Money matters

pete quentin, 15 September 2008

The EU is eager to prove itself as a geo-political force, most recently by leading negotiations to appease the troubles between Russia and Georgia. (That is if you discount the genius of the original peace deal constructed to enable Russia to legally continue its military force…)
But there is certainly a new, closer-to-home, battle which the EU still has to negotiate its way out of – it’s the economy stupid!

As oil prices continue to soar and the credit crunch continues to bite, this year, euro inflation reached its highest level since the eurozone was founded. A common theme amid commentary on the global credit crunch has been the need for increased financial responsibility: for individuals (the iPod generation have been criticised for their overeager use of plastic and hypothetical funds), and for the financial industry (the EU is currently giving voice to calls for tighter regulation of the banking sector, specifically hedge funds and private equity, and for caps on city bonuses deemed to symbolise the increasingly foolhardy culture of financial markets).
However, the EU is hardly a model for responsible economics. For example, the European Court of Auditors announced today that it will not sign off the EU’s accounts – for the 14th year in a row. The announcement is especially embarrassing for Commission President José Manuel Barroso who declared that clearing the EU’s accounts was a top priority.
A common criticism of the European Union is that people’s hard-earned money is wasted by an undemocratic and therefore unaccountable bureaucracy (e.g. for examples see a previous blog entry for a link to Chris Heaton-Harris’s scrutiny of the EU budget). Therefore balancing the books would be a very good place for the EU to lead by example. Otherwise it is painfully hypocritical for the EU to shake its fist at the deemed financial irresponsibility in global markets when its own accounts read like the ‘coming-of-age’ spending spree of a Harry Potter star.