn: Can I ask you about the politics of the EU? You know there is a view that the financial crisis has been one of the causes of the rise of nationalist politics across the EU including, of course, in Scotland. That one of the things that has driven that is the idea among local populations that they are being pushed around by the elites at the top and this has driven them to pull themselves inwards back to nationalist parties?

A more relaxed fiscal stance by Germany, and a lot more QE and activism by the ECB might hold the eurozone together

Roger: I think there is something in that. But this is a complex issue really. Those sorts of feelings and support for, let’s say, fringe parties, non-consensus parties, does tend to rise in weaker…

Merryn: I don’t think we can call the SNP fringe anymore, can we? (Laughter)

Roger: …in weaker economic times. So, I think yes the recession rather than the financial crisis itself has had that effect I think. But that’s not the only reason. I think a large part of people’s anxieties across Europe is now about the movement of labour. That’s only really become an issue after the admission to the EU of members of the former eastern bloc. While we were stuck with pretty much with the old Western European club, it wasn’t a big issue. But as soon as you open up to the Polands, Hungaries, Czech Republics of this world you then get this issue of large flows of labour. Again, concern about that tends to be strongest when unemployment is high, and that’s been the position over the last few years.

Merryn: Interesting. Is there a possible programme of reform that you can see that would allow the eurozone to survive long-term and the EU?

Roger: Well the eurozone, yes, I suspect some countries like Greece have got to leave it. But the really big change I think that might save it would be the adoption by Germany of much more expansionary policies. So, a more relaxed fiscal stance by Germany and some of the other countries like Netherlands and I guess a lot more QE and activism by the ECB; that might hold that together.

As far as the EU is concerned there are a whole host of things that could be done to make things a lot better. But fundamentally, to try and narrow them down to a fundamental principle, which I talk about a lot in the book, it’s the principle of ever-closer union. When you look at the Treaty of Rome there’s no doubt what this game was about from the beginning. It was about the construction of a political union in Europe essentially putting the national divisions of Europe behind us all and uniting, if you like, in a United States of Europe.

That’s been the principle driving everything. I don’t think that’s a desirable principle to adopt. I don’t think it can work. I think it’s a political recipe for a political nightmare I think in Europe. It hasn’t worked economically. So, the main thing to get Europe working is to draw back from that and accept that what this is an association of similar countries who are getting together for trade and friendship. If you adopt that principle then I think so many of these detailed reforms will simply fall into place.

Merryn: I think that if you entered writing the book not convinced how you felt about it you’ve come out at the end pretty clear, haven’t you?

Roger: I have, yes. I have.

Merryn: Can I ask you a little about possibly more UK economics, and where we stand today? The recovery, the GDP numbers out this week have suggested what recovery we do have is slowing slightly. Where do you think we are on our cycle?

Roger: Well, for a start these GDP figures, on a quarter-by-quarter basis just you know they are pretty loopy. The longer I go on in this subject the more suspicious I become I’m afraid about national stats. Let me give you one little homespun example. Capital Economics, my company that I founded 16 years ago, still a small company but we’ve got over 100 employees. We export 75% of our output around the world. I’ve never been asked to fill in a single form about my output or my economic activities in here, Capital Economics. I suspect in London in particular, but in Britain in general, this is not unusual. The economy has gone through massive changes. We know that the small business sector has been very important that things have been turned upside down. I wonder how many other businesses there are like this.

Merryn: You know that’s very interesting because since we launched MoneyWeek about 15 years ago. I, too, have never even seen one of those forms, let alone been asked to fill one in.

Roger: Is that right? Yes, well this is the point. So, you know these official GDP numbers are produced by a bunch of, I’m sure they’re very admirable people, but essentially the intellectual model behind the whole process just sounds like, sort of, widget counting really.

Merryn: OK, well skip the numbers then. Skip the numbers.

Roger: Skip the numbers.

Merryn: What is your feeling? Are we still in a semi-recessionary deflationary environment?

Fundamentally, the UK economy is in reasonable shape. The key development is the fact that real earnings are now rising

Roger: No. I think fundamentally the UK economy is in reasonable shape. The key development is the fact that real earnings are now rising. I mean for the last several years the average bod’s real income has been going down.

Merryn: Although I’m always slightly suspicious of those numbers because if you saw the numbers that the ONS threw out a few months ago about anyone who’s been in full time employment since the beginning of the crisis has seen their real wages rise by 4%. So, it depends where you look. So, these average numbers are sort of slightly suspicious and of course they don’t take into account all of the redistribution.

Roger: Yes, don’t try and blind me with science!

Yes, I mean there are different ways of looking at this. I mean it’s quite clear that what’s been going on in the last several years is a squeeze on real earnings. Whether the fairest way of saying it is that people’s earnings have gone up, but not by very much, or they’ve fallen, that’s like a detailed issue. The key thing is there’s been a lot of pressure on people’s real earnings and we know why. Principally because of the increase in tax; the rise in oil prices – since reversed – and the sharp fall of the exchange rate a few years ago has meant that there’s been a real squeeze on people’s earnings. That is now changing and this is I think is a very important factor. As long as energy prices stay pretty low over the next few years I think it’s right to assume that people are going to get steadily better off.

Merryn: Does that mean we have to start worrying about inflation?

Roger: No. I don’t think we need to worry about inflation for years still.

Merryn: How many years?

Roger: I don’t know that.

Merryn: But you’ve written books! You must know the answer to these questions!

Roger: No, come on! Writing that book 20 years ago, The Death of Inflation. That was a pretty call I got that right, just about. Actually, it’s very amusing I get hate mail from some readers of my Telegraph column who say, “You wrote that book, Death of Inflation, what a load of rubbish. Last month inflation was 0.1% it hasn’t died at all.”

I’ve said for a long time that I think the key issue with regard to inflation is whether and when the authorities, that’s to say central banks and governments, come actually to want inflation. They are not there yet.

Merryn: Don’t they want inflation now with these enormous debt burdens? If you were in government wouldn’t you be hoping for 3%, 4% 5% help you out with that a little?

Roger: Well that’s the point. Policy is not being operated that way at the moment. The Bank of England is essentially aiming at, essentially, 2% inflation and plenty of distinguished economists are now saying, “Look, the problem is you are aiming at too low a rate of inflation. Aim for 3%, 4%, 5%.” And if we get to that point then I start to get worried about inflation.

Merryn: Then you start to worry that once you get to 5% it’s hard to stop at 5%.

Roger: Exactly. Yes. Yes.

Merryn: Yes. On the subject of inflation, can I move you, just briefly, over onto UK house prices? In the run up to this election we’ve see pretty much every headline policy that comes out is designed to help house buyers, ie push house prices up further than they are already. You famously, for a long time, were very bearish on house prices as of course were we at MoneyWeek and now I know that Capital Economics certainly has changed its view and is looking for house prices this year to go, oh, 5%, 6% or something. Is this about lack of supply? Is it about very low interest rates? What’s your feeling on what’s driving this change?

Roger: Well, first of all both Capital Economics and MoneyWeek were right about house prices.

Merryn: Absolutely, I keep telling readers that! We were right!

Roger: This is not recognised. We were right. Prices did fall. Actually fell very substantially and of course-

Merryn: And in real terms up in the north they fell by 14% plus in some places.

Roger: Absolutely. So, that forecast was right. The timing wasn’t wonderful but the forecast was right. This is a difficult issue. Can I confess to feeling rather depressed about this?

Merryn: Absolutely.

When interest rates go up, there are going to be some serious, serious problems in the housing market

Roger: I’m not depressed about the forecast. I’m depressed about the politicians because it’s so obvious that this is a problem about lack of supply on the one hand meeting artificially boosted demand on the other. If you want people to find it easier to get the right sort of accommodation you’ve just got to build the stuff. This is all about the restrictions on the supply. What the politicians do of course, all the time, they are doing it is fiddling with it and making the problem worse by shoving a bit of money here and bit of money there and a bit of restriction here and a bit of restriction there. Not helping the problem at all.

Now at some stage or other I think there has got to be a change and the really interesting thing about the UK, interesting in the Chinese sense that is, is when interest rates go up I think there’s going to be some serious, serious problems in the housing market because there are lots of people struggling to make their payments even now with very low rates. Now I’m not forecasting interest rates going up soon, but at some point or other they are going to go up,

Merryn: I’m going to have to ask you for a definition of soon?

Roger: Well I think they’ll start to go up probably next year but not by very much.

Merryn: Yes, but then, of course, they don’t have to go up by very much to double, do they?

Roger: That’s absolutely right. But once we start getting bank rate, base rate, call it what you will, at 2% or 3%, which of course is very low by historical standards, I think there’s going to be mayhem in the mortgage market. And if ever we get back to 5% or 6%, which I think we will, well it doesn’t look good. What I would say, I do say to people, who ask me this, and I say it to my children because housing has been a fantastic investment in the last 20, 25 years, don’t assume that it’s going to be that over the next 20 years or ten years. You know, we’ve all got to live somewhere, and of course living in your own home is far nicer in all sorts of ways than living somewhere owned by someone else. But don’t do it because you think you’re going to make a lot of money, because I think housing is a pretty lousy investment starting from where we are now.

Merryn: I take it you’re not investing your pension in a buy-to-let portfolio?

Roger: I’m certainly not, no. Economists don’t have much by way of pensions anyway.

Merryn: Where would you invest your money now?

Roger: Well, I’ve got a most peculiar portfolio really. It’s very odd.

Merryn: Tell us about it?

Roger: It’s odd simply because I own still a very substantial part of this company, Capital Economics, which is after all an equity investment. That’s always made me, with regard to the bit of my money I manage myself, as it were, pretty cautious and risk averse. So, historically I’ve tended to own a lot of bonds, government bonds and I’ve still got a substantial dollop in short government bonds because I want these things to be absolutely and completely safe. Having said that, for my discretionary investment I have been piling money into large-cap equities. Which I think…

Merryn: Which are really expensive in quite a lot of places?

Roger: …well, it depends on what you buy. But the historical records I look at suggest they’re not that expensive actually. I think they’re offering a reasonable return. Not that I think they’re going to be a bonanza.

Merryn: What sort of equities? I’ll squeeze an example out of you here.

Roger: I’m loath to give away the state secrets of my own portfolio but…

Merryn: Oh, go on, just the one state secret?

Roger: …I own a few of all the usual names. I’ve owned some Tesco, unfortunately.

Merryn: You mean, Nestle, that kind of thing?

Roger: BG, the big pharmaceutical stocks, and actually because of my long-term views about the pound, for British stocks, I’ve tended to go for some that have a heavy export content because I think they’ll do a lot better.

Merryn: So, not so keen on the pound then?

Roger: I’m not keen on the pound, no. I think it’s much too high.

Merryn: On what basis?

Roger: On its trade-weighted index basis. On its average value. It just looks extremely high and, of course, Britain’s international trading performance is pretty poor, suggesting that the currency is too high. But in answer to the question about, “What would I invest in?” I wanted to give a warning in that I wasn’t suggesting that my portfolio was the best portfolio for other people.

Merryn: Absolutely not.

Roger: Because my own position is very individual.

Merryn: Of course. Of course. Of course. But in a nutshell, own lots of the company that you founded, don’t have any houses, and large cap equities in the UK that are export orientated?

Roger: That’s about right.

Merryn: Thank you very much.


  • Doug Macleod

    Merryn! Where do you find these guys? He clearly spend all his time with his nose in figures, never stopping to think ” now just who collected these numbers and how?”. I’m in Lisbon just now and it is booming, but a whole lot of that is not in the figures. When I visit the Italian relatives they are all talking about who inherits who’s unmortgaged property. I went to Spain and took in a circus show. Eighty five euros a seat and three thousand seats were sold out for a week. The audience dripped fur, brands and leather. Then there’s all that hi-speed rail, more than anybody but China. By the time HS2 gets going Europe will have a high speed link from Gibraltar to Hamburg, they have already dug through the Pyrenees. Britain’s bottom drawer contains mortgage documents and credit card statements. Southern Europe’s is full of “black” cash and property deeds and it’s new infrastructure would make a British commuter weep. Roger would do well to remember the words of Mark Twain, “It ain’t what you know that gets you into trouble. It’s what you know for sure that just ain’t so.”

    • Warun Boofit

      I will be voting to leave, thats if we are given a vote on it. In London phantom of the opera tickets average about 85 Euros a seat and as you will know its been running for decades to a full house. When they pulled the plug on ‘we will rock you’ at The Dominion it was still pulling in thousands every week after 12 years having been seen by about 2 million people. Both shows have been on in Madrid but only London can pull in the money . The cost of a hotel room in London is extortion but people pay it. I recently stayed in a good hotel on the Gran Via in Madrid for a week for less than the cost of one night in a similar London hotel and eating out is the same difference. Half the buildings in central Madrid seem to be squatted by mad max type anarchists, I dont see the capital of Spain as a hive of economic activity but it was great for a cheap holiday. The more turmoil we get in Europe the better, I am hoping to see the £ go to 1.70 Euros as a result. I was hoping to get tickets to see Bjork in the grim northern working class town of Manchester this July but I give up as I cannot afford the 200 Euro per ticket they are now being touted for, the original tickets were sold out within a few hours, where theres muck theres money.

    • Oliver Thornton

      Bootle has been around a very long time for a reason. He tends to get it right.

      I know little about Spain but the Italy I know must be a different one to yours. The one I know, families are moving back in with their parents to give them a roof, factories are closing and those that can are leaving as did I. My wife’s very large and proud family survived Mussolini and the Nazis but has been ripped apart by the Euro. The vast majority of Italians want out. If they were politically stronger it would have happened already but it is only a matter of time.

      (PS go for the cash or the nic-nacs in the will – the property will be unsaleable and a weight around your neck)

  • Critic Al Rick

    Even the Bank of England is signalling the immediate negative effects of mass migration:

    And if that isn’t enough, how about the longer term negative effects:

    Reduction to the Lowest Common Denominator c/o the Totalitarian EU.

    It’s a great pity that Nigel Farage and UKIP are demonised by much of the MSM. That in itself should tell you something about the agenda of the controllers of much of the MSM

    Shades of Enoch Powell…

    • Oliver Thornton

      Hmm. Lets be clear Powell’s reasoning for his views on immigration versus his views on Europe were entirely different. The former was based on lack of policy and integration problems, the latter was about the constitution and democracy.

      Funny also he was extremely well read and spoke 13 languages yet he never mentioned the conspiracy theory you allude to.

      Poor fellow he has been dead years yet we are still chucking the Powell bomb in to arguments he would have had no part of.

      • Critic Al Rick

        I’m sorry, I should have clarified the context by saying the Establishment didn’t appear to want to know about the potential dangers Enoch was alluding to in his (in)famous so-called ‘Rivers of Blood’ speech.

  • Thanks for that Merryn – and Roger. He’s one of my favourite economists.
    That said, I’m still waiting for that house price collapse he predicted around 2005. And i do believe it’s coming BTW!

    • pete bourke

      even a broken clock tells the right time twice a day…so when do you think it will arrive?

  • Kevin Ramsey

    I thought I might learn something from this interview but all I got was “the eurozone is a mess” – we aren’t in the eurozone, and lots of generalities about over regulation. When is someone going to spell out what all these regulations actually are, which are good for us, which are bad and exactly what do they cost us. Until then I’m unconvinced.

    • DAS01

      Precisely. As if there would be no regulation if the UK were in the EU. This way we get common regulation.

  • Ace

    “….But the second aspect which is not fully appreciated, and it is, I think, at least as important, and that is the tendency for Germany and The Netherlands and some other countries, but mainly those two, to do too much saving”..
    Yet another economist who knows nothing about real world and believes that not spending enough is a problem! This is after all the QE, ZIRP, TARP and NIRP!!
    But what can you expect from an economist?

    • Joss Bolton

      Ah, but what he is saying is that if the countries that ARE doing all right recycled some of their money into demand, particularly for goods and services from the poorer countries, perhaps we could get off ZIRP and QE and economies could normalise. Not sure I agree, but it is a basic precept that to stop the extraordinary monetary policies we have to have relatively “normal” economies, and a looser stance by those countries would help.

  • DAS01

    I am sure Roger Bootle knows something about economics but clearly, like a lot of Brits, fails to grasp the point of the EU, regrettably.

    He is ‘sort of right’ right about this “When you look at the Treaty of Rome there’s no doubt what this game was about from the beginning. It was about the construction of a political union in Europe” and “essentially putting the national divisions of Europe behind us all” but wrong about ” and uniting, if you like, in a United States of

    And wrong with this personal opinion of no relevance to the reality of the EU, “I don’t think that’s a desirable principle to adopt. I don’t think it can work. I think it’s a political recipe for a political nightmare I think in Europe.” I guess he lives in a Celtcc cave since most other people in the EU disagree with him.

    The text is “ever-closer union” and the point is to eliminate conflict and war. That is the underlying concept. Everything else is a bonus.
    No French person (except perhaps, Marine Le Pen and her followers) thinks that France and Frenchness will disappear in the EU!

    “It hasn’t worked economically.” Hasn’t it? The sIngle market (a Margaret Thatcher concept, if I am not mistaken) has brought us unified trading rules with a bloc the world cannot ignore

    As regards “So, the main thing to get Europe working is to draw
    back from that and accept that what this is an association of similar
    countries who are getting together for trade and friendship” I will say that I think expansion beyond the 9 (ie. the Sux plus UK, Eire and Denmark) was too fast and there were altogether too many changes too quickly, but it was encouraged by the UK.

    I wonder if Mr Bootle saw the Yes, Minister episode on the subject of E|U expansion? The message was very clear. The UK supported explansion (including to Turkey!) on the grounds that it would make the whole project fail.

    Aside from relatively minor conflicts we have decades of peace in Europe…that alone is worth almost any price.

    • Warun Boofit

      If what you say is true that the underlying concept is the elmination of conflict and war then who do you think is going to have a war ? The only conflict and possible war that would worry me would be with Putin pressing the buttons and he couldnt care less about the treaty of Rome. Any war concerning Europe will get help from the UK, being in or out of the EU would make absolutely no difference, some of us would still have to die defending Germany and France and the rest. The decades of peace in Europe have been enjoyed because lots of British and Europeans died, the treaty of Rome is a piece of tripe put together by professional politicians, as always wanting to claim the credit.

      • DAS01

        “who do you think is going to have a war ?”
        You only put that question because of our present situation, where major armed conflict among most European nations is unthinkable. And perhaps you have noticed that Russia is not in the EU…

        If you look at the founding of the precursors to the EU, the European Coal and Steel Community, as an example, you might begin to understand what this is about, instead of making glib comments like “tripe”. You have no idea of what it was like when Schumann and Adenauer reached agreement in recognition of the need to stop conflict between France and Germany, and how later young people, yes, young people, later tore down border barriers to demonstrate their support and wish for cooperation and closer unity.

        This is the first free association of sovereign nations in history (British comparisons with the Holy Roman Empire are nonsensical and misplaced, as it was achieved by conquest) and has been pretty successful.

        The fact remains there is huge support for the EU even among the western Europeans, and it has become an important force in the world, even if not in the UK, where there have been decades of media and politicians’ propaganda against it. The UK might well exist outside it but it will be even more diminished. Who the heck cares about a few small islands scattered off the coast of Europe?
        For the Brits going abroad is all about the whole time-wasting paraphanalia of travel as experienced at airports, with checks and passports. Most Brits never experience what it is to drive freely across borders (forgetting they do so across the English/Scottish border…)

        Finally, if you think Norway and Switzerland are doing well outside the EU, that is fine for small countries, neither of which has any say in the making of economic policy to which they are beholden. And, of course, Norway has a huge sovereign wealth fund to service a small population..

        • Warun Boofit

          Thank you, I now have a warm glow as you have brought coal into this argument, my home town in the grim north had ‘ex terra lucem’ on its coat of arms until some idiot politician decided that was not very nice and decided to replace it with something nice which did not refer to coal but unfortunately will never be remembered. I have been down quite a few coal mines and thats when they were digging out coal, I was part of the ‘coal and steel’ community’ as you call it, you have no idea what I actually know about anything, my comment is not glib, I cannot really go as far as I would like in slagging off the Treaty of Rome as it would need several thousand words which no one will read. Are you assuming I am young, another wrong assumption. The UK is not diminished nor enhanced by Europe but as a net contributor we help keep the gravy train going for those useless MEPs. The Treaty of Rome is well past its use by date, its time to put in the bin.

    • Critic Al Rick

      You don’t see so-called Multiculturalism as a recipe for Civil War, then…?

    • Oliver Thornton

      Yes we have indeed enjoyed peace – grazie mille signore NATO

      The EU and its precursors as a body have done exactly squat for peace. They couldn’t even sort out conflict on their own doorstep (the Balkans)

      • DAS01

        I don’t think NATO has anything to do with the peace between France and Germany, the making of which was on the main drivers of the original agreements.
        And NATO did not stop the ding-dong between Greece and Turkey a little while ago.

        • Oliver Thornton

          Well its a hypothetical whether they would have fancied having a pop at each other but since there have been a shed load of NATO troops in Germany for the past 70 years, would have made it a tad impossible.

          Interestingly one of the main protagonists DeGaulle wanted Germany to be split into six, also echoed by Mitterand on reunification (something he was against).

          Since the EU has no military capability, the only thing that has apparently kept peace is a piece of paper (or rather a lot of pieces) and we know the German scorecard on sticking to that kind of deal.

          Whereas actions speak louder than words – the EU did naff all to bring peace in the Balkans – NATO did bring peace and continues to keep peace in Kosovo. EU has also been completely useless in the mediteranean (let them drown was the original strategy for 2015) and worse their existence makes Italy impotent to fix the problem themselves – Bravo.

          • DAS01

            Mitterand’s comment (on unification) about liking Germany so much he preferrred two of them is well known and not germane to my point. Prussian/Germany and France had three wars in less than a hundred years and it was clear to the ten leaders that some economic arrangements were needed to prevent further wars. I don’t think NATO was a consideration at the time.

            Am unclear about “we know the German scorecard on sticking to that kind of deal.”

            • Oliver Thornton

              Mitterand favoured a Germany split into six actually.

              Still waiting for an affirmative action by the EU that has thwarted conflict.

              You are perfectly clear on the scorecard. The shame of one particular German piece of paper literally killed Chamberlain

              • DAS01

                First an error correction. In my previous post it should have read “…clear to the tHen leaders…”.
                I don’t recall anything about Mitterand favouring six Germanys and I don’t see the historical connection. With “two” it would be clear that Mitterand was against unification, but I’ll take your word for it.

                I just don’t see the relevance of Chamberlain and that piece of paper in this context. Among other things it was produced before the EU and by a nasty dictator. Are you suggesting that the post-war German governments were/are neo-Nazi?

                • Oliver Thornton

                  No I am not suggesting anything. Chucking around unqualified pejoratives would be unhelpful.

                  Its about relevance. Modern European thinking says, ‘legislate and it will be so’ whereas these things come about through relationship, trust and affirmative action – 3 things that the EU has not engendered whereas NATO has demonstrably done that.

                  Chamberlain was perhaps foolish and I don’t equate todays Germany with then. However over recent years, Germany has emerged as having disproportionate influence and is the de facto head of a half billion person block. It is always possible that they (or any country) could become more malevolent in the future. The agreement is supposed to prevent this but in such circumstances it would take more than a piece of paper.

                  • DAS01

                    I was not “chucking…perjoratives”. You invited the question by introducing an anachronistic point into the discussion; what’s more, one that I wanted to understand/clarify.
                    You also previously said “we know the German scorecard on sticking to that kind of deal.”

                    Indeed, Germany (or any country) may turn malevolent but, given Germany’s economic position, has remained remarkably reticent in exercising its power.

                    Perhaps if British governments (and I mean most of them) could be less antagonistic and confrontational the UK would have a stronger role in the EU. As it is we are slipping into near-inconsequence by these attitudes, shown particularly now. Some of the British ideas on reform are supported by other (significant) states in the EU, but will not go far when promoted in an uncollegial way.

    • Duncan Richardson

      NATO has kept the peace in Europe

  • hohum

    Roger Bootle is usually an old pub bore who just repeats the same old thing ad nauseum, but not so in this interview. Some very good probing questions and interesting answers.

  • Firebird3

    We could do with more people like Roger Bootle spreading ‘the word’. The quicker we get out of EU, the better.

  • 4-caster

    The EU was indeed invented to bind the nations of western Europe so closely together that war between us would be unthinkable. That is why it all began with the European Coal and Steel Community, in essence a Franco-German arrangement to ensure that (West) Germany could not stockpile the two basic materials necessary to threaten its neighbours.
    Unfortunately the EU’s institutions have more in common with a socialist monolithic state like the USSR. The elected European Parliament is just that, a talking shop. The Council of Ministers can only change the direction of the EU through unanimity, which was just about tolerable when there were only six member states. The bureaucratic Commission takes all the real decisions, with which all member states are treaty-bound to comply.
    I do not support the Tories or UKIP in many ways, but I think Mr Cameron is right to try to relax the EU’s grip on our lives, to give member states, regions, companies and individuals more freedom to manoeuvre and to compete. Above all he is right to give us a referendum (which incidentally the LibDems were offering in 2005, but quietly dropped later). I hope he succeeds in engineering a change of direction to a freer, more diverse and more tolerant EU, but it will be a hard slog. If he succeeds I shall vote to stay in, because any break-up of the EU, engendered by the nationalism preached by UKIP or le Pen’s Front National in France could easily threaten the peace that EU members have hitherto enjoyed one with another.
    As for the common currency, I am pleased we stayed out of it.

  • andrew moffat

    Splendid interview. What a thoroughly warm and likeable personality Roger portrays as he answers your questions.

  • Susan O’neill

    I fail to see the relevance of this article since it fails to address the greater issues of policies that were adopted by Osborne who read a book then miraculously didn’t notice that other EU countries threw it in the bin. The austerity policy adopted in the UK has squeezed the spending power of those who had some money, obliterated it among those who had none. The progressive and regressive taxes have never been applied in a way that allows spending among the lower wage masses. ie. Both taxes propitiate the wealthier at the expense of the poorest, the result being the lack of spending leading to growth. With growth stagnating we cannot compete in the EU where our exports are much lower than import. Where nations like Finland, Norway, Denmark have not adopted austerity and are not so corporation dominated in their markets, their wealth and economic health have not suffered and they are still maintaining a better growth than the UK. Not mentioned is the French suggestion of a “happiness” factor, not a joke but a representation of how people perceive their status in the economic climate. The above mentioned countries are top of the list. If we stay in the Union we are “locked in” to it’s own limitations, if we leave, provided we have the right redress in terms of taxation balance, wage reforms, market and public spending initiatives then we (the UK) can compete in the world markets. Not possible under the current two party system or the non representation of votes system we have, but still possible.

  • Zool

    If we stay shackled to the EU it will destroy us trying to save the Euro. They will drag us into it some point acting as sticking plaster & strip us of 10 ‘s of Billions more a year via the financial tax they propose on London while buying themselves another decade or so it simply won’t work.

    The collapse of the Euro has created the German Economic Union the exact opposite of what the project was intended to create & all other members are now subservient to it unable to act or escape & the more they try the greater the EU’s claws dig in & strangle them & the Politico’s are so far down the rabbit hole now they seem not to be able to admit it’s failure or turn back.

    Being of European decent myself with parents from Italy & England I have seen the devastation the project has had on both my Countries both economic & it’s complete lack of Democratic accountability to the people it supposedly serves. Breaking up may be hard to do & painful but the EU is what it is a failed political, social & economic project & the future of Europe is far bigger than the desires of a few un-elected Bureaucrats in Brussels intent on using the endless crises that it creates to turn it in a Federal Union & write their names in the History books.

    • Critic Al Rick

      Perhaps (?) the EU, by slowly but surely beggaring us all and by seemingly following the Coudenhove-Kalergi Plan i.e by reducing us all to the Lowest Common Denominator (Common Purpose!), is achieving the desires of the ultimate PTB.

      Unless you’re (3rd person) happy for this to continue, surely it’s best to get out of the EU ASAP while it’s still, hopefully, not too late to recover ourselves from the sabotage (economic and political) already wreaked.

      I know it may be fraught with difficulty but it has in the longer term to be viewed as a damage limitation exercise…

  • Michael

    Great interview Merryn.

    Plastering the Euro over so many countries with diverse economic and fiscal infrastructures as well as productivity levels reveals the crass ignorance of basic Economics by naive politicians in pursuit of their federal fantasia.

    However there was nothing wrong with the original idea of enhancing and easing trading relationships within the Common Market. But it’s all got way out of hand. Cameron must be very tough and clever to achieve the considerable amount of reform required. The Euro Horse has bolted, however Cameron’s never had a better time or mandate to influence Merkel to force through radical change over the next 18 months. She can’t afford to let the UK out of the EU otherwise her Horse is going to keep crashing into fences. If radical change is achieved primarily in the interests of ‘trade and friendship’ as Roger Bootle says, then we should stay in the EU and stay out of the Euro.


    • Bab Boon

      Great interview and no major argument from me on most of the points –
      but Michael I think you do some injustice tarring all Pro-integration
      politicians as naive.
      Yes the Euro carries the seeds of its distruction in the internal incompatibilities so well identifed by Roger Bootle.
      if you wish to understand the logic of the Euro don’t loose sight of
      the original vision of the EU – It was predicated on the proposition
      interwoven free-trade would bind together countries that had been
      ripping each other apart with increasingly devastating efficiency for
      70+ years.
      I’d agree with your implicit premise it began to
      seriously over-reach itself as it brought in so many East European
      nations. With hindsight it would have been infininately wiser to have
      an ‘old core’ & an ‘eastern periphery’ – the latter in for trade and
      limited representation but not migration.
      I doubt many if any of the eastern nations now in would agree to step out of the core.
      the extension of Roger’s model is that there might be an achievable
      half-way house for Spain, Italy, Portugal (France if it doesn’t stop
      ****ing around & get back to work!) in a ‘Ero lite’ peripheral Euro

    • Duncan Richardson

      Cameron is neither tough nor clever and wants us to stay in the EU regardless of any renegotiation. Joining the EU is required by the Lisbon Treaty

  • “….But a chain is only as strong as its weakest link,
    Look at the EU membership, then stop and think
    Of what happened to the Euro, who was the threat?
    It will happen to the EU, that’s a pretty safe bet…..”

    From ” A Government Overthrowing Its People” More: https:///

  • Yvette Albrecht

    Comment on Doug Macleod’s comments on Lisbon, Portugal: I, too was in Lisbon about 12 years ago and I was taken on a tour of all the new infrastructure that was being built in Lisbon. The quide rubbed his hands in glee and informed us that all this was because of money obtained from the European Union. Of course it’s booming and so it should be! Who do you think provided all that money? The EU obtained that money from countries such as Britain who are net contributors and passed it on to countries such as Portugal and Spain. One of the EU functions is to take money from Northern European countries and hand it to Southern European countries. That may have been OK when the receiving countries were fewer, but now we have many new entrants of poor countries all hoping that they too will receive EU funds. Britain should indeed leave as Roger Bootle states, and of course the EU will not want that, we are one of their cash cows!
    By the way Roger Bootle is a very well known economist and has been around a long time.

  • Jack Worth

    The European Union is as corrupt as FIFA. Tin pot nations (note Scottish aspirations) with a few million population and net takers with the same voting power as Germany and the UK who generally bankroll the whole thing. Of course Spain and Portugal boomed with cheap money. Visit the huge white (elephant) arts centre in Lisbon which the population look at sadly, visit the miles of coastal walkways in Spain built with our cash.The stopping of future wars were at the heart of this and the UK should have remained on the sidelines ready to intervene when someone gets too big for their boots.
    Without the 500,000 to a million illegals and 300,000 a year legal immigrants we wouldn’t have a housing shorage this desperate.

  • Rãvî

    An excellent and refreshingly straightforward dialogue. Now if we could only apply the unfolding FIFA indictment to the Brussels Brigade-wow!

  • Georg Bleimschein

    Bootle is an economist, one of those responsible for getting the world into the current dire economic situation due to massive debt accumulation. Whenever any problem arises, the economist’s solution is to create more debt and this is all that Bootle can promote. The best performing GDP growth rate of 2.4%/a in the UK was achieved by increasing total debt by about 20%/a. That is total trade deficit, government and public debt. This excludes the debt growth of the largely shaky UK banks. This is the same as borrowing £20.00 and selling it for £2.40, generating a loss of £17.60. This is how the UK has accumulated its world record breaking total debt of about 900% of GDP.

    The EU has bonded 28 countries which have a history of fighting one another for thousands of years into the biggest and most successful economic block in only 50 years. It has integrated the impoverished FSU states on its borders and invested to create jobs, build infrastructure and provided solid growth. All neighboring countries not yet in the EU would like to join or at least have access to the market and investment. The Euro has taken trillions of foreign exchange and other costs out of the system and allowed secure cross border investment without massive forex risk. It allows products to be manufactured in various countries to be competitively priced and sold at known prices and profit margins. The Eurozone has a large trade surplus with the rest of the world, allowing it to invest in the future without borrowing heaps of money from strangers. By this measure alone, the Euro is severely undervalued at present, but that is the rate required to remain very competitive in a deflationary world market.

    The beggars in London have to use the same £ as the multi-millionaires on the same street, even though their financial situations could not be more different. Using the old argument about one currency for one country, it should be noted that the in-country disparities are much larger than the inter country disparities, yet all those citizens have to use the same currency and live with the same economic policies. There will always be some individuals who do not approve of the system, but it is clear that the EU has worked miracles for the wellbeing of its citizens in a very short time and it is on course to contain debt growth to manageable levels. The EU is doing all the right things to avoid the ruinous boom-bust cycles so eagerly advocated by the USA, UK and many other countries. However, Bootle only advocates more debt generation and a continuation of the ruinous extreme economic cycles.

    • Pro-EU

      Why is it that all these pro-Brexiters are old and look like they have just crawled out of a cave.

      Maybe because they love to live in isolation

  • Alex M

    “I write books as a sort of public service”

    Bootle’s is a voice very worth listening to (and I’m pro-remain), but his line at the start is just about the most hilarious example of ‘de haut en bas’ I can remember

  • Alex M

    He’s right about the euro, obviously. He’s also right about the foundational aim of ‘ever-closer union’. But he’s simply wrong that this still holds true today for all members – Italy has recently made clear that a two-track union is now the aim. In reality, a multi-track union already exists, given the variety of semi-detached arrangements held by different member states. The UK got its opt out on that but didn’t really need it anyway.