Have a look at these, often heard, sound-bites. Some of them are direct challenges while others are more subtle. See if you really think there is any substance in what they say or imply!
1. We must be at the heart of Europe!
How many times have I heard this! Ironically, what this really acknowledges is that Britain is out of step with Continental Europe and must get more involved to influence it in Britain’s favour. Of course no matter how involved Britain is, it will never be more than one voice in the midst of many.
2. The business case for joining the Euro is overwhelming!
Only 19% of the British economy is based upon exports to Continental Europe. Companies would indeed save on transaction costs but how big are they? – approximately 1.5% per transaction or 0.4% of GDP. Not exactly a huge saving – the equivalent of less than 6 months economic growth. In fact since UK companies can hold an account in Euros as well as pounds they can further reduce their transaction costs. So these ‘benefits’ must be weighed up against the unproved track record of the whole idea, the loss of control and the likely increase in red tape introduced by Brussels. Not exactly what I would call ‘overwhelming’!
Take a look at No-Euro who set out the business case for keeping the Pound.
3. If Britain joins the Euro the British will have cheaper mortgages!
The interest rate in a country is closely linked to the mortgage rate. If the interest rates go up or down then invariably so will the mortgage rate. So what this sound-bite is really saying is that Britain would enjoy lower interest rate if it joined the Euro. This may be the case but it would seriously damage the British economy in the long term. If lowering interest rates in the UK is the best course of action then why doesn’t the Independent Bank of England do so – it has the power to!
4. It’s inevitable
Of course it’s not inevitable – for a start there will have to be referendum in the UK before Britain will join. At the moment (Autumn 2001) the British people are quite sceptical that it would be in our interests to join – so a ‘No’ vote is more likely. Sound bites like these are just intended to bully the general public into not thinking about the issues and then try to imply that even if you don’t like the idea it’s going to happen anyway. Don’t be fooled!
5. Three and a half million jobs depend upon us joining the Euro!
It is true that we trade with the Eurozone. About 19% of GDP is associated with EU trade. This corresponds to about three and half million jobs. The implication is that if we don’t join the Euro, all trade will be blocked. This is nonsense, especially when one considers that four million jobs in the Eurozone are dependent upon trade to the UK – so Euroland has more to lose than Britain!
6. The Pound is too high!
The British pound has increased in value against the German Deutchmark and French Franc over the last five years. The reason for this is that more value has been created in the UK compared to France and Germany. When someone says, “the Pound is too high” it shows that they do not understand why currencies fluctuate. If the British Government devalued the pound then the relatively affluent British public would start spending money on cheap foreign goods – this in turn would increase inflation and ultimately unemployment. Not a desirable prospect!
7. To be anti-Euro is to be a ‘Little Englander’!
A trite insult implying lack of vision. It is used by ‘Little Europeans’ who cannot see that World trade is more important than creating a protectionist racket. To these people I would encourage them to get a vision that includes more than 5% of the World’s population!
8. It’s the future – you’re just clinging onto the past!
The Euro is not a new idea. We don’t really hear much about it in the media, but there have been several attempts to fix exchange rates in Europe and all of them have failed. These include the Gold Standard, The Snake, The Bretton Woods System and the ERM. Have you ever wondered why France and Belgium both have Francs? It’s because they created a single currency that failed. Why do they all fail? Well when one thing is fixed something else must ‘give’ – usually inflation and / or unemployment!
9. Leaving the European Union is an extremist measure!
Doesn’t it seem strange that Europe is the only group of countries in the World that are seeking to create a common currency? The old Soviet Union has broken up – there’s no (serious) talk of the American dollar and Canadian Dollar linking – Asia is doing well as a group of independent countries. Isn’t the whole European Integration project going in the wrong direction? The decision to Leave the EU is not one to be taken lightly but it is certainly not something that is to be feared. If Britain did leave the EU it would be free to forge trading links with the rest of World. Free trade is the key – not political empires!
10. The Euro has been a success!
The Euro launched at the beginning of 1999 at $1.16/Euro. It is now hovering around $1 – a devaluation of 15%. The main economies in the Eurozone i.e. Germany, France and Italy are struggling to say the least – in desperate need of fundamental structural reform. At the same time Ireland has inflation of over 6%. If this is what the pro-Euro lobby call success then do we really want to be part of it? I think when we hear people calling it a success what they really mean is that they are pleased it’s lasted for so long!
Copyright 2000-2010 Steve Maughan