English wine is leading the way in more ways than one

Nik Darlington 11.53am

The Greek philosopher Diogenes once said, “what I like to drink most is wine that belongs to others”.

That was, in a sense, what we inhabitants of the British Isles were forced to do for hundreds of years.

Whatever might be said about the Romans and their vines along Hadrian’s Wall, for most of history if you wanted to drink wine on these shores then you had to import it and you had to pay a pretty price for it.

Things have changed. The English (and Welsh) domestic wine industry is in very good and ever-improving health, thanks to increasing interest, investment and climate change (yes, it has its silver lining). There are more than four hundred vineyards turning out red, white and sparkling wines, which though admittedly of varying quality, have in recent years hit dizzy heights.

And yesterday the Times (£) reported on what is expected to be a ‘vintage year’ for English wine, with the Diamond Jubilee and the London Olympics earmarked as opportunities to showcase the nation’s best. Indeed, the Olympics cycling road race is due to pass close to England’s largest single vineyard, Denbies, in the Surrey Hills.

But there was another wine-related story in yesterday’s Times (£) that is worth dwelling on.

The EU has plans to abolish vine plantation regulations, which stipulate where and how much wine can be cultivated throughout Europe, so as to limit production, control quality, and maintain prices. However, a number of leading wine-producers, including France, are opposed to any relaxation of the regulations.

Supporters of the reform say it will make Europe’s wine industry more competitive and better able to meet the challenge from New World producers. They accuse France, Spain and Italy and other wine nations of trying to preserve their dominance by preventing the spread of vineyards to other regions and countries.

In 2007, the EU voted to scrap vine plantation rights, which allowed new vineyards and the extension of existing ones. Although the French Government initially backed the reforms, it has since backtracked, in the face of rural fury. President Sarkozy has vowed to fight the move.

Dominique Janin, deputy general secretary of the Assembly of European Wine Growing Regions, told The Times that liberalisation would leave vineyards at the mercy of “hedge funds and multinationals”.

"They are going to plant hundreds or thousands of hectares of vines and we will move towards industrial production," said Mr Janin. "The consequences will be quite serious. Europe will become like Australia. When you have a plant that lasts 70 years you need rules and harmonious management."

First of all, it is a bit of a harsh judgement on the New World producers such as Australia. That country’s recent problems, for instance, have more to do with natural disaster (drought) than industrial production. And while the New World produces some frightful cheap plonk, many of its vineyards are have been matching the old masters of Europe for some years now.

But the main point is that the likes of the French are both right and wrong. They are wrong because one of the reasons why the New World is fast catching up with the old is because its vineyards are freer to experiment with grape varieties and production methods, and to expand into new and exciting terroirs.

They are, however, right in that irrespective of how much the New World ‘catches up’ (relatively or absolutely), the unique selling point of the Old World is its history, traditions and styles. They must be protected.

The proper solution would be for the EU to forge ahead with abolishing continental regulations, so allowing certain producers to follow their own path, but to allow individual member states to maintain domestic controls. This type of flexible thinking should not run contrary to any EU anti-competition laws, because the English wine industry is already outside the existing controls.

English winemakers are proving adept at applying the best of the old - such as the classic methods of Champagne to produce top drawer sparkling wine - and at the same time pushing the boundaries, even beginning production of 'English Malbec' from imported Argentine grapes (which the EU is absurdly prohibiting).

Much as it is doing so in the glass, English wine could be ahead of the pack in other ways too. Europe, take note.

Follow Nik on Twitter @NikDarlington

The eurozone crisis: what Cameron & Osborne must do next

David Cowan 4.29pm

Eurozone leaders have announced a new 109 billion bailout package for Greece, which includes restructuring Greece’s national debt and inflicts further cuts to public spending. Money markets have rallied but the fear is that this cannot last. Meanwhile, Westminster remains mesmerised by the hacking scandal.

Ireland and Portugal have already been bailed out. Greece has now been bailed out twice. Italy is teetering on the edge of collapse and Spain looks risky - bond markets remain turbulent. A new European rescue fund is reported to have $464 billion ready to defend these two countries should markets scramble. If any of these eurozone countries fall to an uncontrolled default then financial contagion could spread right across the continent, cause the eurozone’s collapse and unleash a new global recession.

I think that a default in one of these countries is now inevitable. Bailouts can only prolong the wait. This leaves only one viable option for the PIGS: a controlled default outside the eurozone. New currencies (or re-introduction of old ones) would allow exchange rates to fall to more realistic levels and permit an economic recovery based on increased exports. Once recovery was secured and necessary reforms were implemented in order to comply with the Stability and Growth Pact’s original 3 per cent cap on deficits, such nations could return. However, as President Sarkozy has said that the word ‘default’ (or defaut) is not in his vocabulary, this option appears to be off the table.

The Government seems to have a new EU policy, outlined by David Rennie in this week’s Economist:

Thanks to a great scoop by George Parker of the FT, it is clear the government now believes the following: (a) a big leap towards fiscal union is the only way of saving the single currency, (b) Britain has a strong interest in the survival of the single currency, (c) Britain must play no part in bailing out the single currency and will stand aloof from fiscal integration, thus (d) our national interest now lies in allowing Europe to divide into markedly different zones of integration, with us on the outside.

Whereas eurosceptics such as Bill Cash and Daniel Hannan are clamouring for a radical renegotiation of the UK’s membership of the EU, such changes are unlikely as long as the Conservatives govern in coalition with the Liberal Democrats. However, David Cameron does risk a Conservative backbench rebellion if he does not take some advantage of the situation, particularly when one considers that the 2010 intake of Tory MPs is the most rebellious since the Second World War.

The European Commission’s budget proposals - an unrealistic 100 billion euros increase - could offer the best opportunity for Mr Cameron. At a time of budget cuts across Europe, the Government must demand a 10 per cent cut to the EU budget over the next budgetary cycle (2014-20). In return, there should be negotiations about revenue raising powers for the EU. A VAT increase or new Tobin Tax should be ruled out in favour of options such as replacing the EU Emissions Trading Scheme and carbon price floor with an EU-wide Carbon Tax (see my previous post).

William Hague should also push for a Single Market Act. This could be the greatest supply side reform in EU history by significantly reducing regulations, regulatory bodies, quangos and unnecessary bureaucratic obstacles (see also Nik’s article in March about Tory Reform Group MPs demanding EU deregulation). We must help to liberalise the European economy to enable it to become more productive, dynamic and innovative.

David Cameron envisages an EU that allows the free movement of goods, capital, services and labour, and where there is multilateral co-operation over global trade, the promotion of human rights, international aid and tackling climate change. As the 2010 Conservative manifesto makes clear, this does not include oversight of social policy or the rule of law.

The eurozone crisis is both a huge threat to the UK economy and the greatest opportunity for genuine, lasting reform in Europe. Let’s hope that the Prime Minister and his Chancellor face down this threat and grasp the opportunity in front of them.

Follow David on Twitter @David_Cowan

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