How safe is Britain from the euro crisis?
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Jeremy Hobson: The first question at the BBC’s business news meeting this morning was: has the European debt crisis turned into a banking crisis? The immediate focus is on the Franco-Belgian bank Dexia, which is on the verge of being broken up because of its exposure to bad European debt.
Leaders here are concerned about the troubles at that bank spreading to other banks — and it all comes down to information. What do we know about what the banks are holding? What do we know about what the governments can do about it?
When it comes to the European debt crisis, we at Marketplace get a lot of our information from our European correspondent Stephen Beard, who joins me now in person. Good morning, Stephen.
Stephen Beard: Good morning, Jeremy. Welcome to London.
Hobson: Thank you, it’s nice to be here. I want to first start by asking you — because we go to you very frequently when we cover the European debt crisis, we’re hearing from you, a Brit. And often, in U.S. media, people are hearing from Brits covering this crisis. Do you think that there is a British anti-euro bias, because you guys are not part of the euro, and you look at it and say, “Let them do what they want.”
Beard: Heaven forbid that we would show bias, Jeremy. No, I think skepticism is a better word. You’re right — Britain didn’t join the euro. It was skeptical about it in the run up to the launch of the euro. This country’s always been rather semi-detached in Europe — a rather reluctant member of the European Union. But, boy, are the Brits glad today that they didn’t adopt the euro.
Hobson: But do they feel now that they’re somehow immune from the European debt crisis — I mean, surely, it would reach the shores of the U.K. if things were to start defaulting.
Beard: It certainly would. There may be some Brits who are still gloating about the disarray in continental Europe, but I think the reality is sinking in: Britain is horribly exposed to this crisis.
Hobson: Is there a moment, Stephen — because you’ve been traveling all over Europe covering this crisis for Marketplace the last couple of years — is there a moment that sticks out in your mind when you realized the magnitude of this thing?
Beard: Yes. I think it’s in Athens, I was covering a big protest march, I went back to my hotel, switched on the television. And there was a documentary — newsreel — of the second World War. Marching stormtroopers, Hitler ranting, and it went on and on for hours. The anti-German sentiment in Athens is extraordinary. And this is the real irony, and the paradox of this — the euro was part of this whole process of integrating Germany within Europe after the second World War, creating harmony and friendship. It seems now to be having the opposite effect.
Hobson: Well Stephen, let me ask — can this be compared to the United States? If there was one state that wasn’t doing so well, needed to be bailed out from the other states, I assume that that could be done without bringing down the entire union?
Beard: Big difference. In the eurozone, we’re talking about 17 different countries — different cultures, different histories, different traditions. Different languages — and that is an absolutely key point. Because of the language barrier in Europe, there’s not the labor mobility that there is the United States. People can’t go from one depressed part of the eurozone to another as easily as they might be able to in the U.S. Language is all-important, language is the key. After all, language is why you’re talking to me about the eurozone debt crisis.
Hobson: You speak English.
Beard: We speak the same language — more or less.
Hobson: More or less. Marketplace’s Stephen Beard. Stephen, it’s great to be here with you in person in London.
Beard: And great to see you, Jeremy.
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