The UK is fortunate that Tony Blair didn’t get his way on abolishing the pound.

Why? Morgan Kelly, Professor of Economics at University College Dublin, believes that Ireland — which did join the euro — is “no longer a sovereign nation in any meaningful sense of that term.”

Writing in the Irish Times, he says: “By next year Ireland will have run out of cash, and the terms of a formal bailout will have to be agreed. Our bill will be totted up and presented to us, along with terms for repayment. On these terms hangs our future as a nation. … Sovereign nations get to make policy choices, and we are no longer a sovereign nation in any meaningful sense of that term.”

The country is thought to be close to losing its access to international debt markets. Jens Peter Soerensen, Chief Analyst at Danske Bank, a primary dealer in Irish government bonds, has said that “It’s close to a buyers’ strike at this point.”

Open Europe reports that EU Economic and Monetary Affairs Commissioner Olli Rehn will arrive in Dublin later today to hold meetings with Irish Finance Minister Brian Lenihan and the opposition parties to discuss the government’s proposed budget cuts for 2011.

Ireland’s already eye-watering austerity measures have seen the loss of 20% of its economy, while its banking sector remains mired in bad debt and inadequate capital resources.

Membership of the euro currency zone is hampering government efforts to deal with the crisis by preventing a devaluation, which would make exports more competitive in international markets.

A classic Irving Fisher debt-deflationary spiral is underway with tragic consequences for the Emerald Isle.

The UK’s Coalition Government has already signed up to a triple EU regulatory regime for the City of London. It would do well to hang onto as much autonomy as it can. If leaving the EU is not on the agenda, a refusal to be bossed about by Brussels is the next best option.

This article first appeared in our sister publication Devon & Cornwall Online.

When the eurozone goes, it will go suddenly. One moment it will be there, and then it will have vanished into the historical annals of catastrophic human vanity projects that disappeared.

The worst case scenario is that a worldwide contagion begins on the European continent. August 1914 will have its 21st-century anniversary in four years. And the grandiose political vanity of Continental politicians will be again at the heart of it.

This sunny spring could represent a kind of Edwardian glow before the chancellory lights go out once more across Europe.

Read the rest of this piece on our sister site: Syntagma

The European Central Bank (ECB) today defied the threat of recession in many eurozone countries and raised interest rates to their highest level for almost seven years, despite frantic political pressure.

ECB President, Jean-Claude Trichet, issued a strong warning on Wednesday that inflation in the zone could explode if left unchecked.

The decision by the ECB’s Governing Council is set against calls to hold firm from European leaders led by President Sarkozy of France. It comes after a leap in eurozone inflation to 4pc in June which set alarm bells ringing over price pressures. This was further fuelled by a rise in factory-gate producer prices within the eurozone, which jumped 1.7pc in May, to stand 7.1pc up on a year earlier. The hike was largely driven by an 18.2pc year-on-year rise in energy costs.

More depressing numbers were released today confirming that the eurozone’s services sector, which is at the heart of its economy, shrank in June for the first time since mid-2003.

Economists pointed out new indications of “stagflation” in the eurozone economy, with output contracting as price pressures continue to build. They believe that today’s interest rate increase is a single-shot for the rest of the year.

Could that be more in hope than expectation though?

One of the (almost) hidden treasures of British journalism is Ambrose Evans Pritchard in the The Telegraph. I say hidden because some of his best stuff is tucked away on his Telegraph blog.

Take this article on the deeply unhappy euro currency area:

“… the last decade has shown once again — if such a demonstration were necessary — that Britain’s rumbustious, credit-driven, Mid-Atlantic economy is incompatible with the economy of Greater “Carolingian” Germany [Germany, Netherlands, Belgium, Luxembourg, Denmark, and France above the Loire]. The UK cycle is at least a year ahead. The trade and capital flows are more intertwined with the dollar zone.”

As Neil Mellor from the Bank of New York Mellon points out, the pound has been perfectly hedged in this cycle. Sterling has fallen hard against the euro, giving a shot in the arm to British manufacturers (yes, they still exist, 13pc of GDP) who rely heavily on Europe’s markets: yet it remains overvalued against the dollar, softening the effect of oil, metal, and commodity inflation.

Read the whole article.