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Should we ditch sterling? The political argument is back
5 Dec 2008YES
Roland Rudd
Chairman, Business for New Europe
The euro is starting to reappear on the agenda. In the lead-up to the Bank's one percentage point interest rate cut, sterling plunged to a historic low against the euro and has fallen again today.
With sterling losing 20 per cent of its value since this time last year, there is a growing expectation that it may soon attain parity with the euro. Were this to happen, it would highlight the case for the UK to consider afresh whether to join the euro. The UK and EU's broad economic links, extensive capital flows and the fact that more than half of our trade is with EU member states are the backdrop for the arguments around British membership.
While the politics of joining the euro are one thing, it is the unprecedented economic situation which is drawing attention to the subject that for several years dared not speak its name.
NO
George Osborne
Shadow Chancellor
The dramatic fall in the value of the pound has led some to conclude that the answer is to abandon it altogether. That is exactly the wrong solution.
If Britain was in the euro, the past boom would have been bigger, the present bust would be even deeper, we would have less control over the future recovery. Once you share a currency and a central bank the pressures for closer political union become more powerful. We've seen those pressures operating with the concerted attempt to deliver a euro-area spending splurge.
Given that we are already borrowing more than any major euro economy, that would be wrong for Britain.
Yesterday's rate cut means interest rates in the euro area are now 0.5 per cent higher than here — far higher than they would need to be to stimulate demand in the British economy.
Reader views (13)
Only economic illiterates and politically motivated would see the pound's fall as reason to join the euro.
Economically in the long term, the fact that matters is that the currency floats and can ajust is important
NOT that it may lose or gain value.
Once again there is talk of joining the Euro as the £ moves towards euro parity. If parity is the magic number why havent we looked to join the dollar when we have been near parity?
The fall in the pound has been caused by a decade of Brown's economic mismanagement - and being in the euro woulnt ghave stopped that.
- John, Redhill, England, 10/12/2008 14:56
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Britain agreed to drop Sterling and adopt the Euro when £1 = €1. That day is looking further away than ever but, that is not to say its a bad thing. This adoption at the time when the Pound and the Euro are equal was perhaps the best idea ever, since it gives the markets the biggest vote on that. I personally dont believe we will see that day for another decade at the very least.
- Brian Davis, London, UK, 08/12/2008 03:36
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I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802)
3rd president of US (1743 - 1826)
GERONIMO
- Geronimo, LONDON MIDDLESEX, 08/12/2008 02:23
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There is no act of treachery or meanness of which a political party is not capable; for in politics there is no honour.
Benjamin Disraeli
GERONIMO
- Geronimo, LONDON MIDDLESEX, 08/12/2008 02:19
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History has shown that the UK has benefited from going your own way. Abandoning Sterling is just one more step in the direction of ceding your national identity to a "greater Europe." As an American, I would hope to see our greatest ally remain strong and independent. Retaining your national currency is an important part of that strenth and independence.
- Jim, New York, NY USA, 08/12/2008 02:13
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Is this one of the new stealth routes slowly integrating us into Europe, I'm suspicious.
- David Chertsey, Chertsey UK, 05/12/2008 17:39
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This would be the worst time to adopt the euro. We would suffer and feel the adverse effects for decades to come. The VAT would go up to 21% and every price - especially food - would go up. Our pensions would suffer even more than they are at the moment - there is an even bigger hole in pensions in europe than here and look at Italy, Spain and Greece who are in terrible trouble because they cannot change their interest rates (the countries could go bankrupt). This is not highlighted by our media because they are all controlled by this government and they do not want you to know the truth.
- Vanessa, London, 05/12/2008 17:35
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Of course we must join the Euro. McCavity has got us so deep in debt that the EU will have to bail us out. Mind you look on the bright side. EU pensions? Booze tax harmonisation? As if........
- Michael Murphy, brightlingsea england, 05/12/2008 17:26
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Yes! NO! the problem is we are going bankrupt. none of measures taken have helped except to make it impossible for us to dig our selves out of this hole as we are still digging ourselves into it. We are in a quick sand of debt. The goverment obtained no gurantees for the £800 billions they handed over to banks. If we are following the Americans who have spend $7.5 Trllion bailing everything out, I would say the Anglo Saxon nations are in Seriouis trouble. This trouble was long ago prophecied for this generation and is known as Jacobs trouble. The reason no one can solve it is simply because it is a spiritual problem that goes deep into the heart of our nations. We have turned our back on the heavenly father. and he has turned his back on us. Look at the mess we are in and sinking. When we noticed the disaster happening in Africa students of the scriptures knew that that problem was coming here. If our currency collapses we wont be able to buty oil and our fiels will lie without crops or means of distribution. This is developing into the worst of times or the tribulation.
- Jas, Camberley UK, 05/12/2008 17:12
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We are being manipulated, duped and fooled into accepting a single global currency. The US dollar is to be replaced with the Amero and sterling will be replaced with the Euro; eventually, both will be merged and we will be under the yoke of financial serfdom, a fiat currency based upon debt slavery.
- Neil, london uk, Airstrip ONE ., 05/12/2008 16:09
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Finance is a key industry, if we join the Euro we would become a third world member.
We should not be in Europe in the first place.
- Frank, Home Counties, England, 05/12/2008 16:02
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You should also try asking the rest of Europe if they think it would be a good idea to have Sterling in the euro.. I for one and unlike Barrosso would respond that Sterling should NOT be allowed to join, on the grounds that it would screw up the whole system..and create such grumpiness and bad feelings..
- Philip, Paris, Paris, France, 05/12/2008 15:17
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Why should parity highlight any case to join another currency/economic arrangement? Where is the intellectual or logical argument - on that basis we should have joined the US dollar 20-odd years ago! Indeed on the other hand, why should lack of parity be any argument by people like myself who oppose joining the euro? They are totally irrelevant arguments. This was the argument made by people in the old ERM in the early 90s...and look what that led to. Massive repossessions, record high interest rates. That is the real argument - does the UK economy fit (it doesn't) and do we want even further control handed to the unelected and unaccountable (surely not). Is Germany thriving in the euro? It has a deep recession. Is Ireland? Is anyone? The best argument made yet on this was the Danish Minister of Finance who said that a time of crisis was not the occasion to start on a radical untried and unknown step (we are all engaged in enough of these already!).
- Damian Hockney, London, UK, 05/12/2008 14:44
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