Tuesday, 8 September 2009


So Dennis MacShane had a ludicrous article in the Evening Standard last night Never mind the politics, it's time to join the euro

He begins with:
Europe, from rainy Ireland to sun-soaked Greece, has suddenly become frighteningly expensive, as the massive devaluation of the pound against the euro hits home. The jug of sangria, the pottery and wines to bring home now cost us so much more.

AH, right so there was never a high value of the pound that was frightening exporters a couple of years ago and allowed very cheap holidays then?

The saddest sights in south-west France and on the Spanish Mediterranean costas are British citizens handing back to estate agents the keys of the houses they bought but can no longer afford to keep, as their pounds from back home don't cover the bills.

So these idiots gambled on a high sterling rate and lost? Must have actually believed Gordo when he said there was an end to boom and bust

For more than a decade we have been told that the euro was a terrible idea, while the good old pound sterling would protect the British economy from the wily ways of the Europeans.

Told by who...erm that would be your Prime Minister among others

Now more and more people are asking why the pound is letting us down - and whether treating it as a shibboleth that cannot be questioned makes sense any more.

Who? Who is saying the pound is letting us down?

All the old arguments against the euro have fallen away. There is no European super-state emerging with its adoption. There is no dictation of economic policy from Brussels.

Nope, Europe doesn't tell us what to do, no sirey

The EU takes just one per cent of Europe's gross national income to spend on policies agreed by 27 cantankerous, ever-arguing member states.

That's OK then as our contribution will soar by 60%, that's £257 per year for each household but it's under 1% and for what exactly?

Meanwhile, devaluing the pound was meant to improve exports - but trade figures show Britain's trade balance with euro-zone countries has worsened as the pound slumped.

And who's running the country and economy at the moment? Also I think you'll find that if other countries are also suffering then households will spend less leading to lower exports.

The Left's dislike of the euro was based on the notion that the Maastricht criteria would limit the state's ability to borrow and spend.

Yet France and Italy - and indeed most in the Euro-zone - are ignoring the Maastricht rules as they increase public debt to stave off further business closures.

President Sarkozy is proposing un grand emprunt - a giant loan to increase French public debt as his way of combating the crisis.

So it is OK to ignore the stability pacts in the name of solidarity, something wrong there. Also this is the very argument that the one-size-fits-all Euro hasn't worked and you want us in there?

Worse, as we plan for recovery, Britain is hobbled by its hostility to the euro. Take the fate of the City.

It is vital to our economy, and the UK financial sector, warts and all, adds massive value to the EU as a whole.

But our contempt for the euro means that no one listens when Britain protests about regulation from Brussels aimed at weakening the finance sector.

Erm, the proposed regulations will kill the City and business will move away from Europe, not move to Frankfurt which is the German dream. How exactly would joining the Euro help the City and not strengthen Frankfurt anyway? It is the one bit of economic power we have, don't help emasculate it.

...Gordon Brown's famous five economic tests were always a red herring as the sixth test was, and remains, the certainty that the British would say No to the euro in a referendum - unless the case was properly made to them.

Or like Ireland, the referendum would keep being pushed at us until we voted yes. Still it's nice you recognise what the public wants.

That is still the situation today. The kite flown by Peter Mandelson in June about us aiming to join the euro was quickly shot down. But in the end, Britons prefer reality to prejudice. The pound no longer walks tall against the euro.

Not at the moment because our economy is in a mess. That's what happens with a floating currency Dennis.

The euro is not going to collapse because of wide variations in the economic profile of different regions using it any more than the US dollar fails because its external value and the interest rates set by the Fed do not suit Michigan and California at one and same time.

No it is going to collapse because Italy or Spain will probably leave followed
quickly by Germany as the public turn against the costs to their countries.

There are other ways of managing such imbalances. If low interest rates heat up housing, then banks could simply require a 10 per cent deposit before issuing mortgages.

Oh yeah, can see a bank doing that. Also if we were in the Euro, interest rates will be decided elsewhere and not for our benefit.

Outside the euro, Britain will never be in the driving seat of Europe. We need to be. If the euro were used here as it is without fuss in countries we are close to, including Ireland and the Netherlands, then the next Governor of the European Central Bank could easily be a Brit.

We do not need to be in the driving seat. Far from it. We need to get back to Efta and we need to command our economy for the benefit of the UK only

But if British voters are no longer going to feel like poor relations whenever they holiday in other European countries, then before long someone is going to have to begin making the case that like shillings and pence, the pound may now have had its day.

OK, make the case, use facts and figures, remove the politics, it's economy stupid. Nothing you have written has convinced me. Where is the case? We maybe poor relations at the moment but currency levels change. A few years down the line some idiots are once again going to take the gamble and buy property in Spain or France. Others will be raving about how cheap the Dordonne is with the pound, and I will be looking for some artwork on Ebay because I will have the advantage.

Short-termism does not make a great case for the Euro Dennis.

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