The economic, democratic and cultural reasons for joining the euro

What irritates me is the claim that British culture is somehow so different from European culture that we cannot be continentals
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The Independent Online

"OK," said at least one of my e-mail correspondents this week, a slight exasperation evident behind the departed cursor, "all that stuff about old Geldof is diverting, but what is your view about the euro? If you are in favour of it, why?"

"OK," said at least one of my e-mail correspondents this week, a slight exasperation evident behind the departed cursor, "all that stuff about old Geldof is diverting, but what is your view about the euro? If you are in favour of it, why?"

So this is why. But it has to be said (and this is one of the features of this debate), that I am not passionate about it. For me, it's a currency, not a crusade. I cannot discover within myself more than a fraction of that partisan heat that seems to infuse the bodies and minds of the "no" campaigners. I do not believe that it will be the end of the world if we don't enter the euro soon, whereas many of the no-sters really seem to think that the euro is the fifth horseman of the Apocalypse. Already this week I have been called a Quisling. A more reasonable local chap who passes me with his children every morning writes that Europe – did I but understand it – is "inspired by a virulent anti-Americanism, a distrust of the free markets, a belief in the corporatist state in bed with the unions and always a nationalist agenda". This, apparently, animates the continent from Sicily to Lapland.

I am not going to be rolled over by the incontinence of the anti-euro camp's emotions. The antis like to dish it out, but they can't take it. If they say, "Hitler is for the euro – joke," then I am entitled to reply once again, "The BNP is against the euro – no joke." If they want to have Johnny Vaughan doing a piece to camera in Greenwich saying that the euro "comes from the people who brought us the Dome", then we are allowed to recall that Vaughan was the man who brought us a comedy series described as "woefully badly written, acted, structured and directed... an object lesson in what can happen when a 'star' is over-indulged".

But you're right, it gets us nowhere. Except to say that, if we want a proper discussion we're first going to have to clear away the mountain of accreted crud that has, glob by glob, been hand-plastered over the word "Europe". It serves the Europhobes' purpose to paint a continent full of incompetents and bureaucrats, in which fascists run riot, pensions implode, unemployment is at Weimar levels and the euro is buggered if its value falls, or buggered if it rises; in which Jean-Marie Le Pen is somehow Europe's fault, but good railways, health services, shorter working weeks and higher productivity are ignored or placed against some other account.

So let's just dispense with all that, and – for the sake of fairness – also do without the glib assumptions of the other side, which are that our entry is inevitable and that we are merely following a pattern, repeated time and again since 1950. We can stay out. I just think we shouldn't.

The economic case for being in the euro is relatively straightforward. Business enjoys a higher degree of certainty as a result of the ending of exchange-rate fluctuations against our major trading partners. There is much greater price transparency, and this should help competitiveness. Companies seeking to operate across the eurozone are more likely to invest or locate in a Britain that has the euro. There is some evidence (though not conclusive) that countries in the eurozone are getting a trade bonus as a consequence of membership.

The substantial argument laid against this is that being "locked in" to the euro will destroy our capacity (and that of existing members) to use levers – such as interest rates – to resolve specific problems. Such a lack of flexibility would be a recipe for popular discontent, as national governments blame the European entity for their failure to respond to local needs.

This is an important argument, one that Wim Duisenberg, the president of the European Central Bank, referred to last week. He agreed that monetary and exchange rate policies (set for us now by the independent Bank of England) would no longer be country-specific. "Other adjustment mechanisms are needed," he said, "such as price and wage flexibility and factor mobility. Structural reforms can contribute to a better functioning of these adjustment mechanisms by fostering integration and competition."

These broad policies of the European Central Bank are – contrary to the claims of the "no" camp – pretty much exactly the same as ours. Their implementation will also go a long way to create convergence between our economy and that of the euro-zone. The powers that we might, in extremis, want to invoke are largely chimerical. The benefits, on the other hand, are pretty tangible.

At which point the most powerful and problematic argument arises. Loss of democratic control. Even if the government may not want to follow a particular economic strategy, we may one day want it to. Or we may want the eurozone to. In those circumstances how can we make our votes count? Or will we be told that, as one nation among many, we cannot expect to change things if others do not agree?

Anti-EU people are, at least, consistent about this. They can see that this argument applies as much to the single market so beloved of Margaret Thatcher as it would to the single currency. It is much harder to understand those who – like David Owen – cry "foul" only when it comes to the euro. There is a democratic deficit in Europe, which will – I think – be solved only when the democratically and directly elected European parliament has proper powers.

Another reader challenged me with this: "I can read the minutes of the Bank of England monetary policy committee every month. When does the European Central Bank publish theirs?" I looked it up. I discovered that Duisenberg's answer, given last week, was this: "We fear that, given the multi-country context in which the governing council works, published minutes... could lead to undue pressure on national central bank governors to deviate from a euro area perspective."

That's not good enough. Not by a mile. Transparency and accountability are principles, not tactics. But again we cannot easily effect a change in this attitude from outside. So, though I don't have the complete answer to the democracy point, it seems to me that a greater European sensibility, not a smaller one, is needed to help us to grope towards an improvement.

Last, I come to something that really does irritate me, living in the heart of the most cosmopolitan city in Europe. This is the claim that British culture is somehow so different from European culture that we – uniquely – cannot be continentals. The Spaniard may lay down with the Finn, but the Brit? The Brit is different. We are really Americans with small penises. I heard a version of this from a French journalist this week, who opined that love of monarchy and making money defined the British character, whereas over the Channel it was quality of life and culture.

Another bloody stereotype. Yet here we are with practically the whole continent speaking our language, and we're the ones who are afraid!