Outlook: Eddie and the Euro-phobes
Friday 03 April 1998
His argument runs as follows. There have been huge strides towards achieving the fiscal and monetary convergence required by Maastricht, essentially because all the wannabes have adopted a stable and cautious macroeconomic policy. Unfortunately, there has not been the same kind of microeconomic convergence, in the structure of jobs, goods and capital markets. Both kinds are necessary for the success of the Euro.
For the Continental economies, the external discipline of the Maastricht Treaty forced sound macroeconomic policies on sometimes reluctant politicians. They wouldn't have bothered if they hadn't wanted to join Emu. Mr George noted that many of his counterparts across the Channel think the external pressure will be needed to force structural reforms too.
In other words, if their countries don't join, they will never get round to sorting out the supply side of their economies.
But the Governor believes we do things differently here. We Brits, he suggested, are a bit bolshy about external discipline. We have good policies because we want them. If that delivers convergence, fine. If not, we should carry on regardless and wait for the others to converge on us.
There is obviously something in this argument, as the UK has both met the formal Maastricht criteria with ease and accomplished a lot on the structural reform front without being driven by the urge to join the euro. Both kinds of convergence are certainly desirable. But it does not add up to a convincing case for not joining the Euro until every other member has matched British standards.
One reason is purely practical. Now the last serious hurdle has fallen, with yesterday's decision by Germany's constitutional court, Emu will go ahead and the benefits of the huge Euro market, with all the likely industrial restructuring, will be captured by first wave members. The other reason is that the British dislike of external disciplines identified by the Governor stems from having failed to meet them in the past. The disastrous membership of the ERM is the classic example. Joining the Euro ought to hold no fears for the UK now that both macro and micro-economic policies are as good as, or better than, Continental standards. But it remains a question of whether the economic risks of joining are outweighed by the political risks of staying out. Even the Governor's eloquent testimony cannot definitively answer that one.
- 1 Eurovision 2015: Graham Norton returns with another cutting commentary - his best lines
- 2 Purity balls: Girls in the US making virginity pledges as fathers vow to 'protect purity'
- 3 Eurovision 2015 winner: Sweden beats Russia and Italy to take title from Conchita Wurst
- 4 Mother 'will allow son's circumcision in return for release from prison'
- 5 Puerto Rico, island of lost dreams: People are leaving the debt-hit territory in droves as near neighbour Cuba's star rises
Greek hospitals cannot afford painkillers, scissors or sheets as budget cuts bite
Purity balls: Girls in the US making virginity pledges as fathers vow to 'protect purity'
Bulgarian seaside resort Sunny Beach is cheapest for beer
Female Muay Thai champion hustles coaches to give them a beating
Puerto Rico, island of lost dreams: People are leaving the debt-hit territory in droves as near neighbour Cuba's star rises
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...