In a departure from my normal practice, I am posting in full this article which was published on guardian.co.uk this morning. Former TUC General Secretary and leader of the European Trade Union Confederation John Monks should be commended for his courage in putting another point of view on the Euro.
“With the crunch EU summit today, it will seem very eccentric to many to raise the question now about whetherBritain is well served in ruling out future membership of the single currency.
Of course, there is an overwhelming opinion among the UK’s political and economic leaders that the UK has been well served in not joining the euro. Even some experts, such as Adair Turner, who were very much in favour of UK entry at the start, have confessed that they were wrong. And as Europe’s leaders struggle to resolve the problems in Greece and other distressed countries, the one British consolation has been to thank the Almighty that we are not members, that we have our own central bank and that we retain the power to devalue our currency.
But this easy dismissal of the euro forBritain is ignoring some inconvenient but relevant truths.
One truth is that with all the current troubles the euro has gained 25% against sterling despite all the Grecian and other dramas. The euro is a strong currency, as British holidaymakers know all too well.
For a short time, the UK’s devaluation did seem to work – exports and growth improved (although the rates of growth were lower than in Germany and the other northern European members). Inflation, too, remained low initially.
But in the past 12 months, the recovery has stalled and inflation has soared to 5.2%.
The devaluation did not give British exports a sustainable adrenalin rush. And now we are suffering from the cheaper pound as we pay more for imports of our food and energy. The inflationary impact is now painful.
As the UK congratulates itself on staying aloof from the euro, it should look thoughtfully at Ireland. Ireland was badly affected by the recession but there are encouraging signs of improvement. Industrial production in August was up 11% on a year earlier. As a member of the eurozone, Ireland could not devalue. Inflation is low – a 0.7% rise in consumer prices over four years, contrasting with the UK’s 28% increase in food and drink prices over the same period. Exports are up and, although unemployment remains much higher than here, there is a hint of optimism. Interestingly, public opinion in Ireland is still in favour of staying in the euro and not following the devaluation road of the UK.
Finally, there is the crucial question about British influence. In all the discussions about the eurozone’s future, British ministers are urging the leaders of France, Germany and the others to get their act together, much to the irritation of President Nicolas Sarkozy and perhaps some others. The British ministers sometimes resemble spectators at a football match: non-playing experts with plenty to say but little to contribute. If the UK was a euro member, it would not be waiting to see what the French, Germans and the rest come up with but, instead, would be playing an active and central role in the search for solutions.
Government ministers rightly acknowledge that the UK’s economic future rests to a major degree on the future of the eurozone. Yet as non-members we have limited ourselves in what we can do about its problems. In truth, there is limited advantage in our autonomy.
So, if the eurozone comes through the present crisis, let us not close our minds to the possibility that it could be in the UK’s interest to quit the devaluation road and reconsider membership of the eurozone. Pro-Europeans should have the confidence to challenge the conventional wisdom.”