posted on Jul, 29 2005 @ 10:30 AM
Britain should leave the EU, and one day it will.
Reasons why Britain should leave the EU.
Britain and the Single Currency
"[the euro project] is of course, an intensely political act…the euro cannot be conceived of except politically"
Rt Hon Tony Blair MP, statement to the House of Commons on EMU, 23rd February, 1999 (Hansard col. 181)
What is the Single Currency for?
The Single Currency is a political project designed to hasten the creation of a Single European State in which nation-states like Britain would be
provinces. Helmut Kohl and Jacques Delors have been saying so for years; Chancellor Schröder's new Government has now confirmed that to be the
In joining the Single Currency, a nation hands over control of its interest rate, exchange rate and gold and currency reserves, as well as control
over tax and spending, to Brussels and Frankfurt. All of this is set out in the Maastricht Treaty which Britain signed in 1992, and in the Stability
Pact which she signed in 1996.
The Single Currency is not about economics, though its economic consequences will be profound.
Britain in the Global Economy
There are over 200 nation-states in the world, almost all of them with their own currencies. Although 11 European Union countries ("Euroland")
joined the "single" European currency on 1st January 1999, no nation-state anywhere else in the world plans to join any single currency.2
There are 43 nation-states in Europe, of which only 11 have joined the "single" European currency. Those 11 countries, unlike Britain, are in
varying degrees economic satellites of Germany and France.
Of the world's 200-plus nation-states, only three - the USA, Japan and Germany - have economies that are significantly bigger than Britain's.
British exports to Euroland account for less than a fifth of British GDP. In other words, more than four-fifths of the British economy is not involved
in trade with Euroland.3
British exports outside the EU continue to grow, but British exports to the EU are falling in absolute terms.4
Globally, British exports to English-speaking countries are growing almost twice as fast as her exports to non-English-speaking countries.4
More British exports (54% of all her visible and invisible exports) go outside the EU than to the EU, and the proportion going outside the EU is
growing. Only 46% of British exports go to the EU; only 43% of British exports go to Euroland.4
The proportion of worldwide British exports (46%) going to the EU in 1997 was smaller than in 1992, the year before the Single Market came into
Britain has an on-going structural trade surplus with every continent on the planet, except one: Europe. She has an on-going structural trade surplus
with the world’s two biggest and technologically most advanced countries, the USA and Japan.4
Within Europe, British exports to non-EU countries are growing significantly faster than her exports to the EU.4
Less than one-fifth of inward investment from overseas comes from the EU, and less than one-fifth of British investment overseas goes to the EU.5
80% of the world's financial transactions and close on 60% of the world's commercial transactions are denominated in US Dollars.6
The British economy, and British interest rates and exchange rates, move in step with those of the US, our largest trading and investment partner, and
not with those of the Continent.8
The Single Currency and Economics
The Single Currency is not an economic project. However, joining it would have profound consequences for British jobs, tax rates, growth, investment,
mortgages, welfare and NHS spending.
The Removal of Safety Valves
A single currency eliminates the interest rate and exchange rate safety valves, which allow changing national economies to adjust to each other.
A single currency does not eliminate the need for adjustment. Instead, the strain has to be taken by the unemployment level - as can be seen in
Germany and France, which have voluntarily locked their currencies together for the last 12 years.
Preparations for the "single" currency have already helped to cause mass unemployment in Germany, France and Italy, where real jobless rates are at
least three times as high as in Britain. Many, including the CBI, the Bank of England and the Bundesbank, expect the single currency to result in
further job losses within Euroland.
The Single Interest Rate and the Single Exchange Rate
The "single" European currency means a single interest rate and a single exchange rate from Lapland to Gibraltar. Both will be set by the
Frankfurt-based European Central Bank to suit the German and French economies (which account for well over half the combined output of the 11 Euroland
countries) irrespective of the needs of the other 9 countries.
Most of the time, the one-size-fits-all interest rate and exchange rate does not suit the other countries, and will produce even more unemployment, as
Britain found to her cost in 1990-1992 when the pound was locked to the German Mark in the Exchange Rate Mechanism (ERM).
If Britain joined, she would suffer disproportionately from the consequences of the one-size-fits-all interest rate and exchange rate, since there is
deepening negative correlation between the German and British economic cycles.8
There is no evidence whatsoever, anywhere in the world, that removing the interest rate and exchange rate safety valves increases jobs, trade and
investment within a single currency zone. Trade between Germany and France, for example, has grown more slowly than trade between Germany and the rest
of the world, and between France and the rest of the world.
The only unambiguous minor benefit from a single currency is that costs of changing money (for example from Francs to Marks) within the single
currency zone are removed.
With the growing use of plastic cards by individuals, and of hedging by businesses, such costs are already shrinking. The costs of changing money with
all the other 200 currencies in the world would not be affected by being inside or outside the "single" currency.
The costs of abolishing the pound and substituting the Euro (replacing notes, coins, cash registers, cash dispensing machines, slot machines,
accounting systems etc etc) would be massive. Consumers would have to pay for those costs through higher prices and taxes. It would take years,
perhaps decades, before the trivial savings on money-changing outweighed the costs of abolishing the pound and bringing in the Euro.
Tax, Spending and Labour Costs
With the start of the Single Currency, control over Euroland’s tax and spending passes to the EU. Tax and spending levels will be "harmonised" –
in other words made the same – throughout the single currency zone. In addition, Germany and France are already insisting that what they call
"social legislation" – including the cost of labour – be harmonised too.
Germany, France and other Euroland countries have far higher tax rates than Britain (and, mainly because their unemployment levels are so high, far
higher levels of state spending than Britain). If Britain joins, British taxpayers will pay more and state spending will rise towards German and
French levels. In addition, far more pensions in Germany, France and the other countries are provided by the state than in Britain. If Britain were to
join the Single Currency, British taxpayers would automatically end up contributing to the state pensions of retired people in Germany, France and the
rest of Euroland.
What should Britain do?
If Britain wants to continue as a self-governing nation, she should not join the Single Currency.
She should keep the pound, keep control over her own tax, spending and wage levels, and continue to trade successfully with the rest of the world.
If Britain wants to become a province governed from Brussels and Frankfurt, she should join the Single Currency.
The pound would be abolished and replaced by the Euro.
If the British people are asked to vote in a referendum on joining the Single Currency, the fundamental issue will be the survival or extinction of
Britain as a self-governing nation.
1 - In, for example, Chancellor Schröder's inaugural address to the Bundestag, and Foreign Minister Fischer's address to the European Parliament on
12th January 1999, in which he said: "…a common currency is not primarily an economic, but a sovereign, and thus eminently political
act…political union must be our lodestar from now on".
2 - Some currencies are however temporarily pegged to the dollar.
3 - ONS: Economic Trends, December 1998 and ONS: The Blue Book 1998. Exports (visible and invisible) to Euroland in 1997 were £151 billion; British
GDP in 1997 was £802 billion; thus exports to Euroland as a proportion of GDP=18.8%.
4 - Office for National Statistics (ONS): Economic Trends, December 1998.
5 - The Facts about Foreign Direct Investment: eurofacts Occasional Paper No 5: November 1998 (based on ONS data).
6 - Interviews in the French magazine Capital, January and December 1998, with Yves Thibault de Silguy, the European Commissioner responsible for the
7 - A recent report of the French Commissariat au Plan conservatively estimated real French unemployment at over 5 million, equivalent to a 20%
unemployment rate. Comparable estimates exist for Germany and Italy.
8 - HM Treasury, October 1997: UK Membership of the Single Currency: An Assessment of the Five Economic Tests, page 12.
Enquiries: Ian Milne (Director)
Global Britain, Hope House, 45 Great Peter Street, London, SW1P 3LT
Tel: 0171-233 4443 Fax: 0171-233 4446 Email: email@example.com