Today the FT carried the report that since the financial crash Germany and France have fared better in the single currency than has Britain outside it. The report concludes that Britain might be better off with the Euro..
..what do UKSA members think? Should we join the Eurozone or stick with the much loved Pound?
Forums
Posted by peter_ward on March 28, 2011
Stick with the Pound
We can see so clearly the travails of some Eurozone countries, - Ireland, Portugal, Greece for example - which in my humble opinion were inevitable, sooner or later, when you have one common currency across so many diverse economies without fiscal - and that means, political - union. I am cynical enough to think that the powers driving the EU forward knew that they stood no chance of achieving full political union by agreement, but that they might be able to achieve the same end through the problems that would result from a common currency as the more preferable solution to splitting up the Eurozone. We shall see which way it goes.
Posted by david_ohara (not verified) on March 28, 2011
Eur havin' a laugh mate!
It seems utterly inconceivable to me that Britain will ever join the Euro.
In fact Peter, I would say recent problems in Ireland and Greece were BEYOND the gloomiest of forecasts from the sceptics. Any 'NO' campaign now has two very powerful counter-examples they can cite and a few others to throw into the debate.
Hasn't Ireland's bail-out already cost Britain £9b in a loan?
All that said, these 'difficulties' did not stop Slovakia or Estonia joining up but was it too late for them to back out? Interest is certainly cooling elsewhere (Poland, Czech Republic).
David
Posted by david_lowe on February 12, 2012
Re: Eur havin' a laugh mate!
Is it all a question of optimal currency areas? Does it make sense for Britain, given its economic and institutional structure to belong? (ie. does it make sense for an alcoholic to be a member of alcoholics anonymous?) The easy glib answer is to say 'look at the eurozone now' and shudder. There is no doubt that at the current time, it is best to be where we are, despite the awfulness. But things are never that simple. For instance, how does Britains longer term economic performance measure up to its Continental peers and to what extent is that a result of being outside the currency union?
There is no doubt in my mind that membership of the European Union has not been to Britain's economic advantage. If anyone seriously believes that Britain has done well from membership, he has to argue that our lacklustre growth would have been even worse outside the EU, a proposition that verges on the lunatic. But, we are where we are.
Within a currency union it is the trade oriented secors of the economy that are most vulnerable to external positive or negative shocks. An outwood looking Britain will always be more exposed than an inwood looking Germany. But there are other factors to be considered, most importantly the ability or willingness of interest groups to adjust to changes in economic circumstances. The Greek street is giving one answer, Britain's political establishment and public sector unions are giving another, essentially the same.
Loss of control of the printing press imposes limits on governments' ability to reward supporters and to buy off entrenched interest groups.
There is an argument for suggesting that Britain's economic performance over the years might have been better if the Bank of England had lost its independence. After all, recent monetary management has not been a success and the long term inflation record has not been impressive.
Would membership of the Eurozone have elicited a more responsible handling of the nation's finances?
I doubt it.
DJML
