Should we join the Euro?

NO
Indeed, No, No, No.

I am surprised that some of the people writing into this site think joining the Euro might now be a good idea.

When Euromania was at its height I wrote a book entitled “Just say No”. It set out 100 reasons why abolishing sterling would be a bad idea, for the EU as well as for the UK.

From the UK point of view it will always be a bad idea, for all those of us who want to keep a democracy in these islands. The electorate needs to be able to appoint and sack the people who make the big decisions which affect our economic well being. That includes keeping our own power to determine interest rates, how much currency is in circulation, and our budget deficit or surplus.The fact that our governemnt has been making a mess of using those powers should not dim our belief in keeping them here, under democratic control.

The UK economy is too big, and too dependent on global trade and dollar business, to be a comfortable part of the Eurozone. Whereas today some of the strain on the economy can be taken by changes in the exchange rate, were we to join the Euro more of the strains would be taken in lost jobs and lost investment.

In order to join the Euro, a country is meant to keep its currency stable against the Euro for a period of years to show it has converged with the others. Sterling has moved from 71p to the Euro, to 60p to the Euro to 83p to the Euro now – wide fluctuations showing our economy has not converged, and is not about to. Our miserable experience in the Exchange Rate Mechanism showed how much damage to jobs and asset values pretending we had converged could cost. Why do that again?

A country also needs to keep its deficit down to a maximum of 3% of National Income. Our Treasury is now forecasting an eye watering 8% of National Income. Whilst I would like our deficit to be reduced, slashing it from 8% to 3% would be too far too fast requiring in the short term crippling tax rises as well as spending cuts in a way which could damage the economy further.

Euroland would be foolish to want the UK in at any price. Just as the UK destablised and then wrecked the Exchange Rate Mechanism, so in this condition we could damage the Euro. Euroland is already struggling to discipline or live with the excesses of Italian, Spanish and Greek economic policy. Incorporating sterling would be a bridge too far, and would end in disaster.

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28 Comments

  1. APL
    Posted November 22, 2008 at 10:47 am | Permalink

    JR: "No, No, No."

    Overtones of a previous leader, there Mr Redwood.

    JR: "From the UK point of view it will always be a bad idea,"

    Yes, and given the economic climate, the Euro will afford no shelter, it cannot. If we have to shadow a currency, now that the dollar economy is in trouble, then the yuan might be a good one.

    Given that our politicians (mostly) have no backbone, and wish to subcontract the jobs we pay them to do out to third parties. Given also that politicians usually make the wrong decision. We would be better letting sterling float and remain independent.

    JR: "In order to join the Euro, a country is meant to keep its currency stable against the Euro"

    Rules Mr Redwood, never bothered the EuroFanatics.

    There is talk that Gordon Brown will bring Sterling into the Euro, I don't think he will, because he will not then be able to print £ notes like there is no tomorrow.

  2. Cliff
    Posted November 22, 2008 at 12:54 pm | Permalink

    I personally would prefer to see a future Conservative government move us further away from the giant socialist super state that is the EUSSR…..I would not like to see the loss of the British Pound in favour of the Euro. I do not want to see our culture, beliefs, and way of life diluted further in order to satisfy the desires of those that support a bigger and more powerful European Super State.
    Trading block; yes…Super Socialist State that dictates to us and interferes in every area of our lives; No No No.

  3. Neil Craig
    Posted November 22, 2008 at 1:17 pm | Permalink

    Cutting thje deficit from 8% to 3% would, if no taxes were cut or infrastructure improvements made, be equivalent to an 8% reduction in government spending. While cutting the deficit would not be my first priority that size of cut in spending by a government that employes 2 million people more than in 1997 would be possible.

  4. evil g
    Posted November 22, 2008 at 3:15 pm | Permalink

    Hopefully it will end in disaster without us having to join

  5. lucysharp
    Posted November 22, 2008 at 7:23 pm | Permalink

    Perhaps those who advocate the Euro think it might provide us with some defence against the actions of a government which does not have a clue how the real world actually works. Yes, we could vote them out; but since they employ a third of us and are attempting to bribe another third to vote for them, the remaining third who actually generate income, as opposed to merely spending it, don't stand much of a chance of getting rid of them. They have already destroyed much of the social fabric of Britain. The additional damage they could cause to the country over the next 18 months may prove irreparable. What if we can't stop them? We may not be wholly convinced by the arguments for the Euro, but in the end we may have nowhere else to go.

    And would that be so terrible? Germany and Holland, for example, have managed their economies far better than Britain has done over the past ten years. Their borrowing may be high, but so are their reserves. They subsidise useful jobs rather than effort-free benefits; their infrastructure and, most important of all for sustainability and social cohesion, their agricultural and manufacturing sectors are far healthier than ours. And it is tempting to wonder whether if the EU and specifically the Euro have assisted them, perhaps it could do the same for us.

    I should add that if there were a referendum on continued EU membership without joining the Euro or withdrawing but remaining in the free trade area, I would vote for the latter. It's this half-in, half-out situation, giving us most of the disadvantages (massive contributions, no control over our own borders, forced compliance with ridiculous directives) and barring us from the real advantages (like having the ECB based in London instead of Frankfurt), which seems so futile.

  6. anthonythesensetive
    Posted November 22, 2008 at 8:17 pm | Permalink

    I hate the euro and I hate the EU.

    • steve
      Posted December 15, 2008 at 4:44 pm | Permalink

      And here we have the real reason why most Brits don't want to join the Euro. We think were too good for the rest of Europe. Pride comes before the fall.

  7. mikestallard
    Posted November 22, 2008 at 9:09 pm | Permalink

    In all fairness, it was Mr Brown who prevented Tony Blair joining the Euro with his five golden rules. We all know (did he though?) that these were fake. But they worked.
    At the moment, he is fossicking around looking for backers so that he can win the election. I think he is secretly hoping for China, Saudi and perhaps America to come good. I am not sure he is looking much to Europe. Otherwise, he wouldn't have put President Sarkozy's nose out of joint by "leading the world".
    Would he?

  8. Lola
    Posted November 23, 2008 at 12:20 am | Permalink

    If we are intent on abandoning our currency do we have choice? Could we seek to join the US Dollar (if they'd have us)?

  9. Johnny Norfolk
    Posted November 23, 2008 at 12:59 am | Permalink

    I think the Euro will end in disaster with or without us.

    We would be out of our minds to join.

  10. adam
    Posted November 23, 2008 at 6:24 pm | Permalink

    The EU empire is evil.

  11. not an economist
    Posted November 23, 2008 at 6:40 pm | Permalink

    The problems we have at the moment are a consequence of mismanagament of the nation's currency, with interest rates being set at too low a level. This led to the overheating of the economy which realised itself most strikingly in the house price bubble.

    I fail to see how this would be changed by joing the Euro. Whats important is to get the monetary policy right. Simply surrendering that right to a foreign supranational institution wont necessarily do that unless the ECB just happens to be implementing the policies that our own central bank should have been following anyway.

    Gordon Brown's imcompetence, though staggering in its size, can easily be matched by others. Even in the ECB

  12. Mark
    Posted December 2, 2008 at 1:27 am | Permalink

    The Euro is strong and stable – simple common sense could have predicted that. After all why wouldn't currency investers naturally put all their money into a currency that is not tied to any one country's individual misfortunes and to any one coutry's potitical meddling and disasters. The Euro is a professional currency run by economic professionals not politicans and is free from any one country's vulnerabilities or political interferences. The pound is in a different sea now to that of bobbing along with all the small individual vulnerable Eurpoean currencies of the past; no investers are going to preferentially buy pounds, unless on a short-term bet for a quick profit, when they can put their money into the safe stable Euro. This is why the Euro is and will remain so strong and stable. Simply a manifestation of natural human behaviour – a classic case of don't put all your eggs in one basket.
    So I am afraid we are now doomed, the pound will continue to slowly sink against the Euro in the long term, and with it all our wealth ocmpared to all our neigbours in the Euro. We will become the poor men of Europe. And all because our policians were either too stupid or too arrogant (I think too arrogant) to forsee that this was always going to happen.
    OF COURSE we should have joined at 1.70 like the Irish did. We would all now be 1/3 richer and protected from even further loss of wealth as a result. To not have done has so far cost all of us 1/3 of all our assets. To join now at 1.15 would be an absolute disaster – but to join later at 0.7 when everybody finally wakes up to and realises what is happening and why and starts to demand that we join will be an absolute catastrophe. Yes – we will be forced in at about 0.7 in a total crisis situation to stop our wealth sinking even lower but what a disater that this is happening and that the arrogance of most of our politicians prevented this simple, obvious manifestation of human behaviour from being forseen.
    Don't ever expect the pound to come back up to 1.4 or even 1.7! It never will. That wealth that we had compared to our fellow European citizens is gone for ever. WAKE UP TO WHAT IS HAPPENING – THE EXPLAINATION IS NOT DIFFICULT!!!!!!!

    • mikestallard
      Posted December 2, 2008 at 6:57 pm | Permalink

      Actually, I think that you are leaving something out of the calculations. In a perfect world, you are 100% correct: the bigger the better.
      Regrettably, however, Adam bit the apple……
      This means that the German economy is currently trying to get out of a depression. Meanwhile, the Irish, Italians and Spanish are trying to hold on to a galloping set of price rises. France is…..France.
      I won't mention Bulgaria.
      There is, in other words, a little contratemps going on.
      When this happened to us in 1992, I can remember the closed shops in Watford High Street as I checked in on the dole between a lawyer and a surveyor. Now, in the depression, Spain is roughly in the same sort of predicament, I hear. We could be there too.
      At the moment, at least, even under this Labour incontinent spending, we are at least masters of our own destiny (a bit)….
      I await, with confidence, more and more going it alone among our European fellow citizens and their governments.

  13. James
    Posted December 30, 2008 at 12:01 am | Permalink

    This blog is hilarious. It is rather clear that you are all against the euro and the euro etc etc etc because xenophobic hypercritical conservative supporters. I am proud to say I am from a younger more liberal generation. I love the EU and I want the Euro just like most young people. The sooner you lot pop your clogs the better!!! You are holding us all back

    Reply: If we had been in the Euro in the last three years we would be experiencing an even worse boom and bust, and your job prospects wouldnbe even worse.

  14. ok
    Posted December 30, 2008 at 10:50 am | Permalink

    it hurts to see that so many brits are against the EU but it is not really surprisingly , because your major news papers and tabloids started an anti EU campaign a long time a go, and they were and are not afraid to use falls information.

    example:
    this what the news papers reported:

    Eurocrats call time on light ale
    Bureaucrats in Brussels want to force British brewers to change the name of light ale. They claim drinkers could be misled into thinking the beer is a low-calorie or low-alcohol 'lite' drink… Opposing the move is London Tory MEP John Bowis, who said yesterday: "It is totally intolerable that a traditional British ale should be threatened by a piece of bureaucracy like this."
    Daily Mail 11 May 2005

    Hands off our light ale
    A battle was brewing in Brussels last night to protect the name of light ale from Euro-legislators. New laws are being drafted to crack down on misleading descriptions on food and drink labels. And the European Commission fears that the word "light" could suggest the product is less fattening. Conservative MEP John Bowis is leading moves to vote the plans down… "We are fighting this because light ale is likely to be caught in the net, even though the use of the word "light" in that case relates to the colour and character of the beer, not to any claims that it is less fattening."
    Daily Express 12 May 2005

    THIS IS HOW IT REALLY IS.

    The term light ale refers to the colour of the beer – that's why it is also known as pale ale as opposed to dark ale – and not its alcohol or calorie content. Thus, the Commission does not consider light ale to be a health or nutrition claim. In this particular case, however, it would be up to the British government to determine whether light ale fell within the scope of the legislation, still to be approved by member states (including the UK) and the European Parliament.

    The European Commission is keen to ensure that consumers are better informed about the food and drink they buy, and are not misled by unscrupulous manufacturers who slap misleading slogans on their products. For example, the term "90% fat free" is misleading because it implies the product is low fat, when the fat content (10%) is in fact rather high. So, too, is the claim that a product will "reduce calorie intake" – especially if you then eat cake. These claims would indeed be banned under the proposal, while others, such as those indicating a product is good for your heart, will need be backed up scientifically, a move supported by industry and consumer groups alike.

    AND THERE ARE A LOT MORE OF THESE EXAMPLES
    SEE :http://ec.europa.eu/dgs/communication/facts/index_en.htm
    it is a special website called get your facts straight,to inform the people what is really going on.

    the British government is very good at using the EU as a scape goat.
    they blame every bad rule on europe ( because it can not defend it self in the news) and every good measure is there own, in fact this is a bit different , almost 80 % of your laws are coming from the EU and when it is good laws the British government will say we have made this laws, when the laws is a bit less popular they will sorry people we are also against it but we have too, the EU obliged us.

    criticism is good but blind criticism and absolute lies aren't so before you start to judge take the time to look what is really going on and don't use your news papers as your only source.
    you will be surprised!

    greetings.

    Reply: The reason so many of us are against the current policies of the Eu is that we want less government, less regulation, less interference and less tax, and so much of all of those now come from the EU. If the EU is so innocent of the charges against it by the tabloid press, why doesn't it repeal many of its laws and let us get on with what we want to do?

  15. Christos
    Posted January 5, 2009 at 9:12 am | Permalink

    Stay out and we will talk again in the near Future about your big Economy .
    You cant see that only united we are more stable , i asked oneday a friend why you dont have Euro ? and the answer was "why ? pound is more stronger than euro ".
    1euro=0.95 Pounds (not 0.80 as you said) what about if 1euro = 1.10 or more ? , one country against 16 ??.
    its not only a strong coin its also the idea of Europe, and now its your move dont waste time.

    • mikestallard
      Posted January 5, 2009 at 8:33 pm | Permalink

      My son has just got back from Spain. Coffee: €3 a cup = £3.00. Here it is £1.50. Meals are €20 per person. (=£20.00) This is not in any way the same as England at the moment – even in hot tourist spots like Cambridge.
      What is your part of Europe like? I imagine there is high unemployment, very expensive food and drink and more riots about to take place from the unemployed students. Germany calls the shots and it is doing very well indeed, thank you – at your expense!
      We do not need that – we are fighting to avoid it.

  16. Mali
    Posted January 6, 2009 at 6:06 pm | Permalink

    I'm doing A Debate In School At The Moment. And I Think it is pathetic why we dont join the US Dollar. I Hope That Things Go wrong with the EU while we are not joined to them. and hopefully NEVER

  17. Christos
    Posted January 7, 2009 at 7:10 am | Permalink

    to :mikestallard
    If you join to Euro you dont get the prices up , you just get a stable coin , in Spain yes the prices is up in Greece also, BUT This it depends from Country to Country for example if you want to rent a flat the price is more cheaper in Spain than in England . ( huge differences ) .

    to : Mali you want dollars ? hahah you dont watch finance news or history for sure , you can be an American state if you want also……

    • mikestallard
      Posted January 7, 2009 at 6:12 pm | Permalink

      We'll see who is right in six months. The pound, I reckon, will continue to slide. the euro may not even be there any more.

  18. regina felangi
    Posted January 15, 2009 at 5:53 pm | Permalink

    we should keep the pound. I think this because its what keeps us individual. The pound is a symbol of great Britian and has a large historical input. If we change to the euro then we will suffer a great profet loss. Germany and other large states will be able to control our taxes therefor making it impossible to make money. It is like one size fits all. Some countries because they are part of the europian union are suffering very badly such as greece,italy,portugal etc… if we joined it will only make a mess of our economey. Because some of the countries are suffering so badly they need to lower intrest rates and improve dramaticly but they can't because they arfe part of the union. Unlike us. We have been able due to the credit crunch to lower our intrest rates and remain untouched and although we are not making as much profit and improvement as hoped we are still very well of compared to the many places wading through dept head deep. Plus part of what makes going away to other countries so fun is handling different money, everyone joing the euro will prevent this and i don't like the idea at all. The pund is nice and represents Great Britian through the queen. I also believe Britian is being strong and wise to stand up for the pund and not give in to the Euro.

    ps. we are also doing a debate on the matter and i feel strongly that it will be a mistake to join the euro.

  19. jane smith
    Posted January 15, 2009 at 6:07 pm | Permalink

    i think regina is correct and it will cost a fortune to change over to euros. Everything is more expensive in euros.

  20. jane
    Posted January 15, 2009 at 6:09 pm | Permalink

    We should keep the pound. I think this because its what keeps us individual. The pound is a symbol of Great Britain and has a large historical input. If we change to the euro then we will suffer a great profit loss. Germany and other large states will be able to control our taxes therefore making it impossible to make money. It is like one size fits all. Some countries because they are part some of the countries are suffering so badly they need to lower interest rates of the European Union are suffering very badly such as Greece, Italy, and Portugal etc… If we joined it will only make a mess of our economy. Because and improve dramatically but they can't because they are part of the union. Unlike Great Britain We have been able due to the credit crunch to lower our interest rates and remain untouched and although we are not making as much profit and improvement as hoped we are still very well of compared to the many places wading through dept head deep. Plus part of what makes going away to other countries so fun is handling different money, everyone joining the euro will prevent this and i don't like the idea at all. The pound is nice and represents Great Britain through the queen. I also believe Britain is being strong and wise to stand up for the pound and not give in to the Euro. I feel strongly that it will be a mistake to join the euro. Prices are bound to rise if we join because of the costs of changing over to the Euro.

  21. jane
    Posted January 15, 2009 at 6:40 pm | Permalink

    switching to the euro is a bad idea

  22. Christos
    Posted January 20, 2009 at 10:30 am | Permalink

    jane or regina you are wrong …… you cant say about other Countries because you dont know /, you can also built a huge wall and stay inside to protect your great history and your coin also
    wake up you going down and down with your arrogant .

  23. Christos
    Posted January 20, 2009 at 10:36 am | Permalink

    aaa i forgot now you cant join in the EURO ,

  24. Christos
    Posted October 23, 2009 at 4:03 pm | Permalink

    "mikestallardon 07 Jan 2009 at 5:12 pm

    We’ll see who is right in six months. The pound, I reckon, will continue to slide. the euro may not even be there any more."

    You lost the opportunity look who is right now ………..

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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