Only by calming down shall EU rebels get what they want, or have any colleagues left to share it

Nik Darlington 9.54am

Yesterday on these pages, Giles questioned whether the Tory party truly wants to resist the UKIP surge, or whether the Tory party in fact embraced it. This morning on ConHome, Paul Goodman questions whether Tory MPs even want to win the next election.

For some “lunatics”, to paraphrase Mr Soames commenting yesterday, this is not wide of the mark. The MP for Ketting, Philip Hollobone (majority 9,094), is insisting on parliamentary time to debate a referendum bill and “if it ends the coalition, so be it”.

That would, in all likelihood, end the Tory party’s tenure in office. It would not, in all likelihood, end Mr Hollobone’s tenure in the House of Commons.

There are however many hard-working, bright colleagues who would be sacrificed at the alter of Mr Hollobone’s (and others’) capricious whim.

To recap, John Baron (Basildon & Billericay: majority 12,398) posited a motion criticising the Queen’s Speech for not including an EU Referendum Bill. Coalition with the Liberal Democrats precludes this, however David Cameron has since announced the independent publication of a draft bill that is presumed will be taken on by the first name out of the hat for private members bills.

Mr Baron and supporters - including Peter Bone (Wellingborough: majority 11,787) and the reinstated Nadine Dorries (Mid Bedfordshire: majority 15,152) - have extracted this significant concession. Yet they press on. And on. Today’s Times (£) cartoon puts this best.

Has the Prime Minister handled this badly? Of course he has. Should a doomed stand be made against the muddled, undemocratic ranks of the Labour party, the Lib Dems, Greens and the rest? Yes, it should.

Europe is a salient issue for voters and the British people deserve a say on EU membership, pending the Prime Minister’s negotiations. For what it is worth, looking at the status quo, on balance I would vote to stay in; but it would be a close call.

It would not take much to convince me otherwise. The ‘out’ lobby has a war chest of momentum, funding and evidence. The ‘in’ lobby does not. In fact, I fear supporters of EU membership have at worst largely forgotten why they support it, and at best are relying on out-dated evidence.

Nevertheless, Europe is not the most salient issue for voters. It does not even come close. The crucial consideration in this sordid episode is that the Conservative party is being poisoned by myopia, desperation, and fears the wrong enemy.

Lance the boil. Have the debate about a referendum bill. Expose opposing parties. Be done with it.

Demonstrate to voters what this Conservative-led Government has achieved in the realms of welfare reform, schools and immigration; ram home the paucity of Labour’s alternative; press on with vital reforms to healthcare; and continue the hard but necessary work of rebuilding Britain’s economy.

Only by doing so shall the Conservative party have a hope of winning in 2015. Only be doing so shall there be a chance for an EU referendum. And only by doing so shall those MPs in safe seats who yearn for that referendum, have any colleagues left to ensure it.

Follow Nik on Twitter @NikDarlington

Getting below the skin of democratic reform

Henry Hopwood-Phillips 10.15am

The world is a-turning. The classes shift from lower, middle and upper to under, indebted and hereditary. Real power slips through MPs’ hands into those of constitutional lawyers, NGOs and financiers. Voters are confused and apathetic, confronted with a menu of social democrats donning different ribbons, that lack either the ideas, the conviction or the courage to extract the UK from debt-ridden paralysis.  

It is in this precarious environment that democracy has to be protected. If this sounds melodramatic, consider it is complacency that has reduced us to this position. I am often accused of pessimism but I would argue, with Spengler, that i am not a pessimist - pessimism means seeing no more duties.

Parliament has become little more than an acting pit, its real purpose - the coordination of interests - occurs behind the scenes. As Charles Moore recently noted in Standpoint, politics has been reduced to an:

“all-consuming pseudo-science of trying to guess what people want and then find ways of pretending to give it to them.”

Man in this barren environment uproots himself for money despite risk of grave anomie, and allows as compensation his public and private  responsibilities to plummet. Into this vacuum has seeped a state that continues to increase exponentially in size.

The global flipside has been fluid labour - i.e. immigration - encouraged by political elites who sell a Benetton advert and hide behind an aegis largely composed of rhetoric invoking diversity and inclusivity while pursuing cheap labour and the postponement of overly-optimistic pension plans.

The elites told us they loved everyone when they in fact saw everybody as equally worthless unless contributing to their own net-worth. Anybody who did not appreciate their own country becoming alien to them in matter of decades was turned into a social leper overnight by being turned into the modern equivalent of a witch - a “racist” - a word that has become such an invidious tool.

Social entropy has defiled the national fabric. Technology and urbanity has distanced us from ourselves, each other and our environments, to the point where large numbers of sybaritic younger generations who have never known any better feel vaguely apathetic about annihilation

A point that recalls Toynbee’s admission: “Civilisations are not murdered, they commit suicide”.

I harbour much hope though. UKIP’s success at council level demonstrates the seams are distressed. It is in times of crisis that the biggest and best opportunities come about. A national debate on the lifeblood and symbol of our people, our sovereignty - our parliamentary democracy - needs to take place.

Douglas Carswell MP has already started us out along a certain path with his iDemocracy. I would take his principle and extend it towards its natural conclusion. I think political parties are no longer required, they are an anachronism in an age where identities are so fluid that parties feel obliged to be concrete but alienate people with their packages or become hypocritical fudges incapable of enacting any manifestos. These parties have created what Francis Fukuyama calls a “vetocracy” - systems where myriad actors have just enough power to veto, dilute and delay decisions but no single actor has enough power to push through an agenda.

Instead we should take parties, which have morphed into a single cartel with different franchises, out of the equation. Most people have an eclectic smorgasbord of views that are very compromised by the current menu. Why not compile a government file that can be shared via an online cloud in which under the subtitles of ENERGY, DEFENCE, HOUSING etc, people add solutions, answers, resolutions, policy ideas which, after the civil service has redacted, the electorate vote on either all together at a certain time or spread out over a period?

Logistics are a bit irrelevant once the principle is admitted. After policies have been elected, people who believe their lives, their beliefs, their actions, their thoughts most fully represent certain issues or approaches that are popular can put themselves forward to execute proposals.

Referendums should be used, in a similar manner to the Swiss, for issues of great importance, and politicians should be paid in proportion to past and current salaries and posts. Politicians would also be forbidden to take up post-political jobs in which it was decided figures were trading on past public service. In all matters but defence and policing small, directly accountable councils, parishes and townships would replace the monolithic behemoths that are today’s councils.

Direct democracy, devolution and decentralisation are the three Ds that will power Britain into the 22nd century as a leader instead of a relic.

If all this sounds rather ridiculous, scary and fanciful, I can assure you that the nation has undergone far greater changes in its history and will do again. When it’s done so, it’s usually been for the better.

Follow Henry on Twitter @byzantinepower

Mid Staffs: Whither 38 Degrees?

Nik Darlington 3.16pm

In September 2011, I cavilled about the “rise of the clickocracy”, that multi-headed hydra of modern political ‘engagement’. The internet has spawned several campaigning movements, 38 Degrees being pre-eminent, who exist to put the democratic process within reach of a mere click. Click, click, clickety click - and the job is done. Your voice is heard.

The well-funded 38 Degrees made its name by opposing the Coalition’s healthcare reforms. There were just “24 hours to save the NHS”, we were told. Millions of emails made their way to MPs’ inboxes. All, of course, to no avail, but the point was made, not least by that moronic Mirror headstone.

The Health & Social Care Act has of course not killed the NHS. Yet the revelations within the Francis Report threaten to kill public trust in an institution that Nigel Lawson called “the closest thing the English have to a religion”.

Paul Abbott, sometimes of this parish, has a good little piece over at ConHome today, asking what campaigners such as 38 Degrees think about the grotesque conditions at Mid Staffordshire and allegedly sundry other hospitals around the country.

“Now that the Mid Staffs report has been published and debated in Parliament, it makes difficult and upsetting reading - wherever you fall on the political spectrum. Thousands died. The truth was covered up. Problems were endemic and not just because of a few rogue individuals. But, where is the 38 Degrees campaign for NHS reform? Where is the e-petition on their website, saying, “24 hours to save the NHS”? In the past, they have moved quickly to jump on a topical news agenda. So why not now, on their central issue of defending the National Health Service?

38 Degrees will have no credibility on NHS reform in the future, if they don’t step up to the plate now. I’ve met the CEO of 38 Degrees - David Babbs - a few times, and like him. He’s a nice guy, and seems sincere in his intentions. He has told me more than once that he’s not a front for the Labour Party, and I believe him.

But why the silence on Mid Staffs, David? What’s going on?”

Now we shouldn’t expect the likes of 38 Degrees to take a stance on everything (heaven help us all if they did). Though it would be interesting to know what an organisation so vehemently against structural tinkering thinks about endemic cultural and managerial misanthropy.

As Paul suggests, where is the deluge of emails under the subject of “adopt the Francis Report recommendations in full”, or similar?

Typically, big and successful public campaigns rely on catchy, straightforward messages. The nuanced and complex truth cannot compete. Under such conditions do governments often flounder; and organisations like 38 Degrees, conversely, thrive.

Except the entire debate about Andrew Lansley’s NHS Bill was mired in nuance and complexity. 38 Degrees took on the Government with a simple (sometimes just absurd) message, but it still required people to grasp with elaborate change.

The Mid Staffs scandal is, in comparison, really rather straightforward (if frightfully hard to fix overnight). It is simply made for someone like 38 Degrees to take advantage of and put to the people and their clicking mice. Isn’t it?

We should all be unsettled by the reaction towards opponents of equal marriage

Nik Darlington 10.44am

Looking down the voting list from last night prompts some sadness. They are not what Downing Street might describe as ‘the usual suspects’. Neither are they the types deserving of the subsequent vitriol.

What is done, is done. There is a majority for this in the country; there is a majority for this in Parliament. To make this a partisan issue is as disappointing as it is dull. Move on.

Enough has been said on both sides of the debate about rights and wrongs. It shall do nobody any good to dredge over what are now old coals.

Instead, there are some brief observations to make about the reporting of last night’s historic parliamentary vote.

First of all, the nature of the ‘rebellion’. Broadcasters, broadsheets and tabloids are (unsurprisingly) focusing on the scale of Tory dissent, yet giving scant regard to the 22 Labour MPs who voted against, the 16 Labour MPs who abstained, the 4 Liberal Democrat MPs who voted against, and the 7 Liberal Democrats who abstained. Parliament’s vote as a whole reflects most national polling on the issue.

Though wrong to assume unthinkingly, it may well turn out to be the case that the Conservative party emerges from this difficult (and arguably ill-timed) culture war worse than it entered. So be it, one could say, for ultimately it was the right thing to do.

Nevertheless, should the Conservative party be scarred by this episode, that shall in no small part be thanks to the simultaneously superficial and spasmodic manner of its communication by the press.

Take various references across television and print to Tory MPs’ “failure” to back same-sex marriage. How is it itself a failure? I do not count myself among their number, but the many opponents of same-sex marriage (for whatever reason), not to mention opponents of this particular piece of legislation, would consider their vote a “success” rather than a “failure”.

Broadcasters - bound to impartiality by statute - ought to feel especially guilty about making such a partial editorial judgement. Indeed report that a multitude of MPs from all sides of the House of Commons “failed” to stop the Bill’s progression. That is a statement of pure and simple fact.

Yet do not presume yourself the arbiter of right or wrong. This has been a profoundly difficult situation for many people with variously strong religious, social and cultural beliefs. Nor presume to judge that those people have “failed”, have come up short, are somehow not quite as morally or intellectually vigorous as those in favour.

Time advances, opinions change, but not all at once. That is life; and there is no failure in that.

Follow Nik on Twitter @NikDarlington

By attacking David Cameron the EU federalists are shooting themselves in the foot

Miguel Nunes Silva 2.12pm

David Cameron’s much awaited speech on Europe was met with profound disappointment on the side of those who currently push for greater integration in the European Union.

By making a potential referendum on British membership conditional on a Conservative party re-election, Mr Cameron was criticised of pandering to populism.

Allowing structural state policy to be determined by the masses could be said to be populism of the most irresponsible kind. Foreign policy, like defence policy, is a strategic domain of public governance. If no one asks the British people their opinion before Britain goes to war, it would only stand to reason that they are not inquired about UK membership in an international organisation. David Cameron deserves criticism on the referendum conditionality proposed but double the amount on the decision to hold the referendum to begin with.

That said, his continental detractors are a breed of their own.

To call the referendum on European Union membership a foreign policy decision is a mere assumption, because not everyone agrees that EU member-states are/should be sovereign. Most experts on EU politics only agree on one definition of its institutions: that they are a “UPO,” an unidentified political object – euphemism for agreeing to disagree.

Whereas some see the European Union as a mere technical international institution, others believe it to be a supranational entity that will eventually supersede the nation state as the sovereign political representative of the European peoples. One such step was the creation of the European Parliament, whose members are elected by direct suffrage.

Opinions vary according to the nature of the nationhood in question. Germans, Belgians and Italians, due to their short history as independent nations, their traumatic experience with nationalism and them being accustomed to working within a federal system, tend to harbour more federalist feelings. French, Portuguese or Poles, owing to an ancient nationhood, a proud export of such national culture to other peoples and a fundamentally unitary state system, are for the most part more zealous of Gaullist nation state pluralism and sovereignty.

Overall, however, continentals are less eurosceptic than the British and it was no surprise to learn of negative feedback in Europe: the French foreign minister Laurent Fabius called the referendum “dangerous” and criticised the possibility of a European Union “à la carte”. In a poorly chosen allegory, he also mentioned that a football team cannot decide instead to play rugby.

But it was the German socialist Martin Schultz, recently elected president of the European Parliament, who went the farthest in echoing the categorisation of the speech as “dangerous” and painting the announced referendum as the product of a “sorcerer’s apprentice” manipulating forces that he does not understand.

Schultz’s own Austrian parliamentary leader described the speech as “tragicomic”. Belgian Guy Verhofstadt and Franco-German Daniel Cohn-Bendit, leaders of the progressive liberals and Green parties respectively, characterised the speech as dishonest, “ignorant” and the referendum as “hokey-cokey.”

Such attitudes are despicable, disrespectful and unstatesman like. Mr Cameron may be accused of hurting the British national interest but he is at least the legitimate leader of the United Kingdom. The reactions of those who criticize him, on the other hand, are hypocritical and contradictory. These are, after all, those who advocate the European Union as more than a technical international organisation and cannot therefore be perceived as a mere instrument of foreign policy.

If that is so, and what happens in Europe is not “international” but actually “domestic,” why then not allow a referendum? Is that not the very logic behind the creation of a European Parliament, an institution that is already superfluously parallel to the national parliaments, in much the same way that the referendum would be superfluously parallel to a governmental decision to ratify the Lisbon Treaty?

One cannot have it both ways. Either Europe is a proto-state or it is an international organisation. The legitimacy that these politicians might possess to criticise Mr Cameron rests on the very principle involved in the scheduling of the referendum: that European Union member-states are sub-national entities in relation to the union and that any European politician is entitled to criticise a head of government without interfering in sovereign internal affairs, since they do so horizontally.

However, if the referendum is truly a foreign policy matter and a popular vote is purposeless, then not only is it not the place of functionaries of an international institution to interfere in the domestic affairs of a sovereign nation; David Cameron now has the legitimacy to tell them, in turn, how to do their jobs.

The “Europe à la carte” rather seems to be a product of European federalism: the only pick-and-choosing happening at the moment pertains to Europe’s federalists who invoke one logic or another, according to how it suits their own political interests. It was not after all the British footballers who decided to play rugby but rather some of the other players who decided to go cycling instead and self awarded themselves a yellow shirt…

After decades of accusations of democratically deficient integration, if the federalists seriously wish to avoid the image of promoters of a top-down federalisation by stealth, they would do well to not enter into the paradox of calling for a Europe of the peoples without existential referendums and most of all would do well not to call thirty million of their ‘fellow citizens’ “hokey cokey”.

Miguel Nunes Silva is an analyst for the geostrategy consultancy Wikistrat and has been published in a number of foreign policy media. He holds a bachelor’s degree from the University of Lisbon and a Master’s in European Studies from the College of Europe.

Cameron’s EU referendum promise lays down the gauntlet to Labour

Nik Darlington 10.33am

“Mind your speech a little lest you should mar your fortunes.” David Cameron has followed the Bard’s advice to the letter. This has been the most mindful build-up to a prime ministerial speech in living memory. Are his fortunes intact?

First of all, I’m still keen on holding the EU referendum on the same day as the next General Election, something I’ve established on these pages before. Yet that is not going to happen now. By insisting it will be held before 2017 (which in practice means between 2015 and 2017), it does make a Tory victory more plausible.

Yet as Tim Montgomerie writes, it doesn’t “kill off” UKIP entirely. Surprisingly enough perhaps, UKIP’s voters don’t actually rank Europe as their greatest concern: immigration and crime, for instance, are more important. What today’s speech shall do though is present a stark choice to UKIP voters: do you want a referendum or not? If yes, vote Conservative.

Much of that depends on how the Labour party responds. Ed Miliband is stuck between a rock and a hard place. Support a referendum and he looks limp - following Mr Cameron’s lead and betraying Labour’s (admittedly not long held) Europhile principles. Oppose one and he looks undemocratic, betraying the will of the British people. It will be a difficult PMQs for him today, but then again, he’s had plenty of time to prepare for this moment. What is his answer going to be?

Staying with Labour and returning to UKIP, an interesting aspect here is that in certain parts of the country, many UKIP supporters are actually former Labour voters, not Tories. This reinforces how important Mr Miliband’s next step is. Reject a referendum and he possibly loses those voters forever.

There is a risk that the delay, potentially till 2017, creates an uncertain environment for British businesses. If you are an external investor reliant on untrammelled access to European markets, is Britain a safe bet? Mr Cameron’s explicit goal is to win an ‘in’ vote on significantly reconfigured terms - but terms that retain access to the European single market. Is that goal achievable? The tone of this morning’s speech will have reassured and mollified key European allies but there is no guarantee that the negotiation process - or this mooted new treaty - will get us what we want.

The Tory Reform Group has often been branded (from without) as a nest of Europhiles: “unpatriotic” (unfairly so) and “isolated” (these days, admittedly so). There is nothing inherently unpatriotic about wanting Britain to hold a strong hand of cards at the European top table, but as a pragmatist (and I speak for myself here not the TRG) one must recognise the realities of the world we live in.

Times have changed. Many in the TRG would, I wager, still call themselves pro-European; or more accurately, place other causes (such as public services, social policy, the environment, health, justice) far ahead of concerns about the EU.

I would also wager that no TRG member could disagree with the Prime Minister’s essential analysis today: the EU must become more competitive, powers must be held closer to those they affect; the democratic deficit must be closed; and the EU must shed its bureaucratic shackles to become leaner and more flexible.

Mr Cameron recalled the defining, founding ideals of European unity in postwar times. Awarding the EU a Nobel Peace Prize seems ridiculous in this age, but consider its beginnings and that prize is barely recognition enough.

Mr Cameron also recalled what makes the people of this little collection of islands different, and why we have often been seen as the “argumentative” member of the European family.

The past is the past; it can inform us but barely guide us. The European Union’s problem is that for too long it has looked to the future with more than one eye on the past. The world is different. The European Union needs to think differently, behave differently and function differently. That is more readily achievable, I believe, with Britain remaining strongly and critically involved. Not on the outside.

In party political terms, if the Labour party now promises a referendum (as it now surely must), the game is squared. In bigger terms, the best result for Britain would be a significant reforming of our relationship with the EU. And as Tim Montgomerie also writes this morning, perhaps it can allow sections of the Conservative party to let things rest for a while, and concentrate on the policies that voters genuinely do care about, like healthcare, schools, the cost of living and tax.

Things will change, positions will unravel and the realities of European negotiations will hit home hard. Yet for the moment, David Cameron has stolen the stage. Bien fait.

Follow Nik on Twitter @NikDarlington

An absence of truly Conservative philosophy: a reply to Bruce Anderson

Henry Hopwood-Phillips 3.28pm

Bruce Anderson very articulately states the identity-crisis afflicting the Right in his recent blog for ConservativeHome. He outlines perfectly how, as the not-so-old middle ground caves in, the Conservative party glances nervously over its shoulder for a soul. However, no real solution is outlined.

The major problem is awkwardly avoided. Either the state is a good thing, a vehicle of teleology, or it is something that must be kept to a necessary minimum.

Anderson seems to want have his cake and to eat it. Teleology is poo-pooed. Philosophical inquiry is reduced to Mr Cameron’s “activist” components. The danger of which Orwell outlined when he said we risk…

“[sinking] to [the] depth at which restatement of the obvious [becomes] the first duty of intelligent men.”

Yet the minimum state is tarred with the uncaring brush. The easy assumption is peddled that a minimum state would be one in which Beer Street and Gin Lane reproduce themselves.

Anderson’s blog is in fact an honourable retreat into the platitudes of the eighteenth century. ‘Platoons and Patriotism’ is a good bugle call for the tired conservative. Most conservatives I know, however, want Eliot’s LIVING tradition, not the resurrection of Lazarus.

Anderson ignores the fact that were “platoons” to be formed today, they would more likely resemble a multiculti mosaic than a fiefdom of clubs. Patriotism is dying a slow and boring death on the altar of international institutions and global encumbrance. It’s all very well enjoying the baubles it creates but it’s another matter entirely to base a political philosophy on it.

Indeed, as the Right searches for conservative critiques that don’t feel like merely the extensions of the models of European economists such as Hayek and von Mises - or that contain more imagination than Philip Blonde just chucking Left and Right at each other and claiming the resultant mess is a masterpiece - it is forced to look over the Atlantic.

It is telling that the two major conservative intellectuals Britain has produced in recent history, Niall Ferguson and Roger Scruton, live on the other side of the pond. True conservative thought, sensibly reactive to the less enlightened aspects of enlightenment thinking, is to be found in Buckley, Strauss, Pangle and Bloom. Who are our equivalents?

This is why Michael Gove is on to a Good Thing. He is not forcing everybody to go to a private school or attend Blimpish concentration camps; he is encouraging the freedom to choose. Freedom necessitates trust and responsibility. It requires the state to see the electorate as citizens rather than subjects. Indeed, why most Britons like being subjects of the Queen is because they see the Queen as a constitutional emergency valve.

Put simply. If the Left like high taxes, let them pay more. If they like multiculturalism, let them live in multicultural areas. If they like utopia, then let them pursue such ends. If the Right likes low taxes, let them pay less. If they like “leafy” suburbs, let them live in them. Freedom requires devolution. Devolution requires trust. Are the Conservatives the nasty party or does Anderson ultimately think the electorate is nasty itself?

Despite slowdowns, economic stalemate between Europe and China is set to continue

Henry Hopwood-Phillips 3.44pm

Economic data from China is mixed. The bad news is that after first-quarter GDP growth of 8.1 per cent, second-quarter growth is being revised downwards from 9.5 per cent to 7.8 per cent by Caixin, one of China’s leading financial publications.

Reuters reckons second-quarter growth will fall even further, by 7.6 per cent, the weakest rise since 2008. Other indicators fare no better. Industrial production has risen by the lowest amount in three years, at 9.6 per cent. Electricity consumption fell to 3.7 per cent from 7 per cent in March. Property prices fell in over half of China’s seventy leading cities. And manufacturing PMI suffered its eighth consecutive month of contraction, from 48.8 in  June to 41.8 in May.

The second set of statistics paints a rather different picture. Exports were expected to clock a 6.8 per cent rise but instead surged by 15.3 per cent to $181.1 billion, mostly due to American demand. Not only that, imports only increased 12.7 per cent, giving a healthy trade surplus of around $18.7 billion. One of those imports was oil, which was bought at a record rate of six billion barrels a day in May due mainly to its low price and unstable future.

Bears point to a real estate bubble, over-capacity, over-investment, and a consequent lack of inflation as signs of over-extension. Bulls tend to side more with Jim O’Neill of Goldman Sachs who notes that the historical weight placed on production stats is misplaced and that “indicators of consumption are becoming more important”; and Jack Perkowski of Forbes who reckons “the phrase ‘property bubble’ will no longer be in the vocabulary” reasoning that it must have bottomed out after nine-months of decline.

The Chinese government, noticing a slow-down in demand, has not been slow in reacting. It has cut its interest rates for a second time. Consequently the yuan weakened against the US dollar in Shanghai.

Further measures are also being taken. The monetary authority is pumping 225 billion yuan into the financial system by conducting reverse-repurchase operations. The last steps to lower the amount of cash banks need in reserve, started in November and freeing up 1.2 trillion yuan for lending, are being implemented. And investment projects, many in the underdeveloped interior and western parts of the country, are being fast-tracked.

Beijing also hopes to boost energy demand by subsidising energy-saving white goods to the tune of 26.5 billion yuan. Such measures make a mockery of bullish claims that the Chinese government would intentionally try to cool the economy down in order to tactically restructure it.

China knows the oil that lubricated the post-war global economy is running dry. As the purchasing power of the Western consumer, based at first on rising wages but later on rising house prices has evapourated, no significant replacement has compensated for that lost demand. According to Bloomberg’s David Roseberg over 80 per cent of the world’s top economies are now posting a contraction in industrial activity. The EU and US together account for approximately 40 per cent of Chinese total exports but China knows that its long-term future lies with its own domestic consumer. This is why it has not been afraid to upset the laissez-faire apple cart by playing dirty with its currency, by using state funds to stockpile underpriced rare earths whilst imposing quotas and caps that ensure they remain in its domestic market, by refusing to “save” the eurozone, and by imposing duties worth £2.1 billion on US-made cars.

But the long term is naturally a long way off. Though there is talk in some quarters that the West needs to restructure its economy from a consumer-driven to an export-based one and that China needs to do exactly the opposite, the fact remains that the Chinese, with no real welfare state to speak of, are driven by both economic necessity and to a lesser extent culture, to save and supply rather than consume and demand. The West also has a tendency to overlook the old cronyist fundamentals of the Chinese economy which ensure the masses have little option but to stash their cash.

The fact is that much of the economy is still run on political rather than economical capital and that many bad debts are still sloshing round the system. Current generations are also living with the repercussions of the one-child policy legacy left to them by Xiaoping in 1979. They must save because demographically fewer and fewer people must support an ageing 1950s baby-boom generation.

In the short to medium-term the Chinese middle classes are not going to be either big enough or rich enough to fill the demand gap left by western homo consumericus and that gap remains unfilled by both BRIC and MIKT countries. This is the biggest single factor in the Chinese growth slow-down from averaging 10-13 per cent in the past decade to more humble 8-9 per cent IMF predictions this year.

But the Chinese have so far refused to invest in European customers who live in a eurozone that, according to Jin Liqun, Chairman of CIC, they believe to be profligate, lazy and politically undecided. China wants a eurozone to rise in its own image, with a freer market at ground level and a more centralised political command.

However, both seem unlikely to materialise and so, ceteris paribus, until one side blinks the economic stalemate looks set to continue.

Follow Henry on Twitter @TheHolySmoke