As was widely expected, the European Central Bank cut interest rates for the first time in close to a year from 0.75% to 0.50%. The rate cut was driven by an economy in recession, with unemployment hitting a record high in April and inflation dropping the most in more than four years.
It’s yet another reminder that the eurozone crisis remains with us, although its flare-ups may be more infrequent as time drags on (an uncertain Italian election here, a Cyprus depositor haircut there).
You may wonder why some EU countries would want to stick it out in the troubled economic and political union at this point. Especially with mounting euroskepticism places in a country like Britain – which is not bound by the euro – where the BBC reports disillusionment with the EU has been at an all-time high.
On the sidelines of the Milken Institute's 2013 Global Conference, Former Prime Minister of Britain Tony Blair told The Daily Ticker that for Britain, the value really boils down to one thing.
“It’s geopolitical,” he says in the accompanying video interview. “It’s about power – and that’s the rationale for Europe today.”
Blair argues the ability for European countries to leverage the collective power they have for influence and interest globally makes waiting out the eurozone crisis worth it.
“Whatever the short-term problems of Europe,” he says of the current economic woes, “in the long-term why would you want to separate yourself from such a massive union of countries right on your doorstep?”
He cites a need for balance with Eastern countries like China, which he says is many multiples of times bigger than the U.K., as well as India. But he also cites a country with which the UK shares a “special relationship,” the United States.
“The U.K. wants to be an ally with the U.S., but there’s a big disparity of size,” he says. “It’s important we have the extra leverage.”