The Euro

The Euro

Polls taken in the UK in the immediate aftermath of the introduction of the Euro on January 1st 2002, indicate that people in Great Britain are less than supportive of the new Euro currency in the first few months of its history.

One poll on January 5th had the following results:

If there were a referendum, would you vote to join the Euro?

Yes

31%

No

56%

Donít know

12%

 

Do you trust the government to make the right decision, in the interest of the British people, on whether we join?

Yes

46%

No

43%

Donít know

11%

 

If Britain entered the Euro, would a single European super-state become inevitable?

Yes

57%

No

27%

Donít know

15%

This poll was conducted by the respected ICM company. What we do not know is where the poll was carried out, though companies like ICM usually do a spread throughout the land to get some form of overall picture.

If the above questions were only asked in the rural Home Counties, the surprise would be that the No answer was so small. If the same questions were asked in a more cosmopolitan environment, the yes vote may well have been higher.

That the governmentís "Five Tests" policy is now under severe criticism in some quarters is also confusing the issue for the public who may only have a tenuous grasp on the Euro issue anyway.

Economics professors and assorted experts have condemned the "Five Tests" as meaningless. Robin Marris, Emeritus Professor of Economics at London University claimed that the questions were an irrelevance anyway and that people will invest in Britain purely on whether we have a sound economy regardless of the currency we have. If British industry is a good bet, overseas companies will invest.

Two former Treasury chiefs, Gus OíDonnell and Sir Alan Budd, have also condemned the "Five Tests" as a sham as the government can use the answers to these questions to introduce whatever policy they want to regarding the Euro.

The government has said we have to pass all five tests.

Can Britainís economy run in synch with the Eurozone long term? Will joining the Euro affect our flexible labour market? Will it make unemployment worse? Will it affect our world beating financial services industry? Will it stop foreign firms investing in Britain?

Who judges whether we Ďpassí a question or not? What does "affect" mean?`

If we pass 4 very healthily and come near the brink of a pass with the last test, is that an overall pass?

Budd and OíDonnell believe that the five tests cannot be passed regardless of what economic climate we have in this country. Budd claims that Britainís entry into the Euro will be entirely political and that the decision will have nothing to do with economics.

Quotes made in the week January 1st to January 7th 2002:

"The ultimate decision (to join the Euro) will be made by individuals in the privacy of the polling booth because there is going to be a referendum on this." Jack Straw, Foreign Secretary

"It is definitely not a case of when but if there is a referendum. It is by no means inevitable." Senior aide to Gordon Brown.

"Ultimately it will be a decision for the British people. It remains the position that there are five economic tests that have to be met before we are in that position." Spokesperson at Downing Street.

In the same week, Buckingham Palace and the Houses of Westminster announced that the Euro would not be accepted in either; for the Palace, in its gift shop and paying an entrance fee and in Westminster, MPís will not be allowed to use the Euro in its numerous canteens and bars. Only sterling will be accepted in both.

On February 19th, 2002, Peter Hain, the government's Europe Minister, claimed that it would be a "tragedy" if Britain did not join the Euro. He also claimed that those opposed to the Euro were also the "enemies" of the European Union. His comments were made to the French daily "Le Figaro" and caused immediate controversy. They had not been approved by the Treasury. Hain also laid out what the government's timetable could be.

"It would be an enormous blunder on the part of the UK, a tragedy even, to stay out (of the Euro) forever. Let us be clear. The enemies of the Euro are the enemies of Europe. What they desire, simply, is the withdrawal of the UK from the EU and an association with the American bloc. This is ridiculous." 

On February 25th, Gordon Brown's chief economic advisor, Ed Balls, claimed in a speech in London to the Royal Institute of International Affairs that the Five Tests set by the Chancellor to determine whether Britain joins the Euro or not, could not be met in the near future. He claimed that Britain could still play an important part in the EU and keep the pound. He also stated that joining the Euro could threaten Britain's current economic strength and that the exchange rate problems that industry faces would not disappear simply because Britain had joined the Euro.

"If you don't take a cautious approach you could have circumstances not only damaging to the economy but to the pro-Europe cause. We can't let a short term political imperative override long term economic factors. The Chancellor's tests have to show that joining would be right not just that day, or even referendum day, but for the future.

The UK economy is growing more quickly than other industrial economies. The reason is that the monetary policy committee acts quickly to cut interest rates."


MLA Citation/Reference

"The Euro". HistoryLearningSite.co.uk. 2005. Web.






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