The Euro has not gone away
The UK is NOT safe from the euro. The EU Constitution says bluntly "The currency of the EU shall be the Euro". " Brussels wants us in. Even now siren voices are saying that the Euro would be a safe haven in the current credit crunch (see our page News of the European Union) EU Commissioner Barosso thinks that we will join, because although the voters don't want the Euro, "the people who matter" do. Let's show him that the people who matter in the UK are more numerous than he thinks. The only way to make sure we keep the pound in the long run is to leave the European Union.
Even now preparations for the Euro are going ahead. An Open Europe Bulletin of 12 June reports two developments:
1) Lord Mandelson: Joining the Euro is "obviously" an important objective.
In a speech in Berlin, Lord Mandelson has insisted that Britain is committed to joining the Euro. He said "It is perfectly clear that the euro has been a great success in anchoring its eurozone members during this financial crisis". When asked whether Britain would consider joining the Euro in the future, he responded, "Does it remain an important objective for Britain to find itself in the same currency as that single market in which it interacts? Obviously yes." (Telegraph 12 June)
2) Government appoints 'Euro minister' in each department.
The Government has revealed that detailed talks have taken place in Whitehall departments about what they would have to do if Britain joined the Euro. They include explaining to the public how the move would affect their council tax and business-rate bills and how the BBC would pay for the £10 million cost of changing the TV licence fee to euros. Each department now has a special minister in charge of the 'changeover plans'. (Express Guido Fawkes blog 2 June)
The Euro is not Working
The launch of the single market and the euro have failed to boost trade, jobs and economic growth in the European Union, according to a devastating report from an official French think-tank. The research, a 300-page volume by some of France's most respected economists, is the most damning indictment of European economic policy ever produced by an official French policy unit. After a painstaking analysis, the report finds that, contrary to decades of thinking across Europe, "economic integration has stagnated and no longer promotes growth. The Euro's creation has not produced the knock-on benefits expected...Financial and credit markets remain segmented". Europhiles, who were convinced the launch of the Euro would force European governments to reform their failing, high tax and high regulation welfare states, have been proved wrong, the report says. It argues that the single currency has actually had the opposite effect. The report says that:
- No sudden increase in the trade of goods and services has been observed since the euro was introduced in 1999.
- The price convergence that EU monetary union was supposed to bring also did not occur
- The inability of the EU to revive the economy turns investment away from the continent
The report, entitled "Economic Policy and Growth in Europe", is published by the Conseil d'Analyse Economique, chaired by Prime Minister Dominique de Villepin. The main authors are Philippe Aghion, a Harvard professor; Elie Cohen, research director at Sciences-Po in Paris; and Jean Pisani-Ferry, director of the Bruegel Institute and professor at Paris IX-Dauphine. There are also essays by another 10 economists. The members of the CAE include 40 of France's best-known economists from both the public and the private sectors, the Insee (the equivalent of Britain's Office for National Statistics), the Banque de France and various ministries.
This damning verdict comes from the country which has been one of the most ardent supporters of the EU, and has succeeded in imposing its will in countless EU negotiations. They even persuaded the Governor of the European Central Bank to resign half way through his term, to be replaced by a Frenchman. If the French have not benefited, who has?
The Euro has lowed growth in the Eurozone - from an average of 2.4% in the five years before monetary union to 2.1% in the five years after it. The three countries which stayed outside - Britain, Sweden and Denmark - have all grown faster.
Will the Eurozone Crack?
A recent publication by the Centre for European Reform, a pro-EU UK think tank, is called "Will the Eurozone Crack?" It shows that Italy is finding it increasingly difficult to compete with Germany without the ability to devalue its currency, as it has always done in the past, when wage costs increased faster than those of its competitors. Stuck inside the common currency, Italy and other Mediterranean countries are rapidly losing their share of export markets to Germany. Italy may eventually be forced by economic necessity to leave the Euro.
There is a lot of Press coverage of this possibility (see News of the European Union)
"Euro flips Ireland from boom to bust" - a headline in the Sunday Telegraph, reporting that the Bank of Ireland's quarterly bulletin expressed concern that Eurozone interest rates have seriously distorted the Irish economy. Spain has seen a similar effect, but even worse. In both countries low interest rates sparked a housing boom, which got out of hand. Spain built more houses last year than France, Germany and Italy combined.
The Bank of Spain has concluded that houses are now 35% overvalued. As Eurozone interest rates have now started rising, both countries could face a property crash.
Interestingly, the national governments of the EU have each retained their own central banks, control over their monetary reserves, and responsibility for their own debts. If they wanted to leave, they could. All it needs is the political will. How bad do things need to get before the politicians admit they were wrong?
The Euro Is a Risky Experiment
The UK approach to managing the economy is tried and tested. Our interest rates are set to control our inflation, help our economy and protect British jobs. The Euro is badly managed, and it has not yet been tested in a severe recession. A single interest rate cannot possibly be suitable for national economies which are very different, with different strengths and weaknesses, different business cycles, and therefore different needs.
If we were inside the euro, the EU would try to manage our economy in the interests of the EU as a whole. For example, Germany found the single euro interest rate too high, prolonging their recession, while Ireland and Portugal found it too low, feeding their inflation. Eurozone unemployment is high.
By keeping the pound, we have avoided these risks.
The Euro always was a Political Project
Continental politicians see the Euro as a major step towards a United States of Europe. (see Quotes from EU Leaders) Only in Britain do the politicians pretend it is not happening. Most British people don't want us to lose our independence - they want to keep the pound.
If we join the euro, British economic policy will no longer be decided by a British Government. If we don't like the way British politicians run our economy, we can vote them out. The EU, however, is totally undemocratic - we cannot dismiss any of them.
An FT-Harris poll in January 2007 showed that more than two thirds of the French, Italians and Spanish, and more than half of Germans, believe the euro has had a "negative impact" on their countries. In France, just 5% said the euro has had a positive effect.
What can the voters do about it? Nothing.
The EU project, captained by unelected bureaucrats with large salaries and pension packages, sails serenely on.
The only good thing about the Euro is that if it breaks up, it would destroy the EU myth, and open up the possibility of leaving for several countries.
We will Leave the European Union - when we see it for what it is.n the EUSKeep the Pound.sSay No to the Euro.
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