The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

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Bruges Group Blog

Spearheading the intellectual battle against the EU. And for new thinking in international affairs.

Will Donald Trump save or kill the Euro?

The EU's single currency, the Euro, is being unbalanced by the strength of the German economy. The undervalued Euro is used by Germany in a beggar-thy-neighbour policy to expand its exports; hurting not just the other members of the Eurozone but also countries further afield, including the United States. If the USA forces Germany to abandon this policy, it will mean Germany leaving the Euro. This will either be the end of the single currency experiment, or its salvation.

4th January 2017

During the election campaign Donald Trump highlighted a structural flaw in the US economy, namely, the country’s huge structural trade deficit, which he claimed is hurting many Americans.  Trump’s message was very simple: if instead of importing products the US exported them there would be more highly paid jobs in the US. Trump claimed that not all of the US’s trading partners are trading fairly with the US.  The implication being that some countries are taking US jobs unfairly.  Angela Merkel was clearly worried about this rhetoric.  Although Trump did not name Germany, she is clearly concerned that Germany will be exposed as having an unfair trading advantage with the US because it is benefitting from an under-valued Euro. 

Although no one would claim that Germany abandoned the Deutschemark in favour of the Euro in 1999 to gain an unfair trading advantage, this is undeniably what has happened.   As can be seen from the following table this has increased Germany’s current account surplus with the rest of the world.

Germany’s exports are now 30-35% cheaper in US dollars than they would have been if the country had retained the Deutschmark. This calculation is based on the assumption that the Deutschmark would have maintained its value against the Swiss franc.  And, it ignores the fact that Switzerland has intervened in the foreign exchange markets from time to time to depress the value of the Swiss franc against the US dollar and other currencies.   The Euro has become a disguised form of protectionism for the German economy, by making its exports cheaper and imports more expensive. Moreover, this is not a problem that is likely to disappear. The longer the Euro exists, at least in its current form, the greater the problem will become.  The question is what, if anything, will the new Trump Administration do about Germany’s unfair trading advantage and its ever growing current account surplus with the US. 

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Recent Comments
Robert Oulds
Germany has been amongst the biggest distorters of world trade unbalancing the Euro, even breaking the EU's rules in their search ... Read More
Thursday, 05 January 2017 13:12
Robert Oulds
You are right, Germany (Angela Merkel) complains about him. She is trying to position herself as the last line of defence against ... Read More
Thursday, 05 January 2017 19:35
Robert Oulds
Thank you
Monday, 30 January 2017 09:32
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The Obsession with Regulation

The European Commission does not just propose regulation affecting its own internal market but also aggressively seeks to export its rules beyond its own borders

15th November 2016
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The European Commission predicted that the once much-heralded Transatlantic Trade and Investment Partnership (TTIP) will boost EU GDP by 0.5% which will annually add €120 billion to the economy.[i] The gains seem significant but they represent little more than a rounding error in the calculation of economic output.

The speculative benefits are unlikely to be realised. TTIP is effectively dead. Its future looked bleak even before Bernie Sanders rose to prominence in the United States, acting as the bête noire of corporate interests, and long before the election of Donald J Trump. It was EU intransigence on regulatory issues that caused the gridlock and not the public’s overwhelming opposition to the Investor State Dispute Settlement (ISDS); the courts where nation-states can be sued and punished for policies detrimental to corporate interests.

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The Challenge to George Osborne and £350 million to the EU each week?

EU membership is the biggest risk to the public finances. In these two films young people explain what our politicians have failed to grasp.

Paulina and Ben plus Emma and Jo
18th June 2016
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Paulina and Ben (15) challenge George Osborne on EU sovereign debt and how a Remain vote will leave them liable for massive payments.

Mr Osborne - if you think we are wrong come and explain how we are safe. That is our challenge.

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The UK’s liabilities to the financial mechanisms of the European Union

The UK’s potential exposure to the EU is over £80 billion.

Bob Lyddon
16th June 2016

Independent research, commissioned by the Bruges Group from acknowledged expert in this field Bob Lyddon, shows that the true extent of the UK’s potential exposure to the European Investment Bank (EIB), European Central Bank (ECB) and EFSM (European Financial Stabilisation Mechanism) is over £80 billion. If the crisis in the Eurozone continues this already high figure could increase massively.

The UK carries huge financial liabilities as an EU Member State, liabilities that could translate into calls for cash far higher than our annual Member cash contribution. These are created through various funds and facilities of the EU itself, and through shareholdings in the European Investment Bank and the European Central Bank. Each of these bodies engages in financial dealings on a large scale, with the Member States acting as guarantors for sums borrowed. The main recipients of funds are the Eurozone periphery states: Italy, Spain, Greece, Portugal and Ireland.

The UK, being one of the largest and most creditworthy of the Member States, is looked at as one of the guarantors most able to stump up extra cash as and when demanded, demanded, that is, by a Qualified Majority of Member States with no unilateral right of refusal. Such calls can be expected if another crisis blows up in the Eurozone.

The UK’s leaving the EU would relieve us of these considerable risks and liabilities. This independent research shows that Britain should leave the European Union.

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The Business of Hope

We are better off out!

Emma Jane
11th June 2016
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Does Britain face dire consequences if we leave the EU? What is the effect of the EU on business?

This film talks to two businessmen about Brexit and explores the economic issues surrounding the UK's EU membership.

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For Family Businesses

A level playing field for small, medium and family businesses
21st April 2016
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A vote to leave will give us more say over our economy. It is an opportunity to have: ●  Fair taxation, end big business tax avoidance by restoring national control●  A level playing field for small and medium sized businesses ●  Bolster small businesses ●  Support entrepreneurship●  Accountable British people helping to make the regulations, not a faceless bureaucrat in Brussels●  Global trading, better opportunities to open up global markets●  Access to the single market without our economy being dominated by those countries who make policies in the name of Europe what they will not ask for themselves

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The Future of the euro

An address and question time with Professor Bernd Lucke MEP

18th June 2015
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An address and question time with Professor Bernd Lucke MEP, founder and leader of the Alternative for Germany (Alternative für Deutschland) political party which opposes the euro. Recognising that the Single Currency is harming the economy Bernd Lucke MEP will gave a very interesting perspective on the crisis in the eurozone. Professor Lucke discussed the future of the euro.

The Speaker

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Video

Podcast

Speech by Bernd Lucke MEP

Address of Event

Committee Room 10The House of CommonsWestminsterLondon SW1A 3AA

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