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Which democracy matters most?

Published Thursday, June 25th, 2015

Still no deal and not much prospect of one if you believe the comments of the players involved. The weekend’s optimism has turned into despair. Even the ever optimistic European Commission has gone quiet. Syria believes that there is a political agenda to bring it down and the IMF considers it nonsense to build an economic programme on increased taxes and improved tax collection in a country that has a cultural resistance to paying taxes.

Which democracy matters most, the mandate delivered by the Greek people to Syria or the mandates delivered to the leaders of the other 18 members of the eurozone? Greece does not have a monopoly on democracy. In a nutshell that is the friction built into the eurozone which will keep on erupting, hence the calls for ever more integration and centralization.

There is an EU summit today but no agreed Greek resolution document is on the table to discuss. The EU is confronted by two enormous problems – migration and Grexit – both highly toxic. There will not be time for a proper discussion on Brexit as David Cameron had hoped. London is a long way from the sea borders that migrants are desperate to cross but there are more beggars on its streets every day. No wonder German business confidence has fallen again. When the news and outlook are gloomy people are more likely to save then spend and businesses more likely to defer investment decisions. All of these micro-decisions add to poor macro numbers and underwhelming GDP growth.

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Posted by David Hufton