The Euro is bigger than Party Politics and the British Government has done the Right Thing

So our Con-Dem government – more Con than Lib-Dem it has to be said – have been part of the Irish bail out. While I think this was absolutely the right thing to do, the Eurosceptics are spitting blood.

The fact that Britain is taking part in the three way bail-out – through the IMF, the European Union and by providing a unilateral loan is obviously significant.  The UK’s Conservative (and Liberal-Democrat) government has admitted that a euro zone country in difficulties should receive assistance and that euro-free Britain should make a substantial contribution. (For the record, the UK contribution to Ireland is estimated at somewhere near £10 billion

We also now hear that the special euro stabilisation mechanism, worth €13 billion may be activated against Britain’s wishes if Portugal and Spain need rescue packages – a very real fear as the financial markets get ever more jittery.

Although in one sense the UK may congratulate itself in not being part of the euro as it goes through this difficult crisis, we are also justified in asking ourselves what we have gained from being outside the single currency. £10 billion spent on propping up one of the euro zone countries strikes me as high a price as any Britain would have had to pay were it in the euro.

On a narrower point, this bail out of Ireland has surely spelt the death throes of the Eurosceptics.  There cannot possibly be any credibility left for any political credo which maintains that Britain is not part of Europe and should withdraw from the EU.

The crisis of the euro has shown in very graphic terms that the UK is in Europe and cannot ignore what happens in other EU member states when it comes to their economies.  Britain has ended up paying out a very considerable sum of money. I doubt if it would have been any more if Britain had been a fully signed up member of the euro zone.

The last Labour government, it is true, refused to take Britain into the Euro.  I have always been in favour of joining the single currency and, I must say, am once again beginning to feel vindicated that my point of view is the best one for our country.

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33 Comments

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33 responses to “The Euro is bigger than Party Politics and the British Government has done the Right Thing

  1. “the Eurosceptics are spitting blood”

    which Eurosceptics?

    The bail-out is unfortunately necessary, but there is insuffient critique of the financial orthodoxies which have brought about problems in Greece, Ireland AND Latvia.

  2. sameold

    I’m a bit confused by your reasoning here Mary. Nobody has been vindicated about the euro. All that has happened is the UK has helped support the Irish banking sector in order to avoid a catastrophic loss of revenues by our own UK banks, exposed to the tune of some £80bn in rashly made loans. It was pure self interest.

    The debate has now moved on to what is the future of the euro and can it even survive in its current form.

  3. Mary,

    We are not in the Euro due to Brown’s opposition – the only thing we have cause to thank him for.

    We are helping Ireland financially because Alistair Darling agreed to this in the fag end of the last government (even though he didn’t need to).

    Britain isn’t in Europe. It’s in the EU. The terms aren’t interchangeable – why do you persist in doing so?

    regards
    geoff

  4. Of course, if we weren’t members of the benighted EU (note NOT Europe) we wouldn’t be in this position.

  5. Sean O'Hare

    This twisted logic really takes the biscuit. The euro is perched on the edge of the toilet ready to tip over and get flushed away and here she is advocating we join it.

    How many Labour MEPs agree with her? Not many I would hope. As a previous post has already said at least Brown kept us out of this artificial incubus even though he did sign the Lisbon treaty. Mitigating circumstances in likely event of a trial for treason against the people.

  6. Daniel Oxley

    All this talk of whether or not the euro is in Britain’s economic interests is entirely beside the point. The euro was not invented to improve anyone’s economy. It is just a natural milestone on the road to creating a new country called the European Union.

    On the continent politicians are rather more honest with the voters; they do not make a big deal about the economic benefits of political union. Here in EU sceptical Britain the economic deceit has to be delivered up in tonnes because we are not interested in belonging to our new country.

    The lie is that we are being asked to limit our sovereignty in order to achieve prosperity but the truth is the exact opposite. We are being asked to sacrifice our economy in order to lose our sovereignty.

    From a purely economic view the Euro was always a flawed idea. One size does not fit all. This is as true in international finance as it is in the fashion industry. The Euro is a trap, not only are the Euro nations unable to set suitable interest rates for their economies but they are unable to devalue their currencies when it would be wise to do so.

    The federal institutions of the EU do not consider economic matters very much. They blithely demand more money from the UK even now at a time when public spending is being reduced. An absurd position when one considers that they can’t tell us with any certainty what they did with all the money we have been giving them every year since 1994.

    They do pay attention to their own salaries of course. Earlier in the year the MEPs voted for an inflation busting pay rise for themselves and the European Court of Justice has just decided that the Eurocrats should have their full pay rise of 3.7%. The judges who made the decision will themselves benefit from it!

    An excellent explanation of the pay rise by Marta Andreason MEP (former EU Head Accountant) can be seen at http://www.ukip.org/content/latest-news/2015-eurocrats-pay-hike-budget-block-call

  7. David Waters

    Astonishing that an elected MEP could write such ill thought through nonsense. I work in Germany a lot, where the majority of the Germans think the Euro was an appalling idea. To suggest that we should join this failing currency beggars belief. Memo to self – never, never, vote Labour

  8. maryhoneyballmep

    David
    I think your German friends are politely humouring you and your views. Can you cite a single German MP or MEP who thinks they should leave the Euro? I could name dozens with the opposite view!

    I also wonder from your email address if you are a banker – I think you have amazing chutzpah if you are..

    Finally a quick google indicates you may be a Conservative cllr, could you confirm please? if so full disclosure would be appropriate and would set your views in the appropriate context, or are you expressing your employers views?

  9. Tony Hewson

    “Can you cite a single German MP or MEP who thinks they should leave the Euro? I could name dozens with the opposite view.”
    All of my German contacts are against the Euro, as are my Danish friends and colleagues.
    The views of their MEPs demonstrates the undemocratic nature of the EU.
    Are you a democrat Mary? If so you would naturally agree to a referendum before Britain took such a fundamental step as joining the Euro, wouldn’t you?
    Thought not.
    I’m not a banker or a conservative, just a hacked off and worried grandad.

  10. Matt

    “I have always been in favour of joining the single currency and, I must say, am once again beginning to feel vindicated that my point of view is the best one for our country.” ”

    If you believe that, I have several large bridges for sale.

  11. Ken Hall

    Mary, could you estimate how much larger the deficit would have been if Labour had signed us up to the Euro?

    With our inability, in such circumstances, to reduce our interest rates to 0.5% and the inability, in such instance, for the Bank of England to bail out the Government to the tune of 200 Billion pounds of QE as it did last year, I would respectfully suggest to you that 10 Billion is a small price to pay for staying out of the Euro.

    Even added to the total eventual cost to the treasury of “Black Wednesday” this makes a total of only 12 – 13 Billion.

    It is ironic that the labour leader Ed Miliband raised Black Wednesday in PMQs this week, clearly forgetting that labour ran up a deficit the size of a Black Wednesday every week in their final disastrous year in office.

    If we had been unfortunate to be in the Euro at the time, it could have been 3 Black Wednesdays per week instead!!!

    You should thank John Major for saving us from that disaster.

  12. Ken Hall

    Mary, perhaps you should read your comments a bit more carefully.

    David stated, “I work in Germany a lot, where the majority of the Germans think the Euro was an appalling idea.”

    Where in that does he say the majority of MPs or MEPs are opposed?

    He clearly means the majority of ordinary Germans hate the Euro and pine for the return of their strong Mark.

    In my experience with German friends, I would suggest that David is correct. Does this not show a growing disconnect between the rulers and the ruled?

    This is a dreadfully worrying trend in the ever diminishing democracy of the EU.

  13. So our Con-Dem government – more Con than Lib-Dem it has to be said – have been part of the Irish bail out. While I think this was absolutely the right thing to do,
    //
    What are you talking about? We were committed to the bailout, thanks to the previous Chancellor. Further bail-outs could truly cripple us.

  14. sameold

    Mary – I think you shouldn’t stray too far off topic. Current surveys do not back up what you are saying about German sentiment – and frankly, the views of German MEPs are not necessarily representative of real people.

    http://www.montesquieu-institute.eu/9353000/1/j9vvhfxcd6p0lcl/viimo74l3py5?ctx=vh93qqnk8atd

  15. George

    ‘I think your German friends are politely humouring you and your views.’

    How strange, Mary. I’m just back from staying with some friends in Munich. I’ve known them for twenty years now. Their left wing politics helped make them great enthusiasts for European integration.

    Their views were very different this time. They expect to paying for this mess in lower pensions and higher taxes for the rest of their lives. They think the next generation are already paying in unemployment.

    They think the chief beneficiaries of pouring cheep money into overheated economies have been bankers, property developers, fraudsters, politicians and bureaucrats. They don’t like the way in which their votes don’t seem to matter any more.

    I thought they meant these things but perhaps they were politely humouring me?

    Would one of your German politician friends like to contact them to reassure them that these views of theirs are as misguided as I imagine you think they are?

    When you’ve done that I’ve got quite a few Irish friends and relations who might like a chat as well.

  16. Elizabeth Morely

    Are you mad? No credibility for Euro sceptics? If ever there was a graphic demonstration of why the UK should not be in the Euro (and the EU in general) these bail outs are it.

  17. Five questions for you re the implications of the UK joining the Euro:

    1) If the UK had joined the Euro more than two years ago would you expect UK interest rates to be lower or higher now?

    2) If the UK joined the Euro within the next six months would you expect interest rates to rise or fall?

    3) If the UK joined the Euro within the next six months would you expect the UK’s credit default swaps to rise by more or less than 300 bps?

    4) What economics qualifications do you have that enable you to state that ‘joining the single currency … is the best one for our country’

    5) If you are so certain that ‘joining the single currency … is the best one for our country’ would you support a referendum to put this question to the UK electorate?

    I await your considered responses with some interest.

  18. Tony Hewson

    “Fifty four per-cent of Germans polled by the prestigious Allensbach Institute said they want the euro replaced by the old mark, the trusted building block of the economic miracle. ”
    Admittedly that was in 2002 so opinion will have shifted since. Which way I wonder?

  19. Elizabeth Morely – quite so. The bottom line is that the people of Ireland are being condemned to penury to save the Euro and the EU.

    Now the EU and the IMF dictate Irish economic policy – what price sovereignty?

    This will all and in tears, and the sooner the better.

  20. The Irish show us how to deal with our new masters

    And I see Rompuy and Ashton have overturned the EU Council of Ministers on pay awards, and have awarded themselves nice pay increases.

    Remind me, Mary – who voted for these people? How are they accountable to me? How can I get rid of them? Who awarded them their power? What did I sign that says they can take money that I have earned?

    Do you understand what democracy means? And do you understand how ANGRY the people are?

    Shame on you.

  21. barney12345

    “There cannot possibly be any credibility left for any political credo which maintains that Britain is not part of Europe and should withdraw from the EU.”

    I am trying really hard to understand your logic here, please help.

    EUsceptics have been saying for 15yrs or more that the Euro was a doomed scheme that could bring down economies and Gov’ts and was bound to fail in the medium term esp during economic downturns.

    We have now been proved correct and indeed sooner and more dramatically than many predicted and YET you say we have no credibility.

  22. Eeyore

    The Euro was doomed from its inception. All we are seeing now is the chickens coming home to roost. Five years from now it probably won’t exist.

    What beats me is how someone, presumably reasonably intelligent, paid (handsomely) by taxpayers to study and understand such things in depth, could possibly believe – still less write – such utter tripe as you do, Mary.

    As for jeremyp99 at 1:52, the EU was designed specifically NOT to be democratic. Its founding fathers saw where democracy gets you (see 1930s Germany, Italy) and ensured that its main mechanisms are impervious to public opinion and the ballot. The recent fiddles to avoid voting over the Lisbon Treaty were disgraceful but no surprise: they are consistent with EU methodolgy.

  23. Eeyore

    Now that I’m in ranting mode, there’s another thing or two.

    (1) So it’s a good idea for the UK to borrow money (we have to – there’s none left, remember?) to lend to (a) the IMF to lend to Eire, (b) to European bodies to lend on to Eire and (c) to lend direct to Eire. Mary, please explain the logic (or save yourself the trouble – there ain’t none this side of the madhouse);

    (2) The UK taxpayer has propped up UK banks to protect them from the failure of the dodgy loans they made to, inter alia, Irish banks and property speculators. So our banks are safe from an Irish collapse, then. Why, then, is it thought necessary to prop up the Irish banks who represent a threat? The threat’s already covered.

    (3) Passing the newspapers in Sainsbury’s today I saw that the Express (vile rag) is launching a Get Britain Out campaign. I urge everyone to join. Whilst we may not be able to exit fully thanks to the intellectual inertia of most of the great British public, at least we can frighten Cameron into negotiating some serious opt-outs.

  24. David Waters

    In reply to maryhoneyballmep, on November 25, 2010 at 10:51 am:

    Glad I checked back to read the comments. Thanks for your reply to my post timed at 10:26

    First, some facts.

    My email address does correctly identify the town in South West England where I live. I own that domain name.

    As you should know, this town is not a banking centre, and therefore the assumption that I am a banker is rather strange. You should have realised by now that bankers are mainly in London, many in your constituency of London North.

    As an engineer, I have worked all my life in manufacturing industry, including a total of eight years in Germany. I have been a director of small manufacturing companies in both Germany and in your constituency In London. I currently work for a German company in the UK.

    I am not a councillor, and hold no governmental office of any kind, unless you include school governor in that definition.

    Having corrected your rather odd assumptions, I should like to turn to my main point. I do not doubt that there are few German MPs or MEPs who would openly say think they should leave the Euro. That was not my point. I said that the majority of Germans – the German people – think the Euro was an appalling idea. In opinion polls at the time, two thirds did not want to give up the D-Mark. But the three main German parties – I don’t know about the Greens – were in favour of the Euro, so they ignored their own electorate and went ahead. Just like the Labour Party did when they broke the promise to have a referendum on the European Constitution / Lisbon Treaty.

    In supporting Britain joining the Euro, you are also ignoring your own electorate. Go on, ask around London North, and see what answer you get.

    You should spend less time talking to cossetted MEP’s and MP’s, and more talking to the people you – and they – represent.

    You should aplogise for your poor representation of the people of London North

  25. Russell

    Please consider 2 scenarios;

    1- If Irish debt was priced in locally controlled currency, not Euros, it could devalue the currency to mitigate the extent of these kind of problems. The policies of this nature used on Sterling from 2007 onwards have been quite beneficial in reducing the impact of the global financial crisis on the UK.

    2 – If Irish debt was priced in locally controlled currency, it would have been more expensive as the perceived risk would be higher (no France / Germany to act as a backstop). More expensive debt would have led to slower growth, but as we are seeing now, this growth was not sustainable and the social impact of fluctuating growth is much more harmful than lower, but steady growth.

    The Labour party was definitely correct when it identified that boom and bust cycles are very socially disruptive. What I think we may have learnt on this first attempt at avoiding the cycle, is that to break it requires strong, rigorous policy on controlling rates of growth and avoiding the boom phase in the first place.

  26. Russ

    It’s truly terrifying and a little depressing to think that – somehow – you were elected by real people. I guess it just goes to show that true lack of democracy in our corrupt and peverse political process.

    Shame on you for an idiotic and utterly ill-conceived post.

  27. maryhoneyballmep

    Thank you for all the many and varied comments on this post, I have been reading them with interest. Unfortunately due to work commitments I will be unable to answer them all, but I thought I’d take this opportunity to answer NotaSheep’s list of questions which seem the most constructive in terms of this discussion. I will repeat each question here so that you can read them.

    1) If the UK had joined the Euro more than two years ago would you expect UK interest rates to be lower or higher now?

    Interest rates as set by the Bank of England were 3% on 25th Nov 2008, and dropped steadily to reach 0.5% in March 2009, since when they have been unchanged. Interest rates set by the ECB were 3.25% on 25th Nov, and dropped steadily to reach 1% in May 2009, since which they have been unchanged (key figure is Main refinancing operations). So in last two years we can assume that interest rates in the UK would not have been different to any large degree had we been part of Euro. In years 2002-2006 the data reveals that Bank of England rates were about 1.5-2% higher than European Central Bank. Obviously we cannot state what the ECB rates would have been had the UK been a member of the Euro, since the impact of the UK on the macro data and models the ECB uses to set rates would have been very high, given the relative size of its economy. One could argue that, assuming the ECB drew the same conclusions as the Bank of England Monetary Policy Committee, the rate of ECB rates would have been marginally higher than they were, but not as high as those set by the Bank of England. But this is mere speculation and impossible to prove.

    2) If the UK joined the Euro within the next six months would you expect interest rates to rise or fall?

    Given that interest rates BoE and ECB interest rates are virtually identical, and have been for the last 18 months, one would imagine that UK interest rates would not change greatly. Impossible to say however, depends on unknowns such as demand led-inflation resulting from any economic recovery, spike in commodity prices etc vs. decreases in wage inflation caused by austerity measures etc.

    3) If the UK joined the Euro within the next six months would you expect the UK’s credit default swaps to rise by more or less than 300 bps?

    I would expect them to remain where they currently are, assuming that UK’s triple AAA rating were to remain in place when it joined the euro. But again, total speculation.

    4) What economics qualifications do you have that enable you to state that ‘joining the single currency … is the best one for our country’

    I think we can all remember that the bankers, who we know had many economic qualifications between them, managed to get it so wrong on the economy.

    5) If you are so certain that ‘joining the single currency … is the best one for our country’ would you support a referendum to put this question to the UK electorate?

    I would follow the line of the Labour party on this issue.

  28. “So our Con-Dem government – more Con than Lib-Dem it has to be said – have been part of the Irish bail out.”

    Again. They had NO CHOICE, thanks to Darling. But thank you, Ms. Honeyball, for betraying your ignorance on this matter. As enlightening as all those who condemned Cameron about the aircraft carrier farrago, unaware that it was Brown who did this, and Brown who loaded the penalty clauses, so that to NOT build them would have cost more than building them. All to buy votes in Scotland.

    Words fail me.

  29. Rob

    I think I’ve got it…

    It’s a spoof UKIP election broadcast…. Nope, that’s not it.

    I know, the Daily Mash have posted their latest article to the wrong site….Hmmm

    Aha

    “I am a Labour member of the European Parliament”

    Say no more.

    Still, for £80k plus all the expenses you can handle I’d probably do the same. Sadly I’ve never been wealthy enough to be a socialist. Mind you looking on the bright side maybe, just maybe…

    E Europe 1989 = W Europe 2011

    Wir sind das Volk

  30. Terry Ferguson

    I have just returned from a business trip to China, I stopped in Holland and Germany to see some clients.

    None of my clients in Europe want to be part of the Euro, some of my german clients hope the European Union collapses. My Chinese suppliers think the UK will decline in competitiveness, living standards and lose jobs through remaining in the EU. I for one would leave Europe tomorrow and I am an international businessman whose company is dependent on foreign trade.

    I find your views uninformed, unrealistic and out of touch. If you had any interest in the man on the street you might actually listen to their views rather than trying to impose your own on them. Your arrogance and stupidity is an insult to democracy.

  31. Thank you very much for your answers to my five questions, most illuminating. I have some follow-ups if you don’t mind as I think you have left a few parts unaddressed. If I repeat all of the original questions and answers as well as my requests for illumination this message will become far too long so I have summarised:

    1) re Interest rates if UK had joined Euro a few years ago
    A good answer – thank you

    2) re interest rates if UK joined EU soon
    A good answer however you have not mentioned that by joining the Euro the UK would lose its freedom to set interest rates to suit its economic conditions and not those of a collection of other countries

    3) re future cds spreads
    An interesting answer – thank you

    4) re your economics qualifications.
    I am sorry but that is not an answer to my question but an attack on bankers. Are you saying that because most bankers, along with almost all politicians, did not foresee the economic problems that were brewing, a knowledge of economics is a liability, or at least not useful in this area? I ask again what are your qualifications in economics? You must have some good background knowledge to have answered points 1,2 & 3 so ably?

    5) re a future referendum on joining The Euro.
    Mary Honeyball do you really think that that is really an adequate answer? ‘I would follow the line of the Labour party on this issue.’ I hesitate to use the parental cliche but ‘If the Labour Party told you to jump off a cliff would you?’ At what point would you stop following Labour party instructions? You want the UK to join the Euro, so I suppose the question really is if the benefits of joining the Euro are so obvious do you believe that the people should be able to decide such matters?

    Mary Honeyball, do please answer my follow-up questions as I think we really are making some progress.

  32. sameold

    People posting on here insulting the views of an elected parliamentarian should stick to Guido Fawkes’ website. If you don’t like the EU why bother coming on here spouting your bile.

    To actually even consider the wholesale break up of the eurozone is breathtakingly ill informed and would have ramifications not just for those who actually live here, but the global economy. So be careful what you wish for.

    Mary Honeyball made a perfectly reasonable, although slightly confusing remark that the current travails spell the death knell of euroscepticism. That’s what Sir Humphrey would have called a “courageous” position.

    Other than that, get off her case, she’s got a right to her viewpoints.

  33. maryhoneyballmep

    David Waters
    Thank you for answering my questions. Your email address references the words Cheltenham and Gloucester. I am surprised you have forgotten how important the Cheltenham and Gloucester (part of the Lloyds Bank group) is to North Gloucestershire. I grew up in Cheltenham and I’m told by a friend who still lives there that it employs about 1500 people, making it one of the biggest local employers. I’m sure you’ll recall it was irresponsible mortgage lending that caused the collapse of Northern Rock. There is a councillor David Waters on Tewksbury Council which is just a few miles up the road from you – so there’s two of you quite close together! That explains my questions – not assumptions.
    If as you and some other commenters suggest there is such widespread antipathy to the Euro on the conctinent why are there not more UKIP style parties elsewhere in Europe? And where there are, as in Denmark they have small electoral support at best.
    People in London have been consistently more pro-Europe than elsewhere in the UK. People in South west England have consistently been the most sceptical. I acknowledge your right to hold a different view, but it is not a view I hear much of in London on doorsteps. Education, transport, health and jobs are the issues I hear most about.

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