Thursday

28th Mar 2024

Opinion

I predict Britain will join the euro in 2016

Ten years ago, the euro was born, As it happened I was in Austria on a ski-ing trip. I remember a bright sunny morning, blue skies and a whiteness of snow on the mountains. The moment seemed monumental, the creation of a common currency by 11 states, the end of all those romantic names - franc, schilling, deutsche mark, peseta, escudo - that we had shuffled in our wallets as travelling students.

I don't know quite what I was expecting that 1 January - fire in the heavens perhaps, or some celestial sign that we were leaving old Europe behind and entering a new age. The child in me has always expected some grand physical accompaniment to major change. I am always disappointed, by the Millennium especially: life goes on much as before and nobody on that calm Friday morning seemed to notice the euro's arrival. Even the schillings limped on for a further three years.

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  • "We do, after all, always join European projects late" (Photo: European Commission)

Many hoped that the United Kingdom would be part of this single currency. The advantages seemed compelling on any consideration but the shortest of short terms. They still seem compelling - indeed more compelling because in 1999 there was a real risk that the euro might fail. Plenty of influential folk appeared virulently determined to sabotage the new currency if they could. Even today there continues loose talk of the eurozone splitting apart and countries abandoning the euro.

The reality is that ten years on the euro is accepted as the world's second reserve currency. It is strong and respected. It has boosted intra-European trade and thereby helped to create sixteen million new jobs, three times the number created in the previous ten years. The eleven founding states of the eurozone have been joined by five more so that over half the Union's states and two thirds of its citizens now use the one currency. It is a great protection for them in the current economic turmoil. Two states outside the Union, Montenegro and Kosovo have also adopted the euro. More will surely follow.

Of course there are localised stresses and strains. What did anyone expect? Goodness! Are there not stresses and strains in those countries, like Britain, that have kept their own currencies? But the more one considers, the more the enormity of the accomplishment becomes clear. Hans-Gert Pöttering, President of the European Parliament, described it as ‘one of the most important historical decisions made in the EU.' I can think of only one more important: that of creating the European community in the first place.

Where does that leave Britain? Despite the protestations of her politicians - Prime Minister Gordon Brown has specifically ruled out joining the euro ‘next year and beyond;' while William Hague, shadow foreign secretary, has said ‘never' to the prospect - I personally believe that British membership of the euro is inevitable. Put brutally, we as a nation have to earn our keep by trade and the pound is too weak and too unstable to enable us to do this effectively.

But whereas once Britain might have joined the euro from a position of strength, and as a result of a positive commitment, now we shall be driven into the euro like a drowning man struggling aboard a life raft. This will not happen in the next year or two - we shall in any case need to re-qualify ourselves - but I suspect Britain will be on board well before the euro's twentieth anniversary.

We do, after all, always join European projects late. We took 170 years to join the rest of Europe in the Gregorian calendar, resulting in a troublesome décallage between Dover and Calais, not of an hour, but of 11 days. We have taken even longer to follow Europe into the metric system. We were 17 years late in joining what was then the European Economic Community (thereby losing the opportunity to structure the Common Fisheries and Common Agriculture policies, as well as the way of calculating contributions). We were late in joining the ERM - the precursor to monetary union - and so enraged our partners by our lack of commitment that they refused to give adequate support when speculators attacked the pound. We left the ERM at great cost, triggering yet another devaluation of the pound.

Open a British newspaper from the 1950s and you will see in the advertisements names of companies that supplied cars, aeroplanes, engines, ships, locomotives and engineering of every sort. Exported all over the world. Precious few remain today. Our trade imbalance in manufactured goods is massive.

Had the euro been in existence then, the pound might have bought eight of them. Fifty years later it barely buys one.

If a weak currency helped exporters then countries like Germany and Japan would not have trade surpluses and Britain's exports would still be king. But devaluation of the currency is a cheap drug - a quick shot in the arm. In the long term it impoverishes the country with inflation.

The last six months have seen a further substantial devaluation of the pound. Against other currencies it is down 25 per cent. Even if half of this is recovered we shall have staggered even further towards a worthless currency. It cannot go on.

In the first flush of his 1997 election victory Tony Blair had the opportunity of winning a referendum on the euro. But he preferred to take advantage of the moment to hold a referendum on Scottish and Welsh devolution. Thus did our best chance with the euro slip through our fingers.

Today only about a quarter of the electorate support Britain joining the euro. Not surprising when the drip of vitriol and bias continues year in year out in much of the British media. Or when the Conservative opposition front bench are selected for their opposition to the currency project.

Nevertheless, it is a fact that all difficult European decisions in Britain have been taken by Conservative governments. For all their hostility in opposition, in government ultimately the Conservatives are realists. William Hague's remarks about ‘never' should therefore be taken with a pinch of salt. Almost certainly it will be a Conservative Government that will drag a reluctant Britain into the Single Currency.

Seventeen years of lateness would see us embracing the euro in 2016. That seems as good a date as any, though whether any Briton will be able to afford to cross the Channel by then is anyone's guess.

The author is an independent commentator on European affairs

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

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