Attempts to force artificial economic ties between very different economies would slow economic growth and cause political instability, Portillo told a seminar at last week’s Foodex show. “I see the Eurozone as being a perennial source of weakness of low growth and potentially of instability,” he said.
The condition of the Eurozone was an “unstated danger” because the UK was so tightly integrated with the economic bloc, he added. Portillo warned not of another economic disaster befalling EU states (“another Greece, another Portugal, another Italy – although those things may happen”) but of the continual drain on resources to turn the project into reality.
“It’s rather that the scale of the challenge of what the EU has embarked upon is underestimated hugely,” said Portillo. “They are trying to put together 17 economies of extraordinarily different stages of development.”
As a measure of the likely consequences of financial union, he pointed to the aftermath of German reunification. “It was a process that lead to about 15 years where Germans did not have a rise in living standards. But it was a sacrifice that was worth making at a national level because they were all Germans and they believed in German integration.”
However financial union – linking economies as disparate as Greece and Germany – posed far greater challenges, without the social glue that bound German society together. “In the European case, there is not a very strong sense of European identity. So, you have to ask the question, to what extent are Europeans prepared to make the sacrifice for the movement of money in one direction [south] and the movement of labour in the other [north]?”
Further evidence of the food and drink manufacturing sector’s close links with Eurozone countries came last week in the form of the latest export figures from the Food and Drink Federation (FDF).
Exports to the EU rose by 3%
Exports to the EU rose by 3% last year, with 9% growth in the second quarter and 7% growth in the fourth quarter. Exports in the previous year were stagnant.
Ireland and France remained the UK’s biggest food and drink export markets, measured by both total value and value gained, rising by 7% to £3,206M and 10% to £1,470M respectively.
FDF’s economic and commercial services director, Steve Barnes, welcomed the boost in exports to EU countries. “The recovery of exports to key EU markets is particularly welcome news for food and drinks manufacturers, as exports to the EU 28 account for 75% of total export sales.
“We will continue to help exporters overcome barriers and inspire new businesses to start exporting as part of our 20/20 Vision for sustainable growth,” he said.
Exports to China rocketed by 82% to make it the second largest non-EU market. British pork exports to China soared by 92% and Scottish salmon by 90%, together totalling £33M in export sales.
Meanwhile Foodex took place at the National Exhibition Centre, near Birmingham between March 24–26. Don’t miss the Food Manufacture Group’s video highlights of the event.