Euro anniversaries might seem two a penny these days. The most recent was the 10th birthday of the European Central Bank in May. But the anniversary that falls at midnight tonight – the moment, 10 years ago, when the exchange rates of Europe's major currencies, including the Deutsche Mark, the French franc and the Dutch guilder, were linked together and fixed – marks the point of no return.
A project that had once been a mere gleam in the eye of Valéry Giscard d'Estaing had materialised into European monetary union. Without it, the notes and coins, now taken almost for granted across so much of Europe, would not have come into circulation three years later. In a remarkably short time, the euro has become a world reserve currency, cohabiting with the US dollar, if not challenging its supremacy. That achievement alone would qualify the euro to be judged a success.
That tomorrow's anniversary coincides with a high point of the euro – in many different respects – is a happy coincidence for its early advocates. In strictly economic terms, the thesis may be suspect, but at popular level, the strength of a currency reflects the internationally perceived standing of the nation, or group of nations, that use it – and that this in turn reflects the way the country thinks about itself. After a tentative start, the rise of the euro against the US dollar and the recent sharp devaluation of sterling against both currencies testify to the relative strength of the eurozone economies and the positive light in which the European Union is widely seen.
The present head of the European Central Bank, Jean-Claude Trichet, has steered a steady course through the turbulence of the past year. Fears that competing pressures from different national economies would weaken the euro, perhaps spelling its collapse, have proved unfounded. So far, the reverse has happened, with countries that had shunned the single currency, such as Denmark, reconsidering their position.
But the transformation of economic fortunes brought about by the global economic crisis also poses crucial questions for Britain. As the pound sinks, apparently inevitably, to parity with the euro, it is reasonable to ask not only whether Britain made a mistake in not joining the euro at its inception, but whether euro-membership should not now become a priority. The Business Secretary, Lord Mandelson – perhaps the chief cheerleader for the euro in the Cabinet – has insisted that the Government has too much on its hands to fast-track such a contentious policy just now, while maintaining that euro membership remains a long-term aim.
But is this really good enough? The British public has been given no further insight into official thinking since 2003, when Gordon Brown, as Chancellor, closed down renewed debate, by saying that his "five tests" had not been met. That might have been true then. Now, though, the validity of those five tests – met or not – must be of questionable relevance; the economic and political context in which they belonged has changed utterly.
Simply listing these tests – convergence of interest rates, the impact on financial services, the need for market flexibility, the effect on growth, stability and jobs, and, finally, investment – shows how outdated they have become. It is high time for the Government to consider the merits of euro membership in the present circumstances, not against criteria rooted in the past.