Friday, 5th September 2008

Leading economist Tim Congdon CBE told the UKIP annual conference in Bournemouth that the Northern Rock affair was "a saga of misgovernment" for which much of the blame fell on Britiain’s membership of the European Union.

"In the Great Depression of the 1930s no depositor with a bank in the British Empire lost money," Professor Congdon said, "whereas thousands of banks in the USA and continental Europe went bust.

"The Bank of England is – or at any rate should be – one of the UK’s great institutions. But in the Northern Rock fiasco it made mistake after mistake. The UK was humiliated, as the world’s media reported on the 21st century’s first major bank run in a leading country."

"Although the UK authorities were incompetent, much of the blame falls on the effect of EU membership on our laws and regulations, and on constraints over our government’s ability to act.

"The Bank of England misinterpreted a European directive, the Treasury imposed an inappropriately short deadline for loan repayment because of EU state aid rules, Northern Rock itself had to sack a third of its staff in order to comply with those rules, and a new government-appointed management had to run the business according to a set of principles decided by Brussels bureaucrats.

"Perhaps most fundamentally, throughout the proceedings key officials were concerned not to take decisions in the long-run interests of Britain and its financial system, but instead to comply with European laws and to accept orders from the European Commission."

Professor Congdon, founder of the highly respected Lombard Street Research, added: "The Northern Rock affair demonstrated the corrosive effect of EU membership on the British government’s ability and willingness to govern our country.

"It established, in institutional detail of unusual clarity, why the UK must withdraw from the EU if it is to recover its independence and self-respect."

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