Magazine Issues » February 2012

OPINION: Vive la différence

FionaSo what's special about Europe? Some years ago while living in New York, I found my answer: what brought me back was Europe's enormous, vibrant, challenging variety.

Of course, Europe’s glorious heterogeneity makes it difficult to manage. Getting all the European countries to fall in line with, say, a common economic policy is like asking a zany reveller to sit quietly and do trigonometry.

Never has this been more apparent than now. So difficult is it to get everyone to do trigonometry, in fact, that the whole European Union edifice looks rather shaky.

In the fund industry, which has benefited so much from the single market, this has engendered panic, sometimes accompanied by a kind of wilful blindness.

“Global fund managers optimistic on the future of the eurozone” is how Aviva Investors bills a survey of 188 fund managers’ views on the eurozone in 2012 and beyond. But the results reveal little cause for optimism.

“While 41% of the fund managers surveyed expect some countries to exit the eurozone within the next 10 years, only a quarter (23%) believe this will happen this year,” says the statement. “The remaining 36% either don’t agree, believe there will be joiners as well as leavers, or simply don’t know.”

A quarter of fund managers think countries are going to exit the eurozone this year, and possibly as many as a third have no clue what’s going to happen. The statement that follows: “Over half of those surveyed (52%) are optimistic about the future of the eurozone and expect a fiscal union to be established within the next 10 years.” Sounds more like wishful thinking than optimism. 

We need to wake up and smell the coffee here.

The European Union is a fantastic project that has enriched every country that is part of it, even (and perhaps especially) the late-to-the-party-couldn’t-be-bothered-to-dress-up UK. In this industry, it has increased competition, given savers wider choice and through Ucits provided a fund brand recognised across the world.

But if there is one lesson to be drawn from the eurozone crisis (apart from the obvious one that it’s best not to lie about your public finances) it is that you cannot make people (or countries or economies) act the same simply by screwing your eyes tightly shut and wishing it to be so.

I write this from a far-flung corner of Europe where we know all about the problems (and advantages) of political unions: Scotland. Or, as a colleague from Berlin described it to me, England. Partly because a separate Scottish identity has persistently been denied within the UK, we are now gearing up for a referendum on whether to quit the union.

How does the British prime minister, David Cameron, respond? Like a rich, neglectful husband whose wife has finally left him. He is by turns hurt, angry and bored. His chancellor waves the cheque book menacingly: “You’d never get by on your own,” he hisses. “Who’d pay for all those shoes [defunct banks]?”

A similarly patronising attitude often attends the berating of delinquent eurozone economies by those that perceive themselves to be less delinquent. “Abide by the eurozone rules or leave,” the French president told Greece, forgetting perhaps that France broke the 3% borrowing rule. Berlin seems to think it would be better if someone a bit less Greek ran the Greek economy, someone who understands what FT Deutschland calls “deutsche Spargründlichkeit”, German savings thoroughness.

Such attitudes ignore the fact that it was ramming unalike economies together that caused them to splinter in the first place. Until that is recognised, until we respect the differences that are our strength (and charm) as Europeans, there is little reason to be optimistic about the eurozone. And all the good things the EU has brought – not least the hard-won and by no means yet perfect single market for funds – are put in jeopardy.

Fiona Rintoul is editorial director at Funds Europe

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