Should Britain join the Euro?

Tiberius

Never say never - except in the case of joining the euro.

To say "yes" is akin to consenting to become an additional German "Land", which is very much not in the national interest.

David Lindsay

No.

But if you want to, then you should vote Tory.

The whole Poltical Class has long wanted to flog off the schools and the hospitals. But only Labour could actually do it. Imagine if the Tories tried.

Likewise, the whole Political Class has long wanted to join the Euro, to withdraw from Northern Ireland, to abolish the monarchy on the death of the present Queen, and to hand over Gibraltar (and the Falkland Islands, once Thatcher is dead). Everyone in it who is not Scottish has also long wanted to dissolve that Union.

But only the Tories could actually do these things. Imagine if Labour tried.

Think of the Treaty of Rome, the Single European Act and the Maastricht Treaty. Think of the Sunningdale Accord, the Anglo-Irish Agreement and the Downing Street Declaration. Think of how Heath started the ball rolling on devolution.

Think of Thatcher's refusal to recognise the Muzorewa-Smith Government. Think of how the Tories began the practice of electing Leaders even while in government, and let the hereditary peerage go without a peep (a continuation of their own record, since the case against the trade union barons of organised labour checking bourgeois capitalism was and is the case against the hereditary barons of the aristocratic social conscience checking bourgeois capitalism).

Think of all sorts of things.

Hugh

This was obviously going to happen at some point: the economic cycle would bring us closer to the economies of the Eurozone. But that doesn't mean we're now moving in step with them, simply that we're more closely aligned at this moment. The arguments against the Euro are as strong as ever.
Unfortunately it was equally obvious that this would lead some to argue we should join the Euro.
I have to say, though, I didn't expect anyone to argue that we should do so in order to help the Tories rebrand. I don't think the word for Hennessy's suggestion is "brave".

John W

In his article Patrick need not point out he's no economist, it is abundantly clear.

It is moronic to even deign him with a response - but then with your grasp of economics Fraser...

J H Holloway

Dead right. You could, conceivably, have the Euro currency, but with floating exchange rates and domestic interest rate setting.

However, imagine what would have happened if the UK had the recent 2 percent Euro Zone rates in the middle of the recent property boom?

The influence of mortgage payments on the UK economy will rule us out for decades...

Ian C

In France in April and finding it very expensive to go to an ATM for Euros I was struck that continued Euro strength might persuade us that we should join.

But we should remind ourselves not only of the political arguments that still apply, but the economic fundamentals of why we should be out. The Euro is strongg v. $ because the $ has been trashed under Bush, both because of foreign disdain (incorrect in my view) of his foreign policy and because of the fear of deflation since 1998.

However, it is weak against £ because of the 'Great Ditherer'. If you examine when £ fell out of line with the Euro it was September last year. Had the $ not had its own peculiar reasons to be weak, this would be a full blown Old Labour curency crisis - to be followed by a budgetary one next year unless he is lucky.

Britain needs £ to be weak and strong in its own time - not Europe's or anyone else's. If we run sound money, tax and interest rate policies as was the case from Autumn 1992 to Blairs announcement on TV that we were going to spend the same as Europe on health, we can have it too.

Again, another reason to get politicians out of running anything. We want our own rules set by us and politicians successfully elected only if they will undertake to follow them - not have them making up the rules as they think they should suit their egotistical, politically correct, trying to please the latest fashion, ideas.

ChrisD

In word, NO.
The British economy always seems out of sync with its European counterparts?

Scott Walker

Sure if we want the ability to not set our own interest rates and be part the EUSSR one size fits all, we deserve to be part of this Napoleonic Socialist Dictatorship, Broon and the Scottish Rak aka McLabour will sell out England good style.

Oliver Kamm

"And aside from saving a few bob in the forerign exchange, what would we gain?"

Increased trade flows, owing to removal of exchange-rate risk in our most important markets; greater foreign investment, for the same reason (in reverse); reduction of vulnerability to economic shocks due to exchange-rate fluctuations (particularly important when the exchange rate is driven by asset-market shocks); the potential for the City to gain still greater importance as a financial centre owing to integration of financial markets; and reduction in influence of some of the nastiest and most xenophobic elements in British public life.

TGF UKIP

Mr Hennessy asks a question slightly ahead of its time. Thanks to the tax, spend and waste policies espoused by Gordon (and duly endorsed by Dave and Boy George) this country is going to have a very tough couple of years. During that period it is likely that the citizens of euro Europe will be enjoying rather better economic and financial circumstances than their Brit counterparts. It is then that the siren voices will begin to sing their beguiling song. The ERM we stupidly went into at a time of domestic economic weakness so you cannot rely on the British political class across the three parties not doing something similarly stupid at a time of ecomomic weakness again. And for all you Tories who would like to convince themselves that Dave wouldn't do that to us, I would simply refer you to the gerrymandering exercise carried out by John Maples and Cameron Central Office to ensure that sitting MEPs and europhiles would represent your party in Brussels. You trust this Tory Leadership on Europe at your peril.

Nicholas

No.

TGF UKIP

BTW, nowt to do with this but Guido is in full flow on order-order.com under "Porkbusters" and as always definitely worth a read. Spelman again put into perspective.

John Page

No. Anyone even contemplating that needs to read Martin Wolf's recent piece at http://www.ft.com/cms/s/0/2572735a-2de3-11dd-b92a-000077b07658.html

As for the eurozone itself, Mediterranean countries and Germany now need opposite rate movements. The eurozone's likely to look a lot messier in a few months' time.

Does no politician remember what happened the last time the UK shadowed another country's rate?

Cameron should! And he should rule it out.

Craig Strachan

Mervyn King is right - the U.K. needs higher interest rates to counter inflation. That's also what the US needed, but it got the opposite, and inflation is taking off here big time.

(The German economic model is looking pretty good again, right now, isn't it?)

Cogito Ergosum

There are 50 states beyond The Pond which seem to do quite well with a single currency. Is it really so impossible to make that happen in the Old World?

Augustus

I seem to remember, at the start of the Millenium, that when the ECU was politizied by our scheming European partners into the Euro, mainly to prop up weak currencies such as the Peseta and Lire, many people in mainland Europe complained of the sharp increases of goods almost overnight. The Germans hated losing the D-mark and even called the new currency the 'Teuro'. Some countries did benefit, notably Ireland. The Punt today would probably be about 40% weaker if it had not joined.

Britain made out a case for not being in sync with the D-Mark, or Eurozone. If you take the D-Mark as having been roughly converted as 2:1 this would mean that the Pound is now only worth about DM2.5 which is not much above its post-war lows during the 'sick man of Europe years'. It seems never to have been able to retain the dignity of a strong currency commensurate with its trading status. The way it is heading now it will not be long before it will be a Euro in all but name.

Adrian

The arguments used ten years ago by the pro Euro campaign - more jobs, lower prices, increased trade - have been proven to be false.

Except for the fact that they haven't. Germany is now the world's biggest exporter with high employment growth.

Craig Strachan

Cogito Ergosum asks:

"There are 50 states beyond The Pond which seem to do quite well with a single currency. Is it really so impossible to make that happen in the Old World?"

Not at all. I would be all for a European Union on the US model. But do you really think the Continentals are ready to abandon their native languages in favor of English, and to adopt the common law as the basis for their legal systems?

Max Kaye

Deciding whether or not to join the Euro has been - and always will be - a political rather than a monetary question. The question being: Do we want the UK to become part of a nascent federal super-state? All the rest is posturing.

Kevin

"Mervyn King wants, if anything, higher rates to curb inflation."

Whose inflation? Inflation of what? Prices? The market determines prices. Wages? The market again. Money? Well, whose fault would that be?

Tina

Totally agree with Fraser's excellent piece.

Fraser Nelson

I totally agree with Tina. Adrian, you may argue that Germany's trade growth within the EU25 has been 62% since the start of the Euro against our 55%. But the figure for Italy is 44% and France 38% - so I think you can thank German spending and labour reforms for its better fortunes rather than the Euro. Average UK economic growth has been 2.8% since the Euro launch against the EU's 2.1%. Our inward investment is 5% of GDP, against 1.8% in the Eurozone. I could go on.

Fergus Pickering

Craig Strachan says what every idiot Europhile should remembber. Much more impotant than trade or currency or flags on anthems is LANGUAGE. We can't have a superstate unless everybody speaks the same language i.e. English. Is that going to happen? Then shut up. Consider. You get on a plane in New York and you get off in Los Angeles. And it's the same country - Americans speaking American. You get on a ferry at Dover and you get off again an hour or so later and what have you got? God help us, you've got France.

J H Holloway

Fraser, you might have also pointed out to Adrian that the fact 'Germany is now the world's biggest exporter' is due to its long history of engineering excellence and that its engineering base is string thanks to great products, making good profits allowing re-investment.

When BMW bought Rover in 1994 I interviewed an angry Tony Benn who told me that 'exporting profits is how you become a third world country'. Unfortunately, Rover very rarely made a profit.

Frank Pulley

The remaining symbol of our sovereignty must not be destroyed. Stick the Euro up your fundamental eurotunnel and go f**k yourselves you Continental Counts.

In other words thrice No!

Chris

You have to wonder how much of a success the euro has to be before Fergus Nelson gets it. Ten years and it's still there and working well. Meanwhile our interest rate decisions come down to who, between Gordon Brown and Mervyn King, thumps the table loudest. The pound is a liability and it has been for as long as I can remember. Not joining the euro was one of the greatest mistakes in British history. We should be in as soon as ever we possibly can.

Steve

Even though I don't think we should join the Euro. I do have sneaking suspicion we will at some point in the next 10-15 years. I do wonder just how much trade in the city is already done on a Euro basis and whether that will turn into the financial services industry drifting off to Frankfurt, Paris etc. Something that could have very serious consequences for Sterling.

cuffleyburgers

Not just language but also mobility.

You cannot pretend that a single economic policy is always right for all the states all the time - when one goes down, historically paople have been happy to move, or more likely, as historically the USA has relied heavily on immigration for economic growth the flows of immigration have redirected to where the growth was.

These conditions do not pertain in Europe.

The Euro experiment has not totally failed yet but there are stresses and strains that shouldn't be underestimated. No surprise that rate setting should favour German economic conditions - but what about Italy? What about Ireland? And to have another large economy like the Uk in there as well, completely out of synch, would add further strains which cannot be absorbed.

Therefore it is obvious that in purely economic terms a UK entry into the Euroland would be bad news for the UK, and bad news for Frankfurt.

In political terms - personally I would be loth to make any grand gestures of amity at such a time when the EU juggernaut of corruption, hubris and waste is so keen to wipe us off the face of the map and complete what Napoleon, the Kaiser and Hitler failed to do.

There can be no other reason for "ever closer union". It is not needed to prevent Germany from having to invade France on a regular basis and it is not needed to improve trading relations and indeed encourage closer cultural relations. It is not needed in order to standardise road signs or banana curvature either.

Get a grip Cameron and tell these idiots where to get orf.

Monk

When the Southern States of America left the Union they had a common currency, common language, common law. The result was the American Civil War. Tje same could occur in Europe when the strains of membership become too great.

Cogito Ergosum

Thank you Craig Strachan 9:11pm and Cuffleyburgers 8:38am. Language, especially, is an issue that has to be discussed.

England, Scotland, and Northern Ireland manage to rub along with their different legal systems. I don't see the Continental differences being a showstopper.

We return to the issue of language. It is difficult to build the same level of trust, or of confidently recognising the defects of partners, when only very few people understand the other's language in depth. Therefore we need a very different kind of arrangement from the US.

The tragedy is that continental bureaucrats have refused to recognise this. There is a European dream which will not go away and is worth pursuing. We need a genuinely new constitution in Europe, as opposed to the French whitewash engineered by Giscard D'Estaing, who never was a friend of Britain.

Nick

I disagree. I think the UK WILL join the Euro and it will be the right thing to do.

John R

@ Oliver Kamm:

Those are all excellent reasons for China joining the Euro, too. So why is this not a Chinese political objective and why is China doing so badly outside the club? Surely she doesn't want to get left behind...the train is leaving the station...two-speed Yerp...blah blah blah

ChrisH

It's amazing how a few people are always full of utopian dreams. Endless trade opportunities; ever-increasing wealth; cities of gleaming metal and glass; get real, it aint out there. You cannot unify 20+ countries with vastly diverse cultures simply by forcing them all to use the same currency. It's not just about the euro..it's about unelected politicians taking control of our taxes, rates, savings, lifestyle, and many other things. The grass is always greener on the other side till someone digs it up and makes a mudbath. Ditching sterling for the euro simply because it "looks nicer" will bring many unexpected and hitherto unknown problems with it. Businesses will always be "pro"....the average man in the street will be totally controlled by others.

simon

if we had joined the euro when it was 1.50 we would have been almost 10% better off than we are now.(we are now at 1.25 and still falling)
euro salaries have gained 10% more buying power over us in the global market in just under a year...infact they do not suffer as much as us for increase in fuel prices.
our salaries are losing buying value by the day. while u make up stupid arguments to keep the pound.....you're spending more for your food , more for your energy and more for your holidays. happy? i'm not.

Annabel Schneider

It was not appropriate to join the Euro until today. June 2008 was a long time ago. Bank of Englands role is minimal anyway.
EURO is established as of today. They have increased interest rates and may keep them high to maintain the value of the Euro now the Dollar is bouncing back. Bank of England will not be able to reduce interest rates. Banks are behaving out of line. We will have a big recession as we look out of place.
EU has raised interest rates. I think they will maintain the rate of interest. They are now in the same position as the UK was with Stirling until today. It is therefore appropriate to join now. It will encourage growth and investment. EU is strong and UK is not at threat of losing it's identity as of today. Bank of England will not be able to reduce interest rates due to the powerful Euro.
It is time to join. EU is now good enough for UK to join and take it's place in the EU.
The US has also made comments that Britain should start focusing on EU issues.
We need to be willing to do U turns to get it right. UK needs to be in Europe to be involved in shaping it.
We can't do that from being outside of it.

David

'One size fits all' has always just been a nice soundbite used by the right to make the news. The same argument could be used in the UK, The south east and the north east have been desparate for different interest rates for 50 years, maybe we should have a south and north pound?