The Rt. Hon Lord Lamont, ex-Chancellor of the Exchequer in his keynote address, at the excellent FIX Protocol conference earlier this week, gave not only a rounded evaluation of current economic troubles affecting the UK and Europe, but included the most intriguing analysis that China looks like running out of steam. This was the first time I have heard anything like this from such a revered source and it certainly gets you thinking.

Accepted views over the last decade and more are that we beware the Chinese. Their fantastic economic growth has caused a major rebalancing of the world’s economic configuration and by general acceptance China will assume the major economic power from the USA within twenty years. However, Lord Lamont foresees a slowdown in China, as they try and marry the increasing demands of a population now enjoying western style benefits, with their political doctrine and government fuelled business structures.

If he is right the slowdown in China and possibly India would be opportune for Europe. However, the caveat is that the Eurozone is able to manage and surmount the sovereign debt crisis. Well I am not sure that this can be achieved quickly whilst there is an inability to deal with the Greek problem and probably Portugal, Ireland, Spain and possibly Italy in the next few years

There is no doubt that some of the heat has been taken out of the crisis in recent months but this is more to do with the sticking plaster of Greek debt write-offs and bailouts buying time. Make no mistake the current bailout and relief in the market is temporary.

The German and French positions in tackling the long term problem are still at odds. The obvious thing to do is to let Greece default along with other weak countries, but this is a political no no, even though it makes business and economic sense. Lord Lamont also sees troubles ahead and the future of the Euro has to be in doubt, while all this uncertainty and lack of unified political response remains. In fact any response from Europe takes months and countless meetings before action is taken. Even then vetoes can scupper the attempts.

For the UK, we remain in a precarious position but strong only in the respect of being able to have the flexibility of taking decisions to protect ourselves from the economic storms or squalls that have been affecting Europe and will probably continue to do so in greater intensity, in the near future.

Fiscal harmonisation in the Eurozone is the right thing to implement, although late in the day. The sooner the Eurozone enforces fiscal harmony, the sooner the crisis in the Euro will subside. But will Germany, the most powerful, support financially, the weak? Will France be happy to be a junior partner to Germany? Will the rest of the Eurozone countries be prepared to be subservient to Germany and to a lesser extent France, who will have to enforce austerity measures? Will sanctions against Countries that fail to meet the fiscal harmony rules include being kicked out of the Euro?

Lord Lamont outlined the current status in the UK and Europe with great intellectual skill and with massive experience in dealing with recessions during his term in office at the Exchequer. He uniquely pointed out that China is going to hit the wall and have some economic slowdown and challenges which have to be overcome. It’s a window for Europe to aide our own economic recovery but sadly it may be an opportunity that will be passed by and the window slammed shut.