Ten years of the euro
Do you miss the drachma and the deutschmark, or do you wish the pound had gone the way of the peseta?
The European Commission is today celebrating ten years since the official decision to adopt the single currency.
The euro is now used by 15 countries and 320 million people. Later today we expect an announcement that Slovakia will be allowed to give up the koruna and embrace the euro.
But the commission feels that the currency isn't punching its weight so is coming up with some ideas to add heft to its blow.
In the words of one insider, although the euro was a deeply political project, the eurozone is at the moment "an economic giant but a political dwarf".
There are two prescriptions, both familiar to those who follow European Union politics.
One is that economic ministers should think more about their responsibilities to the bloc as a whole, and less of their national interest.
In a phrase almost designed to give a delicious shiver to eurosceptics, the commission promises to "better exploit all instruments provided by the Lisbon treaty to promote broader economic policy coordination."
The second prescription is to speak with a single European voice to the outside world.
Top tables
One idea is to exclude extraneous chatter from mere nation states at the world's top tables.
The commission will argue for a single seat in international financial bodies. I can't get any clarity but I presume they mean the IMF, the OECD, the World Bank and perhaps the G8.
"At the moment we take up too many seats, too much space," says one official.
Britain, in the EU but not the eurozone, would presumably keep its seats on all these bodies although, again, I can't be certain of that.
But would we have been better off joining the euro when it began? When Labour won the 1997 election many of us assumed that there would be a referendum within a couple of years on joining the euro.
Gordon Brown squashed the idea and his then right-hand man briefed the press from the Red Lion pub. Now the idea of Britain joining isn't a blip on even the most sensitive and wide-ranging political radars.
While Blair was keen on the euro, Brown changed his mind on becoming chancellor.
Despite the guff about five tests, he is hostile to the whole project. He not only believes it would be bad for Britain, he thinks long-term the currency is doomed to failure, full stop.
Or at least semi colon: he cannot see how a single currency can work over a long time when individual countries need such different interest rates
'Historic error'
But many of those who were in favour in 1997 think Britain will one day join.
The head of the European Trade Union Confederation, John Monks, is one of them.
He told me: "I think it's almost certain to be seen as a historic error that Britain missed a chance to be part of forming something rather than being under pressure to deliver later. So I think what governments were too timid to do, to join the euro, will be seen as a big mistake."
He says although there are obviously winners and losers Britain would have been better off with the euro.
"The effects of it have been masked by the effects of a strong pound over the last five of six years and the British economy doing well, but now the pound has shot down 16 points against the euro and we are moving back into an era of volatile currencies and the pound is not in a strong position."
Indeed he argues the euro has been essential in helping the world weather the sub prime crisis.
"The euro has made a big difference," Mr Monks says.
"What would have happened if we hadn't had the euro? We would probably have had devaluations of the franc and the lira and some other currencies against a strong deutschmark.
"The currency instability in Europe would have had an effect in the rest of the world and would have deepened the atmosphere of gloom and crisis. As it is, we have a very solid currency in the European Union."
'One size fits all'
But Open Europe's Neil O'Brien thinks the strains are just beginning to show.
"You are starting to see some really alarming problems of exactly the kind that people who were critical expected.
"Because you have a "one size fits all" monetary policy, you have a country like Spain with completely the wrong interest rate and that inevitably means bigger booms and busts, more unemployment and damage to the economy.
"The euro's never been stress-tested so far, but now we are heading into choppy waters. There is no lender of last resort, so if big banks goes bust the whole thing could unravel quite quickly."
Mr O'Brien's dismissive about the idea that Britain will join, one day in the distant future.
He believes the political discussion about joining the euro is over and "it will stay over".
"The government, in their five test assessment, made the case very strongly that the UK economy is just not convergent enough with the eurozone for a whole number of structural reasons.
"You get people who say 'well, it's not the economics: we need to be in there politically' and I think that is very dangerous.
"If people can't tell you what exchange rate they want to join at; they can't tell you what we should do if we have the wrong interest rates and have the idea that we should take an economic gamble for political reasons just so they can go to certain meetings in Brussels, that is a very dangerous idea."
Who's right? Anyone inside the eurozone who wants to get out? Or outside who wants to get in?
I’m Mark Mardell, the BBC's North America editor. These are my reflections on American politics, some thoughts on being a Brit living in the USA, and who knows what else? My 
© MMIX~RS~q~RS~~RS~z~RS~30~RS~)
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The single-currency issue is dead with the UK decision to stay out fully vindicated. The coming issue is re-negotiation of our EU membership.
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The UK probably should join the euro. There is more stability and safety in being big. The UK has a large economy compared to the world today, but that won't necessarily be the case in a few decades. The supporters of the British pound do have a point about interest rates, though. The EU states cover a broad range of development. Some states--primarily in the north and west--are highly developed, while a few would be in the upper end of 'developing' (Romania and Bulgaria).
And if EU leaders decide to lump all EU states together in international organizations *beyond* financial organizations (i.e. the UN), then the EU should have a single seat on the UN Security Council. The idea that Germany should have a permanent seat along with France and the UK is absurd. Europe, a pseudo-continent with roughly 700 million people, already has three out of five seats. Europe doesn't need another one.
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"There are two prescriptions...One is that economic ministers should think more about their responsibilities to the bloc as a whole, and less of their national interest. "
That will be difficult to achieve as long as ministers are accountable to their countries' constituency. The only real solution to this would be a US style federal system, which is already how to implement the second prescription. So two birds with one stone, sounds good to me?
"Britain... would we have been better off joining the euro when it began?"
Absolutely yes, the exchange rate you'd be getting now is much worse than before.
Regarding Spain...it was recently projected to overtake Italy in terms of GDP per capita...and their economy has been booming. Madrid is also No.1 City where non-spaniards would like to work. The signs for Spain are not too worrying in my opinion. Italy, however...
"The government, in their five test assessment, made the case very strongly that the UK economy is just not convergent enough with the eurozone for a whole number of structural reasons."
Anyone who read the report will see that UK and EU economies have been converging in most important areas. Imagine where they are now..Furthermore, countries that adapted the euro started to converge with each other much quicker than before. This indicates, that after the UK would join, convergence would speed up, rather than the opposite.
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the euro will face challenges that i am not sure can be addressed with a one size fits all policy. compared to the rest of the continent the uk's business climate is much more competitive and dynamic as well - after living in germany for three and half years i'm not sure britons are ready for those types of adjustments!
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The EU is a snake-pit of politically selfish individual states that can, and will, willfully damage the interests of the other states for its own benefit !! The Euro will never function as a single currency unless there is a single Europe !!
India has a billion people and they have a single currency, the Rupee, because it is a single country !!
China has 1.3 billion people in its "empire", all of whom contribute towards the growth and strength of the Yuan or the RMB despite their diverse languages, cultures and native talents, skills and abilities !!
Since it liberation from its peg to the US$, the Yuan has been on a steady climb upwards. Since its inception, the Euro's track has resembled that of a demented snake !!
Britain may be a small country but, hopefully, the £ will better reflect the needs of the local economy. It will not be subsumed into the greater needs of the Eurozone !!
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The Euro has lasted 10 years, during which it has constantly embraced newer (read poorer) countries, while staying stable. The dollar, in comparison, has failed and miserably. No amount of wars (and consequent military spend and oil incomes) have managed to hold the dollar afloat. The sub-prime is a sub-indication of the sub-par performance of the currency of the world's most powerful country.
What does this mean? Economic power (or lack thereof) is reasonably independent of political power (or lack thereof).
So, should Britain join the eurozone? Not if it hopes that more political power will come it's way from the alliance. Europe, with it's perennially-in-internal-conflict, but peace-loving, principled attitude towards world politics will not easily succumb to the temptations of raw power. Briton, by staying out, can and does. But will staying out continue to promote British economy is a moot question. Europe and Briton do not command the "numbers" driven economy like China or India do. Nor do they command fear like the US or (increasingly) Russia. The industry in Europe (UK included) has been been lining up for free soup - unlike in the US(which spearheads innovation) and Asia (which spearheads costs).
In this scenario, going with Europe gives UK the comfort of numbers at the cost of loss of individualism. But how long can UK's individualism still last? The sun has long set on the empire. You can choose not to go for the euro-candle (for it will never be as bright), but if you do, at least you can still have dinner. Probably a CTM. If you choose to stay out of the euro, you risk becoming a marginal player, exerting as much influence on global trade as an oil-less, pre-euro baltic state. I'd go for a candle-lit CTM anyday :-)
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Simple fact of life: within the euro zone there is no mass agitation for a return national currencies. The convenience to an increasingly mobile and cross border consumer is just too high. National currencies are a thing of the past for us; remembered with fondness and occasionaly revieved as promotional gimmicks in street markets and fairs - the good old days factor.
The question for the UK is more political than economic. With political will the economic alignment can be found. But after 30 plus years the UK is still not even convinced it wants to be part of the a wider europe. Although I am a firm believer in the EU, I am increasingly convinced the UK would be better as an EEA member, like Norway. With all the derogations and opt outs this level of european attachement is more appropriate.
BUT of course this would mean a drastic reduction in the political influence of the UK on european decissions.
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In the last 6 months, the pound has lost around 20 per cent value against the euro.
For the many British people who spend long time in Eurozone or EU citizens living (and earning money) in UK means we are 20 per poorer when we travel to the continent, let alone the money we lose in exchange trasactions.
Is this acceptable in the suposedly steady world where we live?
UK is surrounded by Euro countries, even Ireland, does it make sense to use a different currency?
Atempsts by some British press (not only tabloids) to sink the Euro experiment have proved useless.
Euro has given stability and above all has made easier the life of millions of Europeans who travel around the continent.
However I am not optimistic having Brown as a PM. He appears even more europhobe than the Tories, the authenctic ones.
His ridiculous delay in signing the Lisbon Treaty last December was a desperate gesture to please the Daily Mail. But he failed again: Rome doesn't pay traitors.
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"he cannot see how a single currency can work over a long time when individual countries need such different interest rates"
I have to say, I think the opposite is true. The problems would be in the short run. In the long run, with a single market, single currency etc. the whole of the Eurozone would even out and behave in, largely, the same way. The problem is that this could take many years.
However, it's in the short run where I believe problems will occur. The Eurozone isn't working together enough for conditions to be so similar that a single interest rate will be ideal for the whole of the Eurozone. In time I'm sure that convergence of economies will come, but I suspect it's fairly impossible to tell how long it will take.
Also, politically I don't think it's compatible with Labour's fascination with decentralising management (ie PCTs, devolution etc.).
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One thing that does become clear after 10 years of single-currency membership is that the absence of an interest-rate or, in extremis, a devaluation "adjustment mechanism" means that governments must rely on fiscal and labour-market measures to sustain (or restrain!) growth while maintaining competitiveness. Not all countries are created equal in this regard.
Germany and Finland seem to have coped very well inside the euro-zone, and my suspicion is that the UK could have done so too. But I'm still not sure that UK politics could have adapted to the constant changes to tax rates and government spending/regulation that would have been required to fine-tune the UK economy in the absence of an autonomous monetary and exchange rate policy. The price of currency stability, therefore, might well have been unpopular governments being voted out of power every 4/5 years. No wonder Gordon didn't fancy it!
It is very clear to me that Italy's perennial lack of institutional flexibility (or political will to change things) has cost it even dearer within the zone than it would have under the old "soft lira" policy. The lack of a concerted anti-euro political movement in Italy strikes me as odd, given the strongly anti-euro bias in the structurally less rigid UK. But then if no Italian politician has the gumption to push through reforms in order to sustain competitiveness, he (and it usually is a "he") isn't going to get chased out of office on account of the euro. Growth just stagnates instead.
A more immediate test of political will is likely to develop among the Baltic/Balkan countries that have de facto adopted the euro, without the surrounding support mechanisms provided by the European Central Bank. Will their electorates be willing to make the massive fiscal sacrifices required to keep their currencies hard-pegged to what is increasingly a son-of-Deutschemark euro? I doubt it.
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Mark_bxl: The deal whereby the UK swaps 100% influence over our own affairs for a insignificant 10% influence in the affairs of other countries was always a fool’s bargain. As Mark Mardell points out the eurozone countries may now lose their positions at the top tables of international finance while the UK will still be there. So who is losing influence?
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Despite the prophets of doom the euro works. And that sticks in the the throats of the Little Englanders.
As for the "controlling our own currency" argument - Chancellor Norman Lamont found to his cost on Black Wednesday that world markets have rather more influence than mere national politicians.
Remember that we British invented the modern "single currency" by using the Pound Sterling in England, Wales, Ireland and Scotland i.e. four countries with distinct histories, cultures and economies. It worked and even after independence the Republic of Ireland tied their currency to the Pound for many years until.
We'd have a single currency with the Continent now if only those silly Johnny Foreigners had had the sense to adopt the Pound Sterling or at least the cunning to use that name instead of that awful "euro".
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I couldn't honestly say if the Euro is a good or bad thing. All I know is that the traders I use in the UK get paid by credit card so currency is not an issue. It becomes a bit of a pain when I come home to visit, as the pound seems to generate even more change than the Euro, which the banks obviously won't change when I'm back.
On the other hand, the Euro has - in it's way - partly hidden the huge inflation we have suffered since it's inception. I tend to have kittens when I idly convert today's prices into Belgian/Luxembourgish francs :(
I don't think this would have affected the UK either, as everything is massively overpriced anyway...
I personally am rather pleased the pound has crumbled to more sensible levels :)
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The Euro has been a tremendous factor for the economic and financial development of the EU. Traders have been barred to play up with EU currencies, whilst a growing numbers of Countries are paying in Euros, because of its stability in order to better control their inflation and budgets.
The UK with an interest rate of 5% compared to ECB 4%, is missing on a great inflation busting tool. Maybe the UK citizens dont like the Euro, but seeing them buying properties and spending in Europe using the Single currency, I doubt this very much.
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This is a very thorough analysis, Mark. Thank you very much!
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The Euro works, because it is based on the concept of economic convergence.
The argument of "one size fits all" is completely hollow as even within nations different interest rates should exist: Obviously, the housing markets in Liverpool and in London are different and would merit different rates.
I am sick and tired of the europhobes and their fake arguments: It's never about the issue. It's always about whether Johnny Foreigner should have any say in things affecting the Little Englanders. This is nothing else than xenophobia.
And obviously, the days of the British empire are over. Lots of foreign powers influence the life of Britons. Even the military takes its orders from abroad.
Therefore, the question is whether you co-operate with others or you chose splendid isolation. The EU is a very fair and transparent concept, if you care to deal with it. It's not perfect, but it really doesn't deserve the permanent ill-informed smear from people who just can't cope with the fact that they are not alone in this world.
I wish the UK good luck with its antiquated society, its irrelevant currency and the chief bottler as leader. The EU and the Euro will move on, with or without the Brits. We will even have a new football champion this year without any interference from that funny island off the Belgian coast.
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It's always funny to hear people claim that the euro won't work because the different nations within the zone need different policies.
It always makes me think about the US, a single market with a single currency where different regions have different economies that have different needs. And yet they're run from one central place with one central currency. And successfully so, despite the loss of value of the dollar against other currencies.
As for the brits changing or not changing to the euo... that's their problem, not ours.
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From an economic point of view, the UK should refrain from joining the Eurozone. The British economy is distinctly different from continental economies (it more resembles the American economy than it does the European model) and has a very different life cycle. Bluntly put: the two (UK and Eurozone) don't match.
From a socio-political point of view, the British people might be more willing to join the Eurozone if the pound keeps losing value and starts to seriously hurt the British economy. At that point, however, the UK won't meet the strict entry requirements for adopting the Euro and thus would be turned down by the ECB and European Commission.
Basically, it's not going to happen.
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Interesting to see the Commission's attitude to seats for EU member countries on international fora - as regards the euro, in this case.
Sends a rather worrying signal for what could be in store in respect of the 'common foreign policy' emerging out of the re-named EU Constitution and Britain's UN seat ... don't you think?
The government strongly denied Britain's seat on international fora like the UN would be under threat as a result of the Lisbon Treaty.
But clearly the Commission thinks that "too many seats" on international bodies are unhelpful (to their state-building project, presumably - they can't mean the proper representation of elected governments).
And, as ever with the EU, its tricky to see who exactly would be in charge of such a decision to merge national seats into one EU seat. Do we have a veto on the area of common foreign policy under which such a proposal could be brought forward?
As regards the euro, those who campaigned for Britain to keep the pound have been completely vindicated.
Britain remains the top destination in Europe for inward investment, we didn't get hit by those euro price rises, we've not seen mass job losses and we've also been far better off setting our own interest rates for local needs.
All the euro-zealot scaremongering has proved groundless.
Don't you just love in particular the self-contradictory way that John Monks says that the idea of our being better off in the euro has been "masked ... by the British economy doing well."
Any chance we're "doing well" precisely because we stayed out, John?
And had a national currency needed to devalue as a result of the 'credit crunch', as he claims the euro has "probably" prevented, the euro would not be solving the underlying economic problem. More harmfully, it would be causing that problem to burst out in a different economic place.
Therein lies the euro's biggest threat; locking down both exchange rates and interest rates can only create an economic pressure cooker in Europe. And the bad news for the EU is ... the temperature's going up!
I'd say we're far more likely to see one or more eurozone countries no longer able to stand the strain of the euro strait-jacket and quit, than Britain decide to join.
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The Euro has both advantages and disadvantages. I don't know the Euro has been good or bad for my country. I guess most people just got used to it.
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To BernardVC @ 17
One key factor that distinguishes the US 'dollarzone' is the federal government equipped with a massive central budget and fiscal powers.
They are able to send significant financial support and greater public spending to US states that aren't doing so well economically relative to the others, in order to ensure all can live together under one currency.
But the eurozone does not have a central goverment with fiscal powers, able to adjust taxes and transfer public spending on a large scale between economically diverse EU economies.
Fiscal decisions go to the heart of what remains of national government. Politicians would both have to *want* to relinquish them, and also win the political argument that taxes raised in one country should be used to bail out another country on a grand scale.
Unlike the US, I don't believe Europe's peoples are sufficiently a 'demos' to accept that.
So, giggle all you want. But no-one in the eurozone will be laughing about this fundamental deficiency of the euro system if recession starts to bite.
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Deep inside I feel like Euro's current strength is similar to inflated U.S. housing values. Since it does not actually represent Euro's real value, it has to come down eventually.
Another thing that I am confused about is, whenever I talk to my friends from Germany, the Nederlands, Italy, Greece, they keep complaining about how their purchasing power went down overnight, yet we see this giant economic power. How come public opinion can contradict to economic indicators so much?
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To -StuartC- (21):
I would like to ask does the euro zone really need a central authority to allocate and support member states in recession and in stagnation? If the problem is caused locally, the best medicines are local. If the problem is global, all countries are trouble equally.
To my mind fixing an economic problem that has been caused by bad politics or other bad decisions should be fixed by doing politics and decisions right. Changing interest rates or value of currency are just easy fixes that don't touch the fundamentals that have caused the problem. In euro zone this has meant that politicians of euro countries have had to more and more look on themselves and their own decisions.
Just to give you an example: In Finland we had a long history of devaluations of our currency. The devaluations were implications of either too high salary rises or other internal reasons that caused Finnish industries to be uncompetitive in world markets. This was compensated by goverment devaluing the currency to give industry their competitiveness back. Other thing that caused problems was that as Finnish currency was so small, it was an easy pray for currency speculators. Now as we are part of euro, devaluations and speculators are part of history now. Instead the goverment, companies and citizens have to focus on making the correct decisions and using the right policies, as there are no bail outs.
I myself am an federalist and would want to see an more tighter European Union, but still we should be practical and use an solution that gives the best resolutions. The current model isn't perfect, as countries that don't have sound fiscal policies are not punished when they break rules from time to time. We need more power for ECB to keep member countries inline with their spending, but we don't need European wide policies to give short fixes for local problems, as local economic problems are always problems in local politics.
I would also say that it's more important to have stable currency and stable interest rates that allow people and companies to have more predictable and safer future. If we look at US and see what happens when central bank is used to advantage politics, the trail is scary. Central bank should act independently and concentrate on price stability, it worked for Bundes Bank and Germany, and it should also work to ECB and Europe.
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Is this working?
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The system is not accepting my post - are there restrictions on what characters can be included, or teh size of the post? I get no error message, but nothing is added to teh list other than test messages (please delete them).
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It is not only the single interest rate that is a problem.
I think there should also have been mention in the article of the general disregard of the Stability and Growth Pact criteria by the members of the Eurozone. This is, if not a financial, then probably a political time bomb given the general level of abuse of the criteria by southern EU nations, and the lack of teeth within the ECB to enforce compliance by the Governments that fail to meet the criteria on an ongoing basis.
Rather than build more grandiose federalist schemes, perhaps the EU should look to clean up on its existing work and strengthen the Euro by the more rigorous application of the regulations and governance through the ECB rather than allow publically motivated decisions within the Commission with regard to the implementation of sanctions (such as those applied against Portugal and Greece, but not against France or Germany).
Even if the regulations are tightened up and enforced, and the southern states are forced to bring their economies into balance, there are still the issues of the distortions created within the Eurozone through countries setting their own tax policies. That will not be addressed unless the EU moves to a federal model.
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Don't hang me on this - I am no economics expert - but after a quick Google of the last 5 years consumer inflation figures:
UK avg = 1,8%
Belgium avg = 2,0%
UK = low tax, liberal econcmoic control.
Belgium = high tax; index linked salary
Given these small rate differences against differences of economic culture I do not see the Euro as being responsible for high inflation. Perhaps someone more statistcally minded can enlighten me?
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A few other comments
Ishkandar @ 5 You seem not to realise that the single currencies of both India and China create the kind of difficulties within their less developed regions that are of growing concern within Europe.
mark_bxl @ 7 The problems are perhaps not immediately evident at street level and in the day to day transactions of the general public. The problems that are building up are in the locked-in decline of competitiveness in the southern states compared with the more fiscally responsible states of the north. Until the southern states start to bring their economies under control, the interest rates will need to remain higher than they should be thus penalising the citizens of the more responsible countries such as the Netherlands and Germany.
Betuli @ 8 The pound has declined recently against the Euro, however it is has maintained a steady rate over the last five years with the current variations principly due to the way funds are shifting away from the Dollar. Yes it does make sense to have a separate currency while our economy continues to have different dynamics.
LondonVoyageur @ 10 I agree with what you say, and suspect that many of the East European candidate members are starting to face up to the difficulties of joining the Euro.
Taxpower2006 @ 14 I would not be too sure about the stability of the Euro. The size of the Eurozone has been a factor in that assumption, but as pointed out in the article, the Euro is yet to be tested in how it copes with higher rates of inflation, high energy costs, and the expansionist policies by southern states in the face of failing economies.
BernardVC @ 17 You answer your own point in your comments; the US is a federation with a strong central government, the EU, though some want it to be, is not.
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Sorry - it seems you do not accept the ampesand symbol.
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to Jukka_Rohila @ 24
The problem comes if the 'local' region (ie. very likely at least one European country in this case) is in recession.
When it has no money, and cannot adjust its interest rate or exchange rate or other factors, that's when it will need support from 'outside'.
You are right - making interest / exchange rate changes alone is never a solution. But they are a 'get out of jail' card, to first stimulate growth. As you say ... "to give industry their competitiveness back".
Usually this has to come before the underlying problem can be addressed in a way that isn't too painful, ensuring that competitiveness is once again secured in other more permanent ways.
But in the eurozone, a system to provide such financial support on the scale that would be required to lift a country out of recession - on a scale that would otherwise have been delivered by an interest / exchange rate change - is not there.
How parts of the eurozone get out of recession has not yet been fully tested, but I suspect we are now heading to a time when it might be. And I fear it will not be pretty.
You also say "We need more power for ECB to keep member countries inline with their spending".
But the ECB is totally unaccountable to the people in the eurozone. Why should it dictate parameters for public spending to national governments, who may have been elected on a basis of improving public services?
Should such issues not more democratically be the job for governments, and then for people to judge their performance at election times?
Such an idea represents the kind of neo-feudal system I fear the EU is introducing - a pre-Enlightenment throw-back outlook, where it's thought to be acceptable for self-appointed, know-best 'elites' to guide how those we elect rule the rest of us.
That is not democratically acceptable and why I, for one, oppose the EU project.
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To mark_bxl @ 29
Something priced in GBP 3.99 is today worth EUR 5.07 - or GBP 2.50 equates to 3.17.
Imagine Britain was converting to the euro. Can you see those euro figures on a price ticket or, say, printed on the front of a magazine?
Of course not. More likely they would be rounded up to 5.10 or 3.20 (if a seller chooses not to *really* exploit the change).
That's only a few pence increase, but imagine that process applied to everything you spend money on daily.
So conversion would undoubtedly cause inflation, and there was a huge fuss about it at the time euro notes and coins were introduced in the eurozone.
Whether the euro is good or bad for inflation post-conversion is a far bigger debate.
Rather than the average, the problem is probably more about the eurozone's diverse economies getting the *right* counter-balance to their own varying inflation rates, how they can do that without national control of interest rates, and the consequences for people in that country if they don't have sufficient control to get the balance right.
Some eurozone countries have already had such problems, though not yet big enough to cause a major crisis. The real tests are probably yet to come.
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I used to be strongly in favour of a single European currency, and my partner is from the continent, but after living over there for 3 years, I've completely revised my opinion.
Culturally, Europe is much more socialist and controlling, when compared with the historic British attitude of an island nation based on international trade and financial freedoms, as evidenced by our reputation as one of the best places to conduct international business, and our base as the world's leading financial centre.
Using the old dictum that "he who controls the currency controls the nation", by giving up the national currency, you are also giving up much of the control and handing it to another power, with vested interests of its own.
Fortunately, at this point in time, most Britons realise this and are opposed to the single currency. We all know which way a referendum would go, so why even bother going to the expense and hassle of having one?
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sooner or later the the euro will blow up in their faces.Even daft Gordon brown knows this.Think of the euro as a elestic band the poorer countries pulling it one way and the rich pulling it the other sooner or later the band will snap.The British love the pound for better or worse and dont want to hand control of thier currencey to muppets in brussels.Whats the point and talking about the euro its not wanted ere .It looks like a childs designed it.
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ask an average person in the euro zone which currencey they like there old national currencey or the forced on euro currencey opinion polls shows the euro is not loved as much as mark beleaves it to be.
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As the EU biggest exporter without the UK being in it in the long term the euro is doomed like the Titanic .This is why the euro idiots want us in to prop up there slowly failing currencey
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If one interest rate does not fit all parts of Europe, why should it fit all parts of the UK?
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"Euro"-phobes,
You've got a problem and it must be just jealousy. Read your posts and one can see that you are almost desiring the Euro experience fails, whilst nobody wants any bad for the Sterling.
Saying that people in Euroland miss "their national currency" is simply "the good old days" common thought and "Eurolander consummers can buy less with the Euro" is also the populist complaint about how expensive is getting life day by day.
So stay away with your beloved pound and don't be jealous with malicious arguments. I don't see the continent is bullying UK to get into the Euro. So take it easy.
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Mark, a few points to add:
1. Governments in the eurozone find it easy to blame the euro for inflation, when it's either their own policies or (as likely) global inflationary effects (eg Oil and grain prices).
2. Do you really think that those countries that have seats on these, as yet unknown, international finance bodies will give up those seats and support a single EU seat? The EU members (nation-states) are not (and never will be) so supine.
3. Just to give eurosceptics another little shiver - of excitement - the Iranian president is on record as saying he would contemplate basing Iranian oil prices in euros, rather than dollars.
Funny old world.
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You are all over-analysing this. The Euro is a sub-project within the grand scheme to build an undemocratic super-state for Europe. Those who prefer the despotism of Brussels to the democratic nation-state want the UK to adopt the Euro; those who prefer democracy to rule by unelected bureaucrat do not. Everything else is unnecessary detail.
P.S. to Gruenebaum1(16): Do you believe that every country in the world that would like to join the EU should be allowed to? And if you do not can you explain why you are not a xenophobic "little European"?
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41. At 8:06 pm on 07 May 2008: Freeborn-John: I think are over simplifying a rather complex body of differing interests. I for one do not fit into either of your categories.
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Had the UK joined the Eurozone when the currency was first launched 10 years ago, one pound was worth 1.62 euros. Now it's 1.27 euros to the pound and falling.
This Johnny come lately attitude will cost the UK dear once the Euro is worth more than the pound and imports become suddenly become quite expensive, not to mention the diminished buying power of UK consumers.
@ Freehorn John no. 41: who is this unelected bureaucrat/despot which crops up so often in your enlightening posts? I was under the impression that it's us in the UK with an unelected despotic PM/Government sending my son to an illegal war in Iraq whilst punishing low-wage earners by abolishing the 10p rate.
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Freeborn-John,
'The Euro is a sub-project within the grand scheme to build an undemocratic super-state for Europe.'
Politicians are doing nearly everything they do in selfinterest. Would a complot 'to build an undemecratic superstate for Europe' against the wishes of their voters be in their selfinterest? Probably not.
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establishment of the Euro was, and is, a political not an economic measure: a key stepping stone on the road to 'ever closer union' whose end objective is a federal European super-state.
For the British the question is political, not economic: who should run our economy? Our own government - whom we can vote out from time to time, or unelected officials located somewhere on the continent who answer only to the elites who run the European Project?
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Re post 43 Ravenseft wrote that 10 years ago the pound was worth 1.62 euros. Wrong on two points.
First the Euro did not come into play until 1/1/1999 when the value of the pound was 1.42 euros. In January 2000 it went up to 1.62. It reached peak of 1.70 around October 2000. Since the intervening 7 years or so there have been peaks and troughs on a fairly regular basis. In the last 6 months it has been falling, largely due to economic problems in the U.S.
It is likely that in the next 12 months it will follow a similar pattern and go up again, undoubtedly it will fall and rise many times in the future. That is what currencies do, including the Euro and the dollar. People do not understand world economics if they do not understand that. A few years ago the pound was reaching parity with the dollar, now you can almost get two dollars to the pound. I have no doubt at some point the pound will weaken against the dollar and so the cycle continues.
No one should read too much into currency movements over such fairly short time periods.
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Problem is Britain used to have an Empire and Johnny foreigner knew his place.
How pleasant to know for all time the cost of trading with our largest trading partner, no unexpected fluctuations to steal profit margins. Bad for the banks of course who daily earn a fortune taking a cut of every deal done with the Eurozone. How pleasant to know that when I travel I can rely on the value of my money. How pleasant to have low interest rates. How pleasant to have a strong curremcy when importing goods from the rest of the world. How pleasant to be a team player and not a carping outsider.
No Queens head on the banknotes, never has been in Scotland, but then that country will be in the Euro long before the rump of the UK.
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Signs are appearing that the Eurozone is in poor health, with rising inflation and declining consumer spending.
http://news.bbc.co.uk/1/hi/business/7387761.stm
The ECB has little room to manoeuvre with the single interest rate instrument while at the same time it is undermined in its efforts by the reluctance of member governments to bring their expenditure under control.
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I tire of the repeated eurosceptic references to "unelected bureaucrats".
Would one of them care to enlighten me as to where one will find elected bureaucrats - other than perhaps dogcatchers in US backwaters.
The most powerful woman in the world, US Secretary of State Condoleezza Rice, is "unelected" (something that one SHOULD find disturbing) but does she count as a "bureaucrat"?.
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Greypolyglot (49): Condoleezza Rice does not hold the monopoly on all proposals to changes in EU law superior to any other for 500 million people and which cannot be blocked by any democratic parliament. Such power is inappropriate for the unelected bureaucrats of the EU Comission.
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I thought Merkel was the most powerful...
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When you give up control over your money and your borders, you have effectively given up sovereignty and control over your own destiny. Britain has one foot through the door and the other on a banana peel. It's only a matter of time before Brits bow down to Brussels.
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UK should not go to the Euro. The French and German economies are not keeping up with new ideas of industrial organization as the industries in the UK are doing.
Another problem is the birth rate in France and Germany and in the Netherlands also. Those countries are going to have serious economic problems that perhaps the change in industrial organization that the UK is doing may save the UK economy and therfore its money. Only the USA, Australia, China, and the UK are making these changes. Japan is out of the economic race. Population growth and lack of immigrants is killing Japans economy.
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To -StuartC- (32):
Get out of jail cards never come without costs. Usually get of jail cards are, especially when devaluing money, actually are paid by everybody, by decreasing the value of money and increasing governments, companies and private individuals debt that is in foreign currency. Basically using devaluing or revaluing money is just one form of shift of money from one hand to another. The same can also be said about using interest rates or changing supply of money to address an economic problem. I strongly object to that, and think we are in much better state when politicians don't have an option to just bail out themselves by using others peoples money.
I also object to an idea that money is something that gets a country out of recession. Recession is always an markets reaction to correct itself, and thus necessary. For country to get out of recession, it needs to re-align its' policies and make reforms to better meet the needs of the day. If in example we look at Germany or Italy, witch both have suffered from low growth, no monetary support can fix their structural problems that cause the problems. Same too with Finland in the beginning of 90s when we lost 13% of our GDP and our unemployment rose to 18% due to collapse of trade with Soviet Union. Yes, our currency was devalued then and our short term interest rates rose to near 20%, which themselves deepened the recession. The correct solutions at the time, and today, would have been decrease in salaries, reforms in goverment spending and bureaucracy, re-alignment of goverment industrial support and development programs. Yes, these things are hard to do, but actually do solve the problem, and eventually allow much stronger base and growth for economy. In case of Finland the necessary changes transformed it from inflexible jobs markets to flexible, and allowed the growth of Nokia led telecommunication, electronics and ICT sectors that are now bigger than traditional forestry and machinery industries. So no financial support, it's not an real option to solve problems.
It should also be noted that ECB is directly unaccountable to the people of euro zone countries because that was there wish. When Euro and ECB was formed, it was agreed that the central bank should be independent from politics and politicians. This agreement was then approved in national parliaments when they decided to join Euro. Same too with growth and stability pact. Now why should ECB have a say on how national governments spend? Well, because their spending affects the whole euro zone. Now on what authority should ECB have a say? Well, the national governments agreed on Stability and Growth Pact that dictates that annual deficit should not be no higher than 3% and national debt should be lower than 60% of GDP. The problem has been that ECB hasn't used it's power yet enough to put countries in line with their finances.
The reason why I think that we should have sound and strict financial policies, and an independent central bank, is because politicians only focus on short term gains and concentrate not on long term survival. It's not neo-feudalism, it's a solution that a democratic process has deemed suitable. It's the same with military too, it's just too important for long term survival that you can't let day to day politicians interfere and run it. Of course you need supervision, with army it's the commander and chief, the president, and in case of ECB, national parliaments do in the end have a power to de-attach from Euro, but that of course comes with bill of it's own.
I think that when we discuss about Euro and ECB, we really should focus more on pragmatism and end results, than does it look similar to other solutions. The thing is, European Union, is not a confederation nor its a federation, it's a one of a kind solution to one of a kind problem. Same too with Euro, it's a one of a kind solution to one of a kind problem. Thus ECB doesn't have to work like Fed or other national banks to function, as the ground where its functioning is very different.
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GeneralVaclav,
'Another problem is the birth rate in France and Germany and in the Netherlands also.'
Birth rate UK: 10,7
TFR UK: 1,66
Birth rate France: 12,7
TFR France: 1,98
Birth rate Germany: 8,2
TFR Germany: 1,41
Birth rate Netherlands: 10,5
TFR Netherlands: 1,66
With exception of Germany the demographics of all the nations you mentioned are doing fine. But wat exactly has birth rate to do with economics? The economies of Germany and Japan started to grow shortly after their populations started to decline.
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Freeborn-John 50)
"... the monopoly on all proposals to changes in EU law superior to any other for 500 million people and which cannot be blocked by any democratic parliament. Such power is inappropriate for the unelected bureaucrats of the EU Comission."
The right of the Commission to propose law was granted by the elected heads of government. It wasn't in some way "seized" by your "unelected bureaucrats". But then maybe you know better than a bunch of mere elected heads of government?
Note "propose": before approval everything gets pored over by the 'elected) Council of Ministers, the (elected), European Parliament, and the European Economic and Social Committee (an advisory body representing employers, trade unions, farmers, consumers and the other interest groups) and the Committee of the Regions (an advisory body composed of representatives of Europe’s regional and local authorities. )
All very undemocratic and dirigiste!
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Wondring about the "one size fits all" arguement against the euro. Every currency has interest rates for everyone that must benefit some more than others - UK£ rates must work for cornish fishermen and london estate agents and US$ rates apply to oil workers in Alaska and retired opticians in Florida. What mechanism allows these disparte groups to accept the same rate and why does this same mechanism not apply to the Euro. Can't just be language as eg Swiss franc and Indian rupee work across multi-lingual countries?
Can anyone shed any light?
You're all doing very well !!
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Jukka-Rohila has made all the pertinent economic arguments for the euro citing the experience of Finland.
But I would dare to suggest that the economic arguments are beside the point. The euro was always a political undertaking and the only question was: would it work?
We now have the answer, at least as far as a core of countries is concerned (Germany, Austria, the Netherlands, Belgium, Finland and a few others).
The question, moreover, is not whether the euro suits all Member States but whether those Member States whose policies are out of line - excessive budget deficits, unsustainable wage increases etc. - will be obliged to remedy the situation. The answer is almost certainly yes because the cost of leaving the euro, or even hinting that this might be a possibility, is higher than staying.
The economic policy test is just beginning for Ireland under a new Prime Minister. The Celtic Tiger has decamped.
The cases of Denmark and Sweden are instructive. The Danish krona is in lock-step with the euro as part of ERM2. The Swedish krona also seems to be staying within a fairly narrow band which suggests that the Swedish monetary authorities foresee ultimate Swedish membership. Both the Danish and Swedish electorates rejected adoption of the euro by referendum. This suggests that there is little popular support in "comfortable" economies for the rigours of a monetary union. (Denmark is reportedly, reconsidering).
Incidentally, a falling pound Sterling increases the cost to the UK of EU membership as the EU budget is, of course, now denominated in euros.
Standing on the sideline saying that something will never work is not a policy. John Monks is right.
The argument that there are no compensating federal shifts of expenditure (automatic stabilisers) cannot legitimately be used by those opposed to a any suggestion of federalism in the EU undertaking. In any case, the choice was quite deliberate and is reflected in the decision to make the ECB totally independent of participating national governments and confining its mandate to monetary stability. As in many other areas, the EU approach is unique and, when contrasted with the recent collapse of the US dollar and Sterling, it seems to work (whether economists can agree as to why being rather irrelevant).
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Unfortunately the downside of being in the Euro is that it removes from the markets and the Member Governments the ability to adjust the value of the local currencies against those of their trading partners. Therefore if the individual member states do not bring inflationary pressures such as consumer price and wage cost increases under control and into line with the Eurozone average then their workforces will become increasing uncompetitive compared with the more fiscally disciplined members of the Eurozone. There are indications that this is what has been happening in Italy with the real level of inflation being higher than the headline rate resulting in a relative decline in the competitiveness of the Italian workforce.
So fiscal discipline at the member state level is essential in order for the Euro to remain stable, but there are indications that not all members of the Eurozone take this seriously. If member states fail to bring down government borrowing they are effectively exerting upward pressure on the Eurozone interest rates in order to attract buyers of their government bonds and debt. In this way, they export their lack of constraint to other members of the Eurozone in the form of higher than necessary Euro interest rates. This unfairly penalises the low inflation member states of the Eurozone, while at the same time not being sufficiently high enough to constrain the more wilful Governments. This unfair penalty is probably recognised by the Governments of the former, but appears to be accepted as the political cost for the stability that the Euro brings to their partners and their exports.
During the stable, low inflation period that has existed during the early life of the Euro, this cost has possibly been at an acceptable level to the Governments concerned, however during this same period, higher than necessary Euro interest rates will have slowed growth in the low inflation states thus affecting their citizens prospects. These pressures on the more fiscally disciplined states will become more apparent as food and fuel costs continue to rise. The less disciplined states will be less capable of dealing with the rising costs, and are likely to look for a disproportionate increase in borrowing to see them through. Thus healthy member states will continue to experience higher interest rates than they would if they still had their own currencies.
So a strong ECB, with a robust anti-inflationary policy and regulatory powers, is needed to bring the member Governments into line and to act against those that do not comply with the Growth and Stability criteria on an ongoing basis. However this does not appear to be the case, with instead certain member Governments looking for greater flexibility in the application of the Euro interest rates and on Government borrowings, but any relaxing of interest rate policies by the ECB to help maintain growth will just encourage an increase in borrowing. The ECB is effectively toothless, with actions against non-compliant states being determined by the Commission in an inconsistent way.
The negative effect that the Eurozone interest rates have on growth in the more disciplined states is also good reason for the fast growing economies of the east to stay out of the Eurozone, probably until their per capita income levels are nearer to the EU average.
The outcome of this is that there are in-built structural deficiencies in the Eurozone which may float during periods of low inflation, but which will come under increasing strain during periods of high inflationary pressures. The apparent strength of the Euro, and its growing significance as a reserve currency, has attracted funds from the Dollar as interest rates have been cut in the US. However this faith may be misguided with the rise in the value of the Euro likely to test the resilience of the Eurozone system. It may come to the point where some countries may have to be ejected from the Euro. The alternative is that the ECB and/or other member Governments will have to bail out the weaker states with direct loans if the latter become unable to borrow on the open markets.
So yes there is a significant political dimension to the Euro but there are also serious economic risks to the member states which are not immediately apparent to the general public in their day to day experiences of the currency.
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32. At 6:07 pm on 07 May 2008, -StuartC- wrote: But the ECB is totally unaccountable to the people in the eurozone. Why should it dictate parameters for public spending to national governments, who may have been elected on a basis of improving public services?
Surely the Governments of the Eurozone member states agreed to ECB attaining its current powers and authority when they signed up to the relevant treaty.
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33. At 6:25 pm on 07 May 2008, -StuartC- wrote: So conversion would undoubtedly cause inflation, and there was a huge fuss about it at the time euro notes and coins were introduced in the eurozone.
The exchange rate would be fixed in advance of a change over and as in those countries that have already joined, there would be a requirement to display the prices in both currencies. It would therefore be self evident if prices were to be rounded up with recourse to the law against offenders. There would also be some downward pressure on prices since exchange rate costs would be removed from imports.
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54. At 10:18 am on 08 May 2008, Jukka_Rohila wrote: You make some very good points.
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Just thowing in my 2p (or should that be in euros).
So far we've seen the euro in 'boom' times. We don't know how 'sucessful' it is until its been through at least one 'bust' cycle.
So far I prefer to be out of the euro - but thats because its suits my circumstances to be outside it.
From what I can see the UK seems to be doing better being outside it - but 10 years is only a short time in the scheme of things.
Time will tell if it is a good or bad thing. But people like to point at the short term things. Long term is the thing - but people want their headlines and information to support 'their' arguement.
So far all I've seen is more 'bad' than 'good' things. But I am trying to look 'beyond' the politics. 10 years is a short time - too many 'closed' finance/markets still in europe for a valid comparison.
Thats my thoughts anyway.
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58. At 4:02 pm on 08 May 2008, DenisOLeary - a few points:
There was certainly a significant political factor favouring the birth of the Euro, however now that it exists the practical problems of making the Eurozone work must come to the fore whether EU politicians like it or not. It may be politically expedient to overlook some of the issues, but there is considerable economic risk to the member states if they fail to take care of the details of the Eurozone's operation. However, so far there has been too much of a free-hand given to some states so risking the long-term stability of the system which, as stated in the original piece, has not been stress-tested yet.
With regard to Denmark and Sweden; I believe the former may be reconsidering its decision not to join following changes to the government, but the latter has determined to stay out of the system (even though they are obliged to join as part of their accession to the EU) by ensuring that they do not comply with the convergence criteria. It should be noted that a number of the eastern candidate members have determined to put off accession to the system.
The pound may be falling against the Euro at the moment, however free floating currencies go up as well as down, and the exchange rate between the two has been relatively stable over the last five years. Yes there is a cost in the transfer of funds between the two currencies, but our exports will also become more competitive if the Euro continues to rise against the GBP, while at the same time the relative decline of the Dollar will increase the difficulties of the poorer performing economies within the Eurozone.
John Monk is perhaps being selective in his comments, with the Euro continuing its stead five year rising trend against the Dollar as funds shift to the Euro because of the declining interest rates of the former, and the growing strength as a reserve and investment currency of the latter. However the pound has followed a similar trend, and it is only comparatively recently that there has been a correction in the GBP/EUR rate as funds shift from the Dollar into the Euro.
I think instead one should pay more attention to John Monk's motivations for making such comments, and I think that is very clear in the fact that he represents the European Trade Union Confederation. I would therefore assume that his comments are politically motivated rather than being based on hard evidence, with his statement that Britain would have been better off in the Euro being made without supporting evidence. He also seems to have forgotten Britain's previous experience with joining European monetary systems.
Monk's expressed opinion that devaluation of EU currencies against a rising DM would have been a bad thing fails to realise that the rising Euro will have a detrimental impact on the weaker Eurozone economies because they will not be able to adjust exchange and interest rates in line with the dynamics of their economies. Overall, I think John Monk's opinions are illustrative of the preference for presentation over substance that pervades the EU establishment and so should not be taken too seriously.
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without full politcan union within 10-20 years the euro is doomed.I cant see any member wanting this apart from Germany.The uk will never go into this kind of union and this is why we dont have the Euro rule the pound
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64# Lorentz. I do not disagree with anything that you say. My general point is that a debate regarding the economics of the euro cannot come to any particular conclusion, one view being very much as good as another. For example, structural rigidities in the core countries are also a cause of inflation (lack of labour flexibility, lack of competition in distributive trades etc) not just the behaviour of the less disciplined member states of the Eurozone.
These are matters for debate. The acquired credibility of the euro and the ECB are not.
My point about Sweden was that, on the evidence, there is no desire to see the krona fall dramatically. (Sweden has availed of the devaluation route on several occasions). As I understand it, it is the status of the Swedish national bank which is the "technical hitch" allowing Sweden to get around her treaty obligations.
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Jukka_Rohila @ 54 wrote: "I also object to an idea that money is something that gets a country out of recession"
You make some fair points. But the changes you suggest are better suited to recovering from recession take time for their effect to be felt. And countries (people!) generally need to recover economic growth as quickly as possible.
That's where the need for large cash injections come in, not just for ways to stimulate growth by funding perhaps otherwise unaffordable tax cuts, but also to support essential public services while the country is in financial trouble.
I repeat - there is no system in the eurozone to achieve this for a participating country on the scale or speed that a short-term fix of an exchange / interest rate change would have been able to.
The eurozone has not been tested in such a situation, so I don't think it's such a sin to 'stand on the sidelines' as it is sometimes put (keep economic control, as others put it) at least while a system is tested in all circumstances.
DenisOLeary @ 58 wrote: "The argument that there are no compensating federal shifts of expenditure (automatic stabilisers) cannot legitimately be used by those opposed to a any suggestion of federalism in the EU undertaking."
A rather neat dismissal of the point, don't you think?
Certainly the argument that financial stabilisers should be *introduced* cannot be made by someone who doesn't want to give the EU more powers, or at least much more money.
But I don't think it's unacceptable for a non-federalist to point out this omission when discussing whether the eurozone can truly work in the interests of all its participants.
In any case, I dispute that the EU is federalist, as its history is to consistently gather decision-making powers from lower (mainly national) levels of government to the Brussels centre, and none pass back.
What exactly is federal about that ... that national governments still retain some major powers, for the moment?
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Lorentz @ 60 wrote: "Surely the Governments of the Eurozone member states agreed to ECB attaining its current powers and authority when they signed up to the relevant treaty."
I personally cannot class as a democratic act elected governments handing away such powers (which do not ultimately belong to them but to the people) to a largely unaccountable body.
Especially without even asking people directly - for example, by referendum.
It is then an even bigger democratic insult to find that the body which has received the powers explicitly prohibits by treaty article any elected person attempting to influence their decisions.
This is not democratic progress! And that, ultimately, will always be dangerous for peace and prosperity, because effective democracy is the only real guarantor of those things.
Lorentz @ 61 wrote: "The exchange rate would be fixed in advance of a change over and as in those countries that have already joined, there would be a requirement to display the prices in both currencies. It would therefore be self evident if prices were to be rounded up with recourse to the law against offenders."
Well, you say that, and that makes sense in principle. But the fact of the consumer uproar that accompanied the introduction of notes and coins shows that, in some way, that didn't really happen. And people paid higher prices. Unless you think they all imagined it?
And you wrote: "There would also be some downward pressure on prices since exchange rate costs would be removed from imports."
True. But this applies only specifically to products (and not services) that have crossed borders, and only *if* those savings were passed on by importing businesses to consumers.
What's the betting that in most cases that didn't happen and company profits were increased instead?
Hence, not much in the way of downard pressure from that source, relative to almost every single retail price being rounded up (even if only slightly).
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Having lived in the UK and US, it's certainly true that the UK's economic culture is closer to that of the US than continental Europe's, an argument to stay out of the Euro and to have a Norway type association with the EU. On the other hand from where I live now, I can (freely) visit by car 5 EU countries is 3 hours time. That's maybe important for UK people to understand, as it gives a totally different view on country borders and national sovereigty, even more so given that these borders have been shifting all the time.
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66. At 8:45 pm on 08 May 2008, DenisOLeary:
> My general point is that a debate regarding the economics of the euro cannot come to any particular conclusion, one view being very much as good as another.
I tend to believe that it is quite possible to draw conclusions about the workings of the Eurozone by analysis of the evidence and the discarding of the politician's pixie dust. The only difficulty being that I personally do not have the time to do the work myself, however I am sure that there are those that have gone through the process and whom are well acquainted with the risks and short comings of the system.
> These are matters for debate. The acquired credibility of the euro and the ECB are not.
Nor will I deny that the Euro and the ECB have acquired credibility but I believe it to be, at least in part, misguided. There are clear gaps in the governance of the Euro, along with evidence of inconsistency in the application of those regulations that exist at present. So as already mentioned elsewhere in this debate, it is still early days and the Euro has yet to be fully tested.
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> 68. At 9:36 pm on 08 May 2008, -StuartC- wrote
> I personally cannot class as a democratic act elected governments handing away such powers (which do not ultimately belong to them but to the people) to a largely unaccountable body. Especially without even asking people directly - for example, by referendum.
It may not be democratic, however that is the way the UK Government works; there is no long term history of the Government submitting treaties agreed with other states to a public referendum for approval by UK subjects. There is perhaps room for change so that future developments are first debated in Parliament (such as in Denmark?), but at the moment that is not the case, with the Government being given the mandate to agree to such treaties at the time of its election. The broken promises made by the parties to submit the Constitution to a referendum is something you are best taking up with your MP.
> It is then an even bigger democratic insult to find that the body which has received the powers explicitly prohibits by treaty article any elected person attempting to influence their decisions.
That provision is designed to prevent political interference in technical decisions; the role of the politicians is to set the policies and to then see that they are complied with by the technocrats while allowing the technocrats to get on with the job. Pretty much the same as with the Bank of England.
> This is not democratic progress!
On the contrary; it stops political interference and allows those that know what they are doing to get on with the job.
> Well, you say that, and that makes sense in principle. But the fact of the consumer uproar that accompanied the introduction of notes and coins shows that, in some way, that didn't really happen. And people paid higher prices. Unless you think they all imagined it?
I have to say that I am not aware of any such uproar, though no doubt there were cases of abuse. Is it possibly that this uproar was another construct of the British media? Most of the issues I recall were technical items such as ATMs running out of cash. There may have been more serious problems reported in different parts of Europe but I seem to recall that in general the change over in the various states was thought to have gone quite well. I am confident though that anything the French can do, we can do better :)
> And you wrote: "There would also be some downward pressure on prices since exchange rate costs would be removed from imports." True. But this applies only specifically to products (and not services) that have crossed borders, and only *if* those savings were passed on by importing businesses to consumers. What's the betting that in most cases that didn't happen and company profits were increased instead?
Quite right; that is why I used the word 'some' to avoid quantifying the extent of the savings.
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It's a paradoxe how much some Eurosceptic British are concerned about the lack of democratic representativity in EU institutions.
The turnout at the last elections in England and Wales was only 37 per cent! And the most worrying sign is that nobody seems to care!
Don't you think is prioritary to focus first on why British electorate feel so distanced from their nearest governments? Is such a low turnout enough representative?
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I'm just wondering why, UK aside, such countries as Denmark, Norway or Switzerland don't seem to see benefits in joining euro-zone.
After all euro is doing exceptionally well as any major EU exporter will happily acknowledge.
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Being able to travel from Lisbon to Helsinki, and from Nicosia to Dublin (overflying UK), without the harsh of changing currency (and losing) is a powerful reason to be jealous, I know, especially among those ones whose obsession is to see a weak and disunited Europe, like in the older days.
However, the good performance of Finland, including her exporters, is creating doubts inside neighbouring countries, like Sweden or Denmark. Same case for Ireland, richer now than UK. Or even Luxembourg, towards the europhile French Switzerland.
In the meantime, several European countries are knocking the Euro's door. Welcome to Slovakia, by the way. Who's next?
Jealousy has never been a good advicer.
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> 72. At 09:49 am on 09 May 2008, betuli wrote: It's a paradoxe how much some Eurosceptic British are concerned about the lack of democratic representativity in EU institutions. The turnout at the last elections in England and Wales was only 37 per cent! And the most worrying sign is that nobody seems to care!
The 37% is I believe for the recent local elections which do historically have a low turn out. You are therefore not comparing like for like. If things go wrong with the local Council it is normally something like rubbish collections, maintenance of parks, or social services and the negative effects involved are comparatively limited in scope and magnitude. We know that Councillors can be removed at the next election, and UK authorities brought in to maintain standards and if laws are broken. In general local councils work well.
In the case of the EU the democratic accountability that exists is seen to be some what feeble. For example, the EU Parliament is supposed to vet and approve EU Commissioners, yet one of the current Vice Presidents of the Commission was previously convicted of fraud. What's more, that information was withheld from the Parliament at the time that the current Barroso Commission was presented for approval, yet the person concerned is still in office. I suspect that the EU Commission has influence over much greater funds than my local council. It is issues like this that raise concerns about the democratic accountability of EU institutions.
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> 74. At 10:42 am on 09 May 2008, betuli wrote:
I think it is not a matter of jealousy, more that of level headedness. Most of the points you make are rather superficial and weak when it comes to justification of the benefits of the Euro, with no consideration of the effects at the macro economic level.
Perhaps you would like to read about Ireland in this article to broaden your views:
http://news.bbc.co.uk/1/hi/business/7386685.stm
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Lorentz @ 71 wrote:"It may not be democratic, however that is the way the UK Government works"
Sadly, that's true. But is that also not the way almost every eurozone government worked when they signed up to the euro? How many had referendums before euro membership, for example?
You wrote: "Pretty much the same as with the Bank of England."
That is not correct. The Bank of England is far more accountable and ultimately, if necessary, controllable by our elected government than the ECB is by eurozone governments. It's all explained in the Bank of England Act 1998.
Re. euro price rises, did you not hear of the term 'teuro'? That's German - so not invented by that 'nasty' British media.
I think there's a clear conflict in the EU debate between the idea of democracy and what could be seen as the quite sinister idea of "stopping political inference" - also sometimes represented by the euphemism "efficiency".
The question is: where do we draw the line in 'stopping political interference' in how people are governed, while still maintaining responsive democracy?
I fear, for EU supporters, the line always tends to be drawn too far away from democracy, because they are distracted from such essentials by a 1950s utopian European State dream.
That course can only store up stability problems for the long-term, once people discover - typically in a time of crisis - that those they have taken the trouble to elect really aren't in control.
And that can be a very serious situation indeed, which is why I really worry for the future about the EU's direction.
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"Another thing that I am confused about is, whenever I talk to my friends from Germany, the Nederlands, Italy, Greece, they keep complaining about how their purchasing power went down overnight, yet we see this giant economic power. How come public opinion can contradict to economic indicators so much?"
It's true that many complained but I think people complained as it took a long time to get used to having fewer units of currency. Supermarkets in the Netherlands showed dual pricing long before and long after the euro was introduced as an actual currency and in reality nothing changed. What people do forget is that we are now several years further so conversting back to the old currency is unrealistic. Of course prices have gone up but if I also convert my salary it sounds high as well!
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Lorentz,
When you say my points are rather weak and superficial it is because I'm just talking as common ordinary people. If it is the case, I totally agree.
I stay far away from the macroeconomical reasons, which I broadly ignore, but they have always multiple, even contradictory interpretations.
What everybody can see is that none Euro-country want to come back to its former national currency and also there are always other nations lining up to embrace the Euro.
It's a common attitude not to applaude what is already done, but complaining over life difficulties. If the source of this complaint can be easily spelled and tangible: Euro, much better.
It's simplistic, common, ordinary stuff... but it's like this.
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betuli @72 wrote: "The turnout at the last elections in England and Wales was only 37 per cent! And the most worrying sign is that nobody seems to care!"
You're right to point that out. That is an issue of great concern, and I would think you would find that many of those who perceive an EU theat to democracy would actually care about that problem too.
I have two responses:
1. I'm sure no-one imagines our own democracy is perfect - very far from it! But I don't think the fact of problems in other areas means changes that make our democracy even worse cannot be argued against. Such as, handing considerable powers to EU institutions of people we don't elect and cannot control in any meaningful way.
2. Maybe the British people aren't so silly, and low turnout is explained by realisation that those national / local elections mean increasingly little, while ever-more decisions-making is done by the EU. Even for local elections, now that the EU's decisions are influencing even issues like waste collections policy.
This sentiment is often represented on the street as: "It doesn't matter who I vote for, nothing seems to change".
I'm sure we here, discussing the EU, do not need to wonder why this impression is growing, and very likely as a consequence turnout is falling.
I believe this anti-democratic direction in which our continent is travelling, due in most part to the EU project, is a very dangerous one for the future indeed.
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StuartC,
You say "low turnout is explained by realisation that those national / local elections mean increasingly little".
Well, StuartC, I live in nowhere else but a city (local elections), and as a non British Londoner, I find a huge difference to have Ken the Red or Boris the Blond as a mayor.
I consol myself that in London the turnout was considerably higher than the national average: 45 per cent, wow!, although it doesn't fulfill my expectations: at least half of the electorate.
And you immediately add one more thing: "while ever-more decisions-making is done by the EU".
This point overshadows your first reason: check the British turnout in European elections to see it's even lower than the last local one.
Despite this discrepancy, I agree democratic deficit in EU institutions is a problem to face. How to do it? For me the answer is more Europe, for you it might be less.
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betuli @ 81 wrote: "This point overshadows your first reason: check the British turnout in European elections to see it's even lower than the last local one."
Not really. It could be said that the British people realise that the European Parliament has similarly little control of EU decisions too.
As the most part is decided by the Commission (with the sole right to initiate laws) together with the Council of Ministers (with majority voting).
Or maybe it's because, due to the PR list system, very few MEPs are likely to lose their seats as a result of voting anyway. Those put by their parties at the top of the lists are all but guaranteed to be returned to the EP.
So it's easy to imagine people similarly wonder why they should bother to vote in European elections too.
The bad news for EU fans is that the EU can never be truly democratic, even if you make bodies like the Commission or its President fully elected.
The EU has no demos - no people with enough in common to consent to be governed together, and accept the will of the majority. We don't even all speak the same language.
A demos is such a fundamental pre-requisite for democracy that it's actually half of the word!
It could be said we even have demos problems within the UK, for example the issue of Scottish independence. So what is likely, ultimately, at the EU level if ever more powers are passed to Brussels?
So 'more Europe' of what we see today can only equal a worse problem. I believe we need to reconstruct this 1950s relic into something new and better for the 21st century.
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vote ukip at the next euro elections
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Replying to #70 Lorentz. I put my point badly. What I was trying to say is that there is little empirical evidence to support one side or the other in the matter of what are the economic factors which have (i) made the euro a success or (ii) which are likely to cause it to fail.
I happen to agree with the points made by Jukka_Rohila (and he has some empirical evidence from the Finnish national experience to back him up).
As to UK contributors who are opposed in principle to the euro, I cannot see what possible locus standii they have in the debate. It does not concern them (except that Sterling's current weakness - whether intentional or otherwise - increases the UK's contribution to the EU budget).
To create a common currency is a political and not an economic undertaking, almost by definition. The UK has chosen not to participate largely, it seems, because of the view taken by the current Prime Minister. That was a political choice, as Mark pointed out in his opening contribution, the famous five points being nothing other than a smokescreen.
Time will tell whether the choice was a good one. (The latest news is that Denmark is definitely going to review its position via another referendum. Assuming a successful outcome, this will be an incentive to Sweden to follow the same path and will leave the UK as the only country with a formal opt-out).
Real-politik will ultimately guide UK choices, as is the case with all States. One element will be the knock that the City of London has taken as a financial centre because of the Northern Rock fiasco. (An intriguing feature of the collapse of the bank was, incidentally, the suggestion that had it had lines of credit open to the ECB through its Irish subsidiary, it might have been able to survive).
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StuartC,
You're right pinting that any government needs a demos to address its policy, but a demos in the 21st century is not defined by language or culture, but by sharing a common project.
And probably there was alreedy a demos 21 centuries ago under the Roman empire, but that's not the point now.
For instance, the 22 Arab states share same language and culture but there is not any Arab demos (so far), neither any Hispanophone nor a Anglophone demos.
Also a demos is nothing innate or steady, but a reality in continuos process of creation. In this sense Europe is creating her own demos.
New generations across Europe are now much more similar among different nationalities than our grandparents were, thanks to mobility for working or studying purposes (free circulation of workers, goods and university exchange programmes) and new technologies.
The necessary political reforms in EU institutions will eventually reinforce this nascent European demos... Would you become a europhile by then?
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85: "but a demos in the 21st century is not defined by language or culture, but by sharing a common project."
21st century? a country managed to pull this off in the 19th century, during the height of nationalism which swept across Europe, one European country with four different languages managed to unite under a federal state: Switzerland.
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?
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DenisOLeary #84:
“Time will tell whether the choice was a good one. (The latest news is that Denmark is definitely going to review its position via another referendum. Assuming a successful outcome, this will be an incentive to Sweden to follow the same path and will leave the UK as the only country with a formal opt-out).”
While I mostly agree with the gist of your comments, DenisOLeary, I never cease to be amazed by the fact that British politicians, media or other interested parties are very aware that the UK may be left as the ‘odd one out’ in relation to the Euro (this was definitely the case *before* the Swedish and Danish referenda) but always remain silent about the fact that the UK is ALREADY THE ONLY voluntary opt-out from Schengen, out of 27 EU members. Additionally all EFTA members (Norway, Iceland, Lietchenstein and – de facto – Switzerland) are already inside Schengen or commited to join (Switzerland will become full member in November this year). This leaves the UK as the ONLY EEA member (out of 29 members, if my tally is correct) to have voluntarily opted out of Schengen, which is, arguably an even more important EU pillar than the euro as it is both an element of the (evolved) Single Market (if in doubt please refer to the preamble to the Schengen Convention ‘'WHEREAS the Treaty establishing the European Communities, supplemented by the Single European Act, provides that the internal market shall comprise an area without internal frontiers’) and also a fundamental part of the political ‘vision’ of the EU of today, that of the EU as an ‘area of freedom, security and justice’.
I wonder if there is some kind of ‘Orwellian’ selective ‘thinking’ going on?
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To Mark:
Congrulations on the 10th anniversary
of the EURO!
I remember when it was announced and watch
coverage.
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StuartC
Has it ever occurred to you that the English could be said to have started the single currency ball rolling by extending the Pound over time to include the (formerly) sovereign states of Wales, Ireland and Scotland?
And perhaps the United Kingdom could even be construed as a model for the EU?
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> 77. At 3:09 pm on 09 May 2008, -StuartC- wrote:
> Lorentz @ 71 wrote:"It may not be democratic, however that is the way the UK Government works" - Sadly, that's true. But is that also not the way almost every eurozone government worked when they signed up to the euro? How many had referendums before euro membership, for example?
Again, it is the way the British Government works; the Euro and many of the EU institutions came about by treaty between Sovereign Governments which have not been subject to referendum in the past.
> You wrote: "Pretty much the same as with the Bank of England." - That is not correct. The Bank of England is far more accountable and ultimately, if necessary, controllable by our elected government than the ECB is by eurozone governments. It's all explained in the Bank of England Act 1998.
I think there is more than enough room for potetial political interference in the ECB through the way the seats on the Executive Board of the ECB is divvied up between the Eurozone member states. I think you are confusing measures designed to prevent Political Interference with a reluctance to be held accountable (the ECB submits reports to the EU Parliament in Commission in addition to new Executive Board members being subjected to investigation by the Parliament). To call for more political interference is to play into the hands of the likes of Sarkozy, and has perhaps come about through an attempt by the UK Government to gain a foothold in the ECB Governing Council without joining the Euro.
> teuro
Yes I am aware of the term and of its German origin, but just like in the case of the stories of the British Media, I do not think the claims have been substantiated beyond the issues of the inflation rate not accurately reflecting growth in consumer prices; a problem we also have in the UK.
> I think there's a clear conflict in the EU debate between the idea of democracy and what could be seen as the quite sinister idea of "stopping political inference"
The Political Independence of the HM Civil Service was held in high regard, until the Blair Government came along, to ensure that the technocrats conducted their activities impartially and effectively.
> I fear, for EU supporters, the line always tends to be drawn too far away from democracy, because they are distracted from such essentials by a 1950s utopian European State dream.
Britain would probably be a lot better off if it had not been for the wild swings of political policy in this country over the last 60 odd years. I am therefore quite happy to hold back the politicians from wrecking havoc and to allow the technocrats to get on with job so long as they are given a clear remit and are held to account.
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> 79. At 3:23 pm on 09 May 2008, betuli wrote:
> ... I stay far away from the macroeconomical reasons, which I broadly ignore, but they have always multiple, even contradictory interpretations. ... It's simplistic, common, ordinary stuff... but it's like this.
Unfortunately it is not. It may be ticking over nicely at the every day level, but it is the macro-economic conditions that are affecting the competitiveness of various workforces within the Eurozone and suppressing growth in the better run economies. Further, as already commented on above, the stability and resilience of the Eurozone has not yet been tested to any great extent.
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> 80. At 3:24 pm on 09 May 2008, -StuartC- wrote:
The turnout at the last national elections in the UK was 61.3%, up from 59.4% turnout in 2001.
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> 84. At 8:09 pm on 09 May 2008, DenisOLeary wrote: Replying to #70 Lorentz. I put my point badly. What I was trying to say is that there is little empirical evidence to support one side or the other in the matter of what are the economic factors which have (i) made the euro a success or (ii) which are likely to cause it to fail.
I still believe this to be incorrect. The NCBs and the ECB have access to the relevant data, and there are regular news items on reports and analysis of how various aspects of the Eurozone economies are being affected.
> As to UK contributors who are opposed in principle to the euro, I cannot see what possible locus standii they have in the debate. It does not concern them ...
There are those that would want to join the Euro but are concerned about the Governance of the ECB and the disregard some nations have for the Stability and Growth pact so I think their involvement in the debate should be welcomed.
> To create a common currency is a political and not an economic undertaking, almost by definition. The UK has chosen not to participate largely, it seems, because of the view taken by the current Prime Minister. That was a political choice, as Mark pointed out in his opening contribution, the famous five points being nothing other than a smokescreen.
I agree that the motivation for the creation of the Euro was political but should it fail, it's impact will be both economic and political. That apart, there are real technical issues about the GBP joining the Euro as demonstrated by the failure of the last attempt. I also see the weaknesses in the current system as being a major technical concern to those that place greater importance on a well run system vs. political idealism. The political idealism that brought about the merger of the East and West German currencies lead to severe economic problems for the Germany economy over the following ten years. I suggest that the same forces are at play in the Eurozone now, and will also be at play should/when the UK joins the Euro. So although the five criteria may not be practical statements of the technical issues, that does not mean that the latter do not exist and that a responsible Government should not give them due consideration.
> Time will tell whether the choice was a good one.
I am sure it will, but are the citizens of the Eurozone aware of the price they may have to pay.
> Northern Rock
There would have been sufficent lines of credit available through the norman Bank of England funds had the latter acted soon enough.
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85. At 9:34 pm on 09 May 2008, betuli wrote: You're right pinting that any government needs a demos to address its policy, but a demos in the 21st century is not defined by language or culture, but by sharing a common project. ... New generations across Europe are now much more similar among different nationalities than our grandparents were ...
Very true.
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‘He says although there are obviously winners and losers Britain would have been better off with the euro.’
Exactly, so who are the winners and losers? ‘No comment’, that is the politicians answer (if only they were asked by the media, which they aren’t). But aside from economic theories as to the benefits (or otherwise) of euro membership, there are ‘clear and unambiguous’ (to paraphrase Gordo’s rethoric) beneficiaries and clear losers of the British opt-out:
The winners (there’s a surprise…) are the banks and financial institutions with their gravy train in the form of currency exchange fees and commissions (in addition to the standard £1.50 they charge for any transaction in a foreign country)
The losers = ordinary people, i.e. the tens of millions British holiday makers and business travelers that visit the Eurozone every year who have to pay hefty commissions to the banks to exchange their pounds to euros AND the legions of OAPs in retirement in the Eurozone, who lose twice: 1) Exchange commissions, 2) depreciation of the pound.
If it was the other way round, i.e. the banks were the losers and ordinary people the winners, the UK would have joined without delay. But as the banks are by far the dominant sector in Britain’s economy (over 30% of GDP) and they rule supreme (see how the government is prepared to tax the poor to bail them out of trouble), the chances of them allowing Britain and its government to join the euro, thereby losing their ‘gravy train’, are as slim as cigarette paper.
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> 88. At 4:53 pm on 10 May 2008, JorgeG1 wrote:
I thought this was a discussion about the Euro, not Schengen?
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96. At 9:01 pm on 11 May 2008, JorgeG1 wrote:
Yes we are familiar with the transaction costs for ordinary UK Subjects, but this is only looking at the day to day activities, and does not take into account either the medium or long term macro-economic impact of joining the Euro.
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Re: 98, you use complicated sentences to say nothing. Can you explain what is the macro-economic impact of joining the Euro?
As for the day-to-day part, I advise you to monitor the price of spanish tomato or italian asparagus at your local Sainsbury/Tesco... and you'll soon realise that Gordon Brown screwed up long time before inheriting Tony Blair's post.
Some arguments here remind me of those who try to convince you that having the cold and hot water separate (a common sight in the UK only) is better than having a mixer because it saves the hot water :-)
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Re: Jorge 88
Also Eire is outside Schengen. Were it to join, it would have to introduce border checks with Ulster which is now check-free under the "Common Area" policy. So not only the UK is slowing its integration with neighbours, but it is slowing its neighbours from integrating with others.
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Re 80: "Such as, handing considerable powers to EU institutions of people we don't elect and cannot control in any meaningful way."
Why, did someone vote Gordon Brown in? Last time I checked it was Tony Blair... and he got in with 30% of the votes! And, you think this a democracy??
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98. At 9:38 pm on 11 May 2008, Lorentz wrote:
“Yes we are familiar with the transaction costs for ordinary UK Subjects, but this is only looking at the day to day activities, and does not take into account either the medium or long term macro-economic impact of joining the Euro.”
The “medium or long term macro-economic impact of joining the Euro” is something for economists to look into. I am no economics expert although I think I understand a bit more about economics than many self-appointed “economic experts”. For example I have been amazed for many years at the fact that the government and the media were talking about British economic success, superior uninterrupted economic growth, etc, etc. when it was plain to me (and to a minority of other people) that this “uninterrupted period of economic growth” was largely based on a debt fuelled consumer binge where people were using their houses as cash machines to pay for plasma TVs, cars, expensive holidays, etc. Now this is becoming apparent for the “economic experts” as well.
Turning back to the euro, as other posters rightly say above the euro is a political enterprise more than an economic one. The same applies to Schengen and this is the reason I brought it in. But with regards to the euro, as the long term macro-economic impact of joining cannot be factually predicted I prefer to talk about hard facts.
1 Hard fact number one is precisely what I mentioned in my post above, re. “winners and losers"
2 Hard fact number two relates to the myth of the British independence to sets its own rates. It is a clearly and empirically measurable “macro-economic impact” that at every BoE rate reduction the pound depreciates against the euro and the dollar making the mountain of imports coming into this country more expensive. As the interest rate reductions are not having much effect on the cost of mortgages, the only result is inflation, i.e. more pressure on already squeezed household budgets, which is exactly the opposite effect of that intended: So much for the “British independence to set its own rates”. The UK has as much independence to “set its own rates” as it has control of the exchange rate of the pound, i.e. currency volatility doesn’t allow you to have “macro-economic freedom”.
Finally, the reason I mentioned Schengen is that, together with the euro, they constitute the two major – political - pillars of EU integration. It is a fascinating spectacle to look at the Eurosceptic hysteria about the Lisbon Treaty when significant parts of the treaty don’t even apply to the UK because of its opt-outs from these and other EU pillars. As the UK is the only EU member that is not part of either of these two major pillars of EU integration, it is arguably the case that the UK is in an EU of its own, but definitely not part of the one that the majority of countries are in. These are facts, not “macro-economic” speculation.
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> 99. At 01:10 am on 12 May 2008, lacerniagigante wrote: Can you explain what is the macro-economic impact of joining the Euro?
Look back through some of the previous posts. Not sure about the relevance of your other comments.
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> 101. At 01:44 am on 12 May 2008, lacerniagigante wrote: did someone vote Gordon Brown in? Last time I checked it was Tony Blair... and he got in with 30% of the votes! And, you think this a democracy??
In the UK we vote for our Member of Parliament in a first past the post system; not the leader of the Government.
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> 102. At 09:52 am on 12 May 2008, JorgeG1 wrote:
Why so many question marks? It makes you comments difficult to interpret.
> ... I think I understand a bit more about economics than many self-appointed ?economic experts
Not so sure that the experts are self appointed. Not sure about your other comment either.
> .. that this ?uninterrupted period of economic growth? was largely based on a debt fuelled consumer binge where people were using their houses as cash machines ...
Yes the property market has been used to fuel a prolonged period of consumer economy growth in the UK.
> ... as other posters rightly say above the euro is a political enterprise more than an economic one.
As I have said myself, but neither can the macro-economic affects of the Euro be ignored which seems to be the Modus Operandi amongst those that blindly accept all that they have been told about the Euro and the EU in general.
> ... But with regards to the euro, as the long term macro-economic impact of joining cannot be factually predicted ...
As in any economics model it would not be possible to predict an out come with either certainty or accuracy, but it would be possible to get good indicators of the impact and the effects that joining the Euro would have on an economy. Similar models are used to indicate the effects of Eurozone interest rates on existing member states prospects for growth etc.
> 2 ...
Overall, not correct. Over the last five years the GBP has been relatively stable against the EUR and the USD. It is only comparatively recently that the GBP has seen a marked drop-off against the EUR, and that is largely due to the way in which a shift of funds out of the USD into the EUR has taken place with the decline in US interest rates.
Not sure about your weak argument that Britain does not set it its own interest rates; It self evidently does. Perhaps you mean that changes in the UK interest rates are having little effect at the moment due to sharp changes in global credit, USD, Oil, Gold, prices etc? I think you will find that the ECB has pretty much the same problem, with the added difficulty that it has less room to manoeuvre to set interest rates in tune to the conditions of each of the member economies. Thus the tendency will be that the rates will not be right for any of the member states current economic conditions. So I think your argument is more of an own goal.
Add on top of that the fact that the rise of the Euro due to the influx of reserve-currency funds is making EU exports less competitive, is making the Eurozone less attractive for tourists, and is making imports from outside the Eurozone cheaper relative to 'locally' produced products, is having an impact on the internal workforce. That is an unfortunate side-effect of the growing importance of the Euro. I am not using this as a criticism of the Euro, instead it is just a statement of an outcome.
> Finnaly ...
Perhaps if you focused on the specific topic you might make more headway.
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Re: 104 says "In the UK we vote for our Member of Parliament in a first past the post system; not the leader of the Government."
I understand. But I don't understand the "lack of democracy" comments that many in the UK attribute to the EU. After all, you'll agree that proportional representation, though not perfect, reflects better the "will of the people" than first past the post, which guarantees more stability (and maybe so much stability that it ends up being a bit undemocratic). I'm not sure, but in 2005 the Tories seemed to have the highest minority of votes in the UK (in England at least) and yet they failed to grab the government. Even with their 20% lead right now and with an abysmal GB (the man not the island) performance, it's not sure they'll get Westminster.
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Re 103 "Not sure about the relevance of your other comments."
Did you realise that the GBP has lost 15% of its value with respect to the EUR in the last 9 months (since the bubble burst). If that doesn't seem relevant to you, then I fail to understand the points you're trying to make. Unfortunately, for the British economy, services financial/knowledge, which constitute the bulk of UK exports, tend to lose their value with the currency that supports them, unlike commodities such as manufactured goods or agricultural products which are mainly only on UK's import list. Joining the Euro, not only would have turned London into the major financial center with the major world currency but it would have given the UK economy the solidity that service-based economies lack.
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106. At 10:00 pm on 12 May 2008, lacerniagigante wrote:
> ... don't understand the "lack of democracy" comments that many in the UK attribute to the EU. ...
I think UK Subjects tend to be concerned by the extent of the powers held by the un-elected EU Council and Comission; the members of these bodies are either members of teh state Governments, or appointed by them, but I think people are argueing for these to be eleceted bodies, an arguement that has its merits and weakneses.
Yes there are problems with the way we vote for MPs in a way perhaps more suited to a two-party system that the current mix of party interests.
The share of the vote in the 2007 local elections indicated that the Conservatives would have had difficulty in gaining a majority in Parliament even though they had teh largest share of the vote because of teh way their voters were concentrated in specific constituencies.
The 2008 locacl elections showed that they have increased their share of the vote sufficiently to negate this and instead potentially achieve a significant majority at the next election. This was also partially due to teh decline in those voting for teh third party which has for many years squeezed their vote.
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> 107. At 10:32 pm on 12 May 2008, lacerniagigante wrote: Re 103 "Not sure about the relevance of your other comments." Did you realise that the GBP has lost 15% of its value with respect to the EUR in the last 9 months
You started out on another topic in your previous post, but OK.
Yes the GBP has declined by between 13% and 15% over the last nine months, but before that it had been relatively steady against the EUR and the USD for the last five years. However is that not because of the weakness of the USD arising from the falling interest rates rather than the strength of the Euro and the Eurozone Economy? Funds are shifting into both the GBP and the EUR by virtue of their reserve currency status, with a larger shift into the EUR due to the size of the Eurozone (30% of world economy) thus explaining in the main the reason for the differences in their rate of increase against the USD. However this is a short term adjustment and will level out. Yes there is a short term loss but this is a side affect of currency movements and will work in favour of UK exports to the Eurozone. This has to be balanced against the longer term risk to the UK economy in joining a monetary system that is potentially flawed.
> Unfortunately, for the British economy, services financial/knowledge, which constitute the bulk of UK exports, tend to lose their value with the currency that supports them
Yes, most of our exports (about 57% I think) are into the Eurozone, and will now be relatively cheaper due to the rise of the EUR against the GBP. The rise in the EUR will tend to make products of the Eurozone less competitive in the UK. However the UK also trades with the rest of the World most of that trade being denominated in the USD (Financial Services in London are based on many currencies) which has fallen against the GBP so it is swings and roundabouts.
> Joining the Euro, not only would have turned London into the major financial centre ...
London is a major financial centre, if not the major financial centre.
> ... with the major world currency ...
The USD remains the world's major currency.
> but it would have given the UK economy the solidity that service-based economies lack.
The UK economy has been more 'solid' in recent years than many Eurozone economies, and with the ability to adjust rates to the needs of the local economy is likely to weather the coming storm better than those that no longer have control of interest rates having given up control of them to an untested system.
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No. 108 Lorentz:
The value of the GBP has been dropping somewhat steadily since the end of the last war, and "relatively steady" means not losing too much in a short period. Have a look at the report on the Parliament website headed "Inflation: the value of the pound 1750-1998". Taking 1974 as the base date with one pound = 100 pence, in 1998 one pound = 17p.
That London is a major financial centre is undoubted, but at the same time something not to be taken for granted. Frankfurt is emerging as a serious competitor, and several major UK companies have recently announced their intention to relocate overseas.
It is arguable that the dollar is losing its status as world currency as more states convert their currency reserves to the euro. Visiting Cairo last week, whilst the dollar was not accepted, the euro was.
Finally, in post 72 you say that "local councils work well". I would have to disagree with you here - they fail both on a democratic level, as on a best value level. Democratically, they are mere extensions of central government power, with little possibility of challenging their masters' instructions or providing a genuine opportunity for citizens to engage in the democratic process. Financially, they are badly funded resulting in low calibre staff being hired and decisions made on the basis of political expediency rather than local need. I worked in a Council for 1 year, then spent time abroad where I was shocked by how poor "democracy" in this country is whilst compared, for example, to France or Germany.
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I certainly do not agree proportional representation better reflects the will of the people. It will almost always result in a coalition, with agreements being drawn up in back rooms and decisions made to cobble together a workable majority. Minority (often single issue parties) will sell their support to the party that gives them what they want. If necesary a bidding war can occcur. This can result in a Government pushing an agenda that the large majority does not want and did not vote for.
Sometimes it will mean that a party that only secured 5% of the votes has the balance of power and a wholly disproportionate influence on the Government.
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I'm still waiting for an answer to my, perhaps naive, question, why, UK aside, such economically successful countries as Denmark, Sweden or Switzerland don't seem to see benefits in joining euro-zone?
And Slovenians (which did join) are already complaining?
After all euro is doing exceptionally well as any major EU exporter will happily acknowledge, no?
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Replying to #112. I dropped out of these exchanges some days ago and, dropping back in, I see that the debate on the benefits and/or disadvantages of the euro remains a work in progress.
The answer to your question is that the governments of both Sweden and Denmark, who were probably in the best position to judge, wished to join the euro but their electorates did not agree. The issue of trying again is a live one in Denmark.
The Danish krona is in the ERM 2 mechanism i.e. it can only fluctuate within a 2% range of its fixed relationship to the euro. However, the mechanism suits it as the assumption of the markets is that the ECB would come to the aid of the Danish central bank was there a speculative push against the krona. In other words, Denmark is de facto already in the Euro Area without any of the benefits of membership. No wonder her Prime Minister considers the situation as damaging to her economic interests.
All Member States joining the euro got less euros in return for whatever their unit of currency was previously. This was, and remains, a particular problem for countries with a highly debased currency, such as the Lira. (One still sees prices in lira and French francs but, in the latter case, this is not surprising as some French people still calculate in "anciens francs" from the time of a gigantique conversion, I think under De Gaulle).
The only member of the Euro Area to get more euros for its unit of currency was Ireland. This would also be true of the UK.
Having visited Slovenia some time ago, I can see why citizens would be unhappy. Prices were low and economic activity stagnant. Both are now moving upwards. It is the price of success.
Switzerland has always been the exception to every rule. In times of financial turbulence, the role of the Swiss currency as a refuge or bolt-hole currency is a long-standing problem for the Swiss economy.
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Re 110: Frankfurt is emerging as a serious competitor, and several major UK companies have recently announced their intention to relocate overseas.
Indeed, if someone is enjoying the fact that UK ditched the Euro, that's the DAX which is enjoying a rennaissance. LSE went as far as to buy MIB (Milano's stock exchange) last year.
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Re 111 This can result in a Government pushing an agenda that the large majority does not want and did not vote for.
Which is exactly what happens in the UK, where there is no proportional rep. So what's your point? The essential core principle of democracy is that parties compromise once they are in power, even in first-past-the-pole systems they have to do it.
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Re 109: The UK economy has been more 'solid' in recent years than many Eurozone economies, and with the ability to adjust rates to the needs of the local economy is likely to weather the coming storm better than those that no longer have control of interest rates having given up control of them to an untested system.
tested=better? Working on this assumption you negate any progress. Note however that implicitly the UK is also "testing" the Euro, by having most of its exchange there. I'm afraid the lower GBP won't favour that much exchanges (except a higher number of tourists from the continent) and things will stay pretty much the same, for the simple reason that the UK economy is complementary to the Eurozone's. Financial exports are good when the currency is stable, but with a plummeting GBP many investors will shy away.
On the other hand the strong Euro is currently pushing manufacturers out of Germany/France (eg, BMW), but not to the UK. They look eastwards and, ironically, to the USA. The UK has pushed itself into irrelevance from the manufacturing view-point by giving up almost all industry except weaponry. Same for agriculture (while continuously whining about the "unfairness" of the CPA). So a strong Euro/Sterling ratio can only damage further the UK. Many airline carriers are already crying foul for the tourists shying from city breaks in Spain and France.
In fact, like with all things new, the UK will end up joining (or by then it will be Scotland and England and Wales) the Euro later. But, as usual, as followers and moaners, having missed the opportunity to do it as leaders and innovators (courtesy Gordon Brown).
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Re 113: One still sees prices in lira and French francs.
Really? Tell me where, I'd be curious to see that. As for Slovenia, I was there in January, they seem pretty happy to me to have the Euro. They moan about the prices, but that's a standard behaviour in all Eurozone.
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Re 115, my point was in your post at 106 you claimed that proportional representation better reflects the will of the people- I believe you are wrong for the above reasons I gave at post 111, but you are entitled to your viewpoint. What I dislike is the arrogance to suggest the question is beyond doubt and a fact not to be contested. To me it sums up some of the problems on this site with both the euro philes and Euro phobes - there is a middle way but our voices are often drown out in the extremes that are put forward.
I would like to see a Europe of Nation states with freedom to move between them and ply your trade. Where there are no tariifs and no bureacratic measures put in the way of free trade. All the matters I have listed above can be done through treaties between member states.
I do not want the ability to deport some one who has raped and murdered in a country stopped because of E.U. rules. I do not want to see tax harmonisation. I do not want a president, constitution or E.U. Parliament for that matter. I do not want a Common Agricultural policy or any other artificial methods of controlling markets. I do not want another layer of Government at European level.
Back to the original thread proportional representation can end and frequently does in a succesion of short lived weak Governments constantly compromising on core principles - no thank you
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Re my post 118, it does not mean that what I say is right (I believe it is of course) just that it is a valid viewpoint. I have the right to express it in the same way as all others have a right to express their opinions. What irritates me is the line taken by euro philes that we can vote to stay in or get out, but if we stay in we have to be good europeans. That the course was set 60 years ago and we cannot change it now, rubbish! Being a good European to me is doing what I posted above. That includes campaigning against the constitution and further federalisation of Europe.
Re the euro sceptics I do not want to leave the E.U. but do want to change it, or at the very least fight to stop it going any further down the federalist road.
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> 110. At 11:50 am on 14 May 2008, Ravenseft wrote:
> The value of the GBP ...
yes I am aware of the falling purchasing value of the GBP over that period, arising from the periods of high inflation and the high level of debt following WWII affecting the economy. Since then, the GBP has been recovering in value, with its value rising against the USD, though it is still affected by price inflation. Not sure however what this has got to do with the points I was making in the post (108) that you were referring to, nor with the topic if this thread.
> That London is a major financial centre is undoubted, but at the same time something not to be taken for granted ...
Absolutely, and I am sure that the City of London is not resting on its laurels.
> It is arguable that the dollar is losing its status as world currency as more states convert their currency reserves to the Euro.
I guess that it could be argued, but I am not sure that there is much credence to it. The USD is still by far the most important currency in this respect. The size of the Eurozone economy is a determining factor, but the main driving force in the recent rise in the EUR has been the cooling in the US economy and the fall in US interest rates. It is also interesting to note that the JPY has also been declining as a reserve currency during the lifetime of the EUR while the GBP has grown in significance (along with the CHF) as central governments steadily adjust the make up of their foreign reserves.
> Democratically, they are mere extensions of central government power ...
Not true. There is plenty of opportunity, just little actual effort on teh part of the electorate.
> Financially, they are badly funded resulting in low calibre staff being hired and decisions made on the basis of political expediency rather than local need.
A good number of councils are over funded and wasteful, along with some political favouritism of a number by Central Government, however others do a good job with the funds and people available.
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> 113. At 7:42 pm on 15 May 2008, DenisOLeary wrote:
> In times of financial turbulence, the role of the Swiss currency as a refuge or bolt-hole currency is a long-standing problem for the Swiss economy.
It would appear that it is going to be a problem for the Eurozone economies as well:
http://news.bbc.co.uk/1/hi/business/7404489.stm
It would be interesting to hear again from those Japanese car manufacturers that a few years ago threatened to take production to continental Europe if Britain did not join the Euro.
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> 114. At 4:01 pm on 16 May 2008, lacerniagigante wrote:
Isn't the consolidation of the trading exchanges is a bit off topic?
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> 111. At 7:41 pm on 14 May 2008, jordanbasset wrote:
> I certainly do not agree proportional representation better reflects the will of the people. It will almost always result in a coalition, with agreements being drawn up in back rooms and decisions made to cobble together a workable majority...
Surely the above comment illustrates that proportional representation necessitates compromise, requiring legislators to take into account a broader range of opinion and thus does better match the 'will of the people'? Yes minority parties can lead to the problems you mention, but as in the case of the London Assembly elections, where a party must first gain at least 5% of the vote before it will be given any seats in the assembly, there are measures that can be taken to limit this. In the case of the BNP, I think all parties have said that they will not get involved with them anyway. Having said that, I am not wholly in favour of PR at National Government level given that it can lead to indecision which is a more critical issue at that level of Government than in local administrations.
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> 116. At 7:11 pm on 16 May 2008, lacerniagigante wrote:
> tested=better?
Not sure what point you are making here?
> On the other hand the strong Euro is currently pushing manufacturers out of Germany/France (eg, BMW), but not to the UK. They look eastwards and, ironically, to the USA.
The USA is a much bigger market for these companies than the UK is, and so it makes sense to base its production for that market in the country.
> The UK has pushed itself into irrelevance from the manufacturing view-point by giving up almost all industry except weaponry.
Yes, there is a good deal of truth in this point.
> while continuously whining about the "unfairness" of the CPA
UK farmers tend to be much more efficient than say French farmers, and thus they loose out in the CAP system which favours small farmers for what seems to be cultural rather than industrial reasons, and so they are justified in their criticism of the CAP system. Not sure what your point has to do with this topic?
> So a strong Euro/Sterling ratio can only damage further the UK.
Swings and round abouts:
http://news.bbc.co.uk/1/hi/business/7404489.stm
> In fact, like with all things new, the UK will end up joining
I think the UK, or what is left after the UK breaks up, will eventually join the Euro, but I also think there will be some reforms of the Euro before then.
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> 119. At 8:15 pm on 18 May 2008, jordanbasset wrote:
> Re the Euro sceptics I do not want to leave the E.U. but do want to change it, or at the very least fight to stop it going any further down the federalist road.
Realistically, I think increased Federalism is unavoidable and is the continuation of many centuries of changes in Europe. I do not agree with the way it is happening, but recognise that it is the likely outcome.
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Re: 122 Isn't the consolidation of the trading exchanges is a bit off topic?
Well, if you think that then your view of the single currency is very different than mine. In my (maybe limited and simplistic) understanding of the Euro (the topic of the thread), it is to ease exchange among member states. Exchange of goods and services, but also exchange of human power and knowledge resources. To name a stupid example, a personal money transfer from Greece to Ireland, or from Finland to Portugal, costs 2 Euros, the same operation from UK to Holland costs 9 pounds and to Slovenia 21 pounds (and that's HSBC... your "global" local bank)!
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Re 124: >> tested=better? > Not sure what point you are making here?
Read your post. You say that the GBP is better suited to weather the storm than the EUR which is untested. No backing to the argument except the "test" case, which I fail to comprehend.
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>> So a strong Euro/Sterling ratio can only damage further the UK.
> Swings and round abouts:
> http://news.bbc.co.uk/1/hi/business/7404489.stm
I always smile at the sense of glee that Euro"sceptics" get as soon as they see some "bad" news about the EU/Euro... Unfortunately, it's bad for all:
http://news.bbc.co.uk/2/hi/business/7408620.stm
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Re 125: I think the UK, or what is left after the UK breaks up, will eventually join the Euro, but I also think there will be some reforms of the Euro before then.
Let's hope so, the Euro (and the EU) needs a lot of work. It's a pity that the UK (or its components) don't share their creativity in that process. There are many things to be taught and learned from both sides and, frankly, I find it quite stupid to use differences for quarrel instead of creating new ideas.
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betuli @ 85 wrote: "but a demos in the 21st century is not defined by language or culture, but by sharing a common project."
This view certainly serves the EU project rather neatly. But I think it is seriously misguided. Worse, it is dangerous, because a healthy democracy (and therefore prosperity and stability) and are at stake over such questions.
And I really don't think it was the 'consent to be governed together' of a demos that held the Roman empire together, somehow. See: military oppression.
You make a good point about the Anglosphere, Hispanosphere etc. And in a sense you just reinforce my point about the Eurosphere (to use your terminology). As you point out, a demos is of course about much more than just language and culture in common. The lack of those is just the tip of the iceberg of the EU's legitimacy problems!
You're also right when you say "Europe is creating her own demos". The EU is undoubtedly working very hard at it, focussing as you say particularly on young people.
Yet I also find the idea of a governing system spending vast amounts of public money to socially-engineer people into self-serving 'European citizens' rather than of their respective countries a very sinister one.
In the context of liberal democracy, governing systems should evolve out of people's needs and demands, and be democratically endorsed. They are not imposed from above, and people then bludgeoned by propaganda paid for by their own cash into recognising or respecting it.
A system developed in that way cannot lead to a sustainably democratic future.
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Ticape @ 86 wrote: "one European country with four different languages managed to unite under a federal state: Switzerland."
Indeed. And look at how democratic their system is. For example, citizens initiative referendums.
That is how they maintain their demos - the consent of those different cultures to be governed together under the federal state.
Contrast with Belgium.
The EU, on the other hand, isn't just a much bigger mix of cultures, doesn't just have much less day-to-day popular input to its decisions than any national government, but even goes out of its way to *discourage* governments from consulting people in referendums when it reforms itself.
If only Switzerland were truly the example.
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Replying to greypolyglot @ 90:
You may be surprised to learn that that has not occured to me! :)
As I've said previously, the example of the Scottish independence question shows the UK has its own demos problems. So it's clearly far from a model for the much wider-scale EU.
And we are not alone in Europe with such problems. eg. Belgium, Spain.
If we have such emerging consent problems even on the existing national government level, think how they will be magnified as more decisions are taken by the far more remote EU ... even if, ultimately, by directly elected EU leaders and institutions.
Such steady undermining of democracy as the EU gains more powers is not something to cheer, and not a nice idea for the future.
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StuartC,
Europe has no other option but creating her own demos and consequently unified institutions capable to govern it.
What Euroscpetics do is spreading the nihilism, or if you want, the sterile culture of NO.
There is no a serious alternative from people who oppose the European project. Do you think the most powerful state in EU, Germany, is able to face on its own the challenges of globalisation?
The national policies in Europe have failed along the last century... it's constantly demonstrated that divergent positions inside the Old Continent only lead to our weakness, if not something worst.
Therefore being Europhile is not just an option, but a necessity. We can discuss though what to do in order to improve our common organisation, but don't say just NO. It is not a valid answer.
If UK just wants to highlight her insularity, alright, no one is going to force you to participate in a club you don't believe. But it is not fair play to try to undermine and obstruct the process: just get out and good luck!
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betuli @ 133,
Don't you think 'you have no alternative' smacks of a rather sinister and desperate line of last resort in defence of the project?
There is never no alternative. Why is co-operation without political integration (without centralising decision-making in unaccountable Brussels institutions) apparently not an alternative? Co-operation on globalisation, on crime, on whatever that cannot be resolved by any one country alone.
Is this not on offer possibly because the project is being driven by zealots who simply *want* the integration part, clinging to some outdated utopian dream of a superstate Europe? I think so.
You make a mistake if you think EU-criticism is an argument for isolation or insularity, although I understand that it serves a propaganda purpose to present it that way.
In reality it is not against working together, but how *better* to work together for the future, not the past.
As Tony Benn is fond of saying; "A no is a yes to something better". I'm not afraid to say No. What Europe needs are political leaders with vision for the 21st century who will say it to the Europe of the 1950s.
Not those who simply cannot bear to be outside the pack.
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StuartC,
I just want a Europe that can act and speak as a unity, in order to be listended in a multipolar world.
It is not a matter of supressing anything or restricting iniciatives, it's about to take advantage of the synergies generated inside a fair union.
You talk about co-operation between states, but this also needs a political and economical frame to be done. Schengen and Euro have demonstrated to be successful policies.
For instance, I can hardly understand in what benefits Britain to be outside Schengen. Everybody can think in recent examples, some of them luctuous.
Another thing: the last diplomatic row between Russia and UK around the case Litvinenko put in evidence the weakness of UK as an international actor. If this raw would have been conducted through a legitime strong European central power, UK'd have saved such a humiliation.
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betuli @ 135,
I fear the EU has its own humiliations to bear where Russia is concerned.
eg. EU-Russian talks end in acrimony
http://news.bbc.co.uk/1/hi/world/europe/6668111.stm
Has Ms Merkel's reported 'alarm' on behalf of the EU about the detention of activists brought about a change in policy? I don't think so.
If you want to call such things "weakness", then fair enough. But I'm sorry to say it applies to the EU too.
I can't criticise the EU for that. I doubt anyone could pressure Russia to do anything it didn't want to. Just let's not set our stall by unrealistic goals.
There are plenty of countries co-operating together in the world without first passing decision-making powers to central supra-national institutons.
The simple reality is that today's EU is not necessary for productive co-operation to exist.
Superstate-zealots have long coupled the two together, because they lack the courage to openly argue for the 1950s-envisaged pan-European government they really want to see created.
It's time for the two ideas to be separated, and the outdated political integration plan consigned to the history books where it belongs. Before Europe goes too far down a very dangerous anti-democratic path.
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Mark,
Revised to my original remarks: When will the United Kingdom will get involved in the EURO
Currency!
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It has always been a tricky question, "Should the UK join the EuroZone / € Currency?" Our experience and monetary circumstances since the € was initiated and adopted by the (then predominant) majority of EU Countries has, in my opinion, shown that it has not HURT the UK by staying out, (mainly due to a steady, growing economy, regardless of who can claim responsibility - that's another debate entirely!) However, there's no reall evidence that staying out has done us much good, either, and it doesn't take a huge amount of shifts in markets and so on to change those circumstances, as may be starting to happen now, with a significantly stronger € against the pound. I have always held the belief that it is, at some point, extremely likely that the UK will join-in, as the economic conditions and arguments WILL make sense, at some point, although I still don't see that being soon. (Incidentally, working in Germany -paid in €, but into a GBP account back home- the current exchange rates are doing me a small favour at the moment, so perhaps I should be glad for the moment that we are not in!) :0)
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I wrote: "the current exchange rates are doing me a small favour at the moment"
I should point out that I am fully aware that this situation is providing a big DISadvantage to many others! (Sorry, should have put that in my first post!!)
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"With the consent of the governed"... this is truly an alien concept to those who control the EU and those who support it.
The EU has yet to return the 10% of my money that effectively disappeared when we dutch were conned with a faulty exchange rate.
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> 126
> a personal money transfer from Greece to Ireland, or from Finland to Portugal, costs 2 Euros, the same operation from UK to Holland costs 9 pounds and to Slovenia 21 pounds
Should n't you be asking yourself why if the countries you name are in the Eurozone, do you have to pay for a transfer at all?
I still think your point is off topic, and you are probably scraping the barrel in trying to distract attention from the real problems within the Eurozone.
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> 127
The Euro, and its institutions, has not been tested by adverse conditions in the way that longer establish currencies have.
On the other point; the economies in the Eurozone still have diverse characteristics so it is more difficult to set the interest rates to the optimum level. The result will be that most economies in the Eurozone will be subjected to rates that do not match their economic conditions as the recession bites, and that the timing of any changes will be determined by the macro conditions of the whole zone, not by the conditions of the National Economy. The rates for the GBP can be better matched to economic conditions of the National Economy because they are less diverse than those of the Eurozone.
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> 128
I am not a Eurosceptic. I am concerned about the flaws in the system.
The term you use seems to crop up whenever anyone wants to distract attention from those flaws.
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> 129
> Let's hope so, the Euro (and the EU) needs a lot of work. It's a pity that the UK (or its components) don't share their creativity in that process. There are many things to be taught and learned from both sides and, frankly, I find it quite stupid to use differences for quarrel instead of creating new ideas.
The UK has made a lot of contributions to the EU already; perhaps the most significant being as a sanity check on some of the more crack-pot ideas, and towards the opening of markets to competition.
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Re 144: The UK has made a lot of contributions to the EU already; perhaps the most significant being as a sanity check on some of the more crack-pot ideas, and towards the opening of markets to competition.
Really? The "Rebate" is the most famous contribution people hear about. I don't know what you mean by "sanity check" (but this may be just your personal view, which unfortunately cannot be quantified as a contribution). As for opening markets to competition what's on the UK showcase: Train Services, NHS or the highly ranking brain-producing top-upped English universities?
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Is the Aberdeen economy the same as the Liverpool economy or that of the overheated and controlling SE of England.? Well.no. So differences in economies don't necessarily preclude having a single currency, unless viewed from Westminster. Where is the majority of UK trade? I believe more than 60% with the Eurozone, currency fluctuations are difficult to manage when planning business,uncertainty is bad, unless you are into CFD or other exotic derivatives. So the Euro goes up and down against other currencies, but the larger proportion of UK trade would be un-affected if we used the Euro. As the UK manufactures virtually nothing post Thatcher the competitiveness of our products is a lesser issue than the ease and certainty of trading. Ah, but I omit one thing, the much vaunted financial sector, which by it's irresponsible behaviour has contributed to our present malaise, makes a healthy rake off every time I buy or sell something in the Eurozone. Brings me nicely on to the ECB, which so far seems to have regulated rather more effectively than th B of E or Westminster. Remember the old joke about having a German policeman and a French lover. Well maybe we should have a German banker and a French run railway and a Spanish run health service. To make it all simple we would all pay in the same beer tokens.
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Congrats on the 10th anniversary of the EURO Currency...
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