Don't Stuff the Euro?

Here is the website of the Liberal Party's catchily-named campaign against the euro. Looks like this one has been won, at least for the time being, but the website remains up. It includes downloadable posters and car stickers. Who knows, it could become a useful resource again if Labour ever revive their efforts to join the Single Currency. http://www.stufftheeuro.org No offence, but the economics is dodgy and the logic is worse. It demonstrates a complete lack of understanding of the current situation (e.g. "unelected bankers" is exactly what we have in this country already in the shape of the Bank of England - and had had for some time when the piece was written). My understanding is that the ERM problem was basically that the pound's value crashed. A single currency would have prevented that, and the underlying problem (as you might say) would be solved by economic union. Anyway...

I personally see little logic in the continued opposition to the Euro, unless you count mild nationalism (but nationalism nonetheless) as being logical. That is not to say that the Euro should be supported, though. That would depend on the economics.

The principal problem is one of convergence. There are currently some problems in the eurozone because sufficient convergence was not reached. However: Britain could have joined and should have done. Italy's economy isn't even in sync with itself so it shouldn't have joined, especially since their budget doesn't balance and they therefore needed to be able to devalue their currency. Portugal's economy was less developed and so shouldn't have been accepted. Joining now would probably be a mistake because there's too much uncertainty in the markets as it is without the world's financial capital (London) changing currency. However, assuming the present mess sorts itself out in a way which doesn't destroy convergence we should then seriously consider making the switch.

I have always been against a single currency because I don't think a `one size fits all` approach to finance works. At the moment the Euro is strong against the Pound, but for a long time it was very weak. From what I`ve read a lot of economists believe the future of the Euro is poor. I`d much rather keep the Pound.

I have always been against a single currency because I don't think a `one size fits all` approach to finance works. At the moment the Euro is strong against the Pound, but for a long time it was very weak. From what I`ve read a lot of economists believe the future of the Euro is poor. I`d much rather keep the Pound. Economists are divided. Some point to greater stability; others point to reduced flexibility in monetary policy. The key word is convergence: get that right and you're sorted. Get it wrong and the Eurozone would be stupid even to think about letting a country in. There are a few countries in there which shouldn't be (e.g. Italy). There are a few not in there that could be. Britain is one of the latter group.

I have always been against a single currency because I don't think a `one size fits all` approach to finance works. Sorry - missed that. It's not really a one-size-fits-all approach. It's more of a recognition that there is a significant degree of economic convergence and that there is considerably greater stability without fluctuating exchange rates. Other mechanisms for avoiding fluctuating exchange rates, such as the gold standard, have failed. I`d much rather keep the Pound. Ah, but that's hardly a sound economic argument, is it? :D

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