BenRoethig

Yes and No. I would like to see a compromise solution with the Banking of England joining with the European Central Bank for a common exchange rate and releasing a new pound with banknotes and coins compatible with the euro while retaining its own identity.

__________________
F/A-18E/F Super Hornet: The Honda Accord of fighters.

DRichards1968

That could be possible: a 'Euro-Pound' if you like. It might be the best solution. The exchange rate would need to be fixed and with no charges imposed by banks to exchange money between the two.

Blackleaf

A poll has shown that 71% of the British people are opposed to ditching the pound and joining the euro.

Showing their traditional Euroscepticism, even the fact that the euro has climbed to a record high against the pound has done little to change the British public's opinion against the single currency.



Majority of voters still oppose Britain joining the euro - 10 years after it was introduced


By Kirsty Walker
02nd January 2009
Daily Mail



The euro has almost achieved parity with the pound


Three out of four Britons remain opposed to joining the euro, a poll has revealed.

Around 71 per cent said they are against ditching the pound to sign up to the European single currency, which was introduced ten years ago.

The ICM survey for BBC Radio 4's World At One programme found just 23 per cent would say yes to the currency if it were put to a referendum.

The research comes at a time when the value of sterling has plummeted against the euro.

And yesterday Shadow Foreign Secretary William Hague told the Daily Mail that the Tories would never take Britain into the euro.

He said: 'Giving up our currency would mean we would lose a vital tool for trying to run the British economy in the interests of the people of Britain - and that means an unacceptable loss of the independence of this country.'

Despite the euro climbing to a record high of 98p against the pound this week, the survey also revealed the rise has done little to improve the currency's image in the eyes of ordinary voters.

Some 69 per cent said it made no difference to whether Britain should join the single currency, while 15 per cent said it made them more keen on signing up.

Europe Minister Caroline Flint said Labour was concentrating on the problems surrounding 'first order' issues, such as housing. 'The issue is financial stability and packages for growth,' she added.

But Dr John Whittaker, UK Independence Party MEP for the North-West and an economist at Lancaster University, said: 'It might be the euro's 10th birthday but we would be crazy to join the party.

'The credit crunch has exposed its real weakness. While all economies are suffering, some eurozone countries are now in an impossible position.

'What these countries need is lower interest rates and devaluation but, stuck in the euro, there is nothing they can do.'


The pound may be in trouble but don't be fooled by the euro gloaters. Their bogus currency will never see its 20th birthday



02nd January 2009
Daily Mail
Peter Oborne

This week marks the tenth anniversary of the euro - and every eurocrat in existence is hailing the single currency as an exquisite success.

According to European Commission president Jose Manuel Barroso, the euro has helped create 16 million jobs. The French finance minister Christine Lagarde hails it as 'a zone of security and stability'.

Joaquin Almunia, the European Commissioner for Economic and Monetary Affairs, declares that: 'The euro has become the symbol of EU identity and is protecting us against the tremendous external shocks that we have had to cope with since the summer of 2007'.


Attack: The euro is being tested for the first time - and it won't survive the mauling

Meanwhile, there are many within the British political and business elite - among them Business Secretary Peter Mandelson and former Prime Minister Tony Blair - who secretly wish Britain was in the euro, and believe we made a terrible mistake when we refused to join in 1999.

To be fair, the europhiles do appear to have reason to celebrate.

Consider these statistics. Following yesterday's accession of the Eastern European state of Slovakia, there are now 16 members of the single currency, compared to a mere 11 in 1999. This means an amazing 330 million people now use the euro as their national currency - more than the population of the U.S.

No wonder, say the eurofanatics, that it has strengthened over the past few years and now stands at parity with the pound sterling - stronger than it has ever been.

Not merely that, there are also those who now believe that the euro will soon overtake the dollar as the world's reserve currency. Indeed, even the villain in the latest James Bond film, Quantum Of Solace, chooses to pay his debts in euros because, so he says: 'The dollar isn't what it was.'

But the truth is very different. As even its strongest supporters must admit, the new currency was mollycoddled during a decade of benign global economic conditions - and only now is being tested for the first time. And it is already showing signs of being unable to survive the strain.

Indeed, far from being the staggering success its supporters claim, the euro-zone is already inflicting huge damage on the nations within it. Many currency market experts believe that some of these struggling members may be forced to peel away from the euro - with devastating consequences for the rest of the world.

The greatest problems, in the short term at least, are in the four Mediterranean economies known as the PIGS - Portugal, Italy, Greece and Spain.

For each of these countries, the euro has already proved a disaster. Put simply, most of the PIGS are so heavily indebted that the market no longer believes they will be able to repay their borrowings.

Normally, if a country falls into too much debt, it can devalue its currency, essentially devaluing its debt burden - this is exactly what Britain has done over the past few months. In the euro-zone, however, the currency's value is set centrally.

This means the only way out for the struggling PIGS is to crash out of the euro, default on their debt and start again. At the start of 2009, this prospect is beginning to cast a huge shadow over the global economy, for the sums involved are huge.

Take the terrifying case of Greece, which was an economic basket case even before it entered the euro, and is even more of a shambles today.

Greek unemployment is soaring, and its current account deficit is a whopping ten per cent of gross domestic product (Britain's deficit is bad enough at three per cent).

But the largest problem is Greek government debt, which stands at a monstrous 94 per cent of gross domestic product - and rising fast.

Already investors have reached the obvious conclusion that there is a very high chance that the poor old Greeks will never be able to repay their debts. That is why the markets now demand to be paid an extra two per cent in return for lending to Greece compared to Germany, even though both countries denominate their debt in euros.

The brutal truth is that if the markets really believed the euro was going to survive, Greek and German debt would cost the same.

But soaring debt is not the worst of Greece's problems. The economy has tilted into recession, and unemployment has risen. Greece desperately needs interest rates to fall - but the European Central Bank is refusing to cut them. The effects are being felt on the streets, and the past few months have seen the worst riots in Athens since the country was a military dictatorship in the Seventies.

There have not yet been riots in the other PIGS - but Portugal-Italy and Spain are all heading for trouble. Spain, thanks almost entirely to the misguided policies of the European Central Bank, is now an economic disaster zone.

In the early years of the euro, the ECB kept interest rates far too low - fostering an inflationary property boom which has ended in inevitable collapse.

Now rates are much too high for Spain's broken economy. The Spanish jobless figure, thanks to the country's membership of the euro, is already 13 per cent. It is expected to approach a truly unbelievable 20 per cent by2010.

Things are already bad enough in Britain, where the jobless rate stands at six per cent.

At least Spain's public debt is relatively manageable, but that is not true of the remaining PIGS - Italy's government borrowing is actually larger than its gross national product.

The truth is that all the PIGS are paying a terrible price for their membership of the euro. If they had kept their own currencies, they would be able to use the traditional tools of economic management. They would set their own interest rates and they could inflate or deflate their national currencies as circumstances demanded.

As it is, however, governments in the euro-zone are utterly powerless to do anything about the menace of joblessness and economic collapse. And to appreciate how damaging that is, one only has to contemplate the fate Britain would now be facing if had we made the mistake of joining a decade ago.


For starters: Greece is just the first of the four major Mediterranean economies to turn into an economic basket case

In the early years, we would have suffered the problems of the poor, hapless PIGS.

The interest rates set by the European Central Bank would have been far too low - meaning the credit boom of the past decade would have been even more inflationary and damaging than was actually the case.

And the recession would have bitten far deeper. Interest rates have stayed far higher on continental Europe, driving millions who would otherwise have a job out of work.

And our currency would have been tied to the strong euro, rather than being allowed to depreciate, find its own level, and give vitally needed assistance to exporters.

Bad though the recession already is, it would have been far worse for Britain had we - as Tony Blair so desperately wanted - joined the euro.

That is why, as the euro celebrates its tenth anniversary, I predict two things.

First, it will never reach its 20th anniversary. The drachma, the lira, the peseta and the Portuguese escudo (and the Irish punt - Ireland can be regarded as an honorary PIG) will all make a return as the PIGS plunge for the exit.

Second, the collapse of the euro-zone will not be a peaceful process. Expect the European political elites to fight to save their beloved single currency.

Eventually, however, their citizens will take to the streets and force their hands. In Britain we can thank our lucky stars we do not have to go through the same painful and bloody crisis.

Gordon Brown had a mixed record as Chancellor of the Exchequer, and bears a heavy share of the responsibility for the recession. But he did one thing for which we should all be thoroughly grateful - he kept us out of the European single currency.

dailymail.co.uk

Blackleaf

The best solution would be to keep the pound. We don't want the euro, or a "euro-pound". We'll keep the pound, and the rest of Europe can have whatever currency they want, be it the euro or monopoly money.

LetsTalk

http://www.lse.co.uk/macroeconomicNe...e_of_stability

4-JAN-2009 11:10



ATHENS, Jan 4 (Reuters) - The euro currency has proven itself to be a source of security and trust in the current economic turmoil, Greece's central banker said in an article published on Sunday.

'Without it, the countries that adopted the euro would have been exposed to serious turbulence, such as those experienced in 1992 and 1993,' Bank of Greece Governor George Provopoulos said in an article written for Greece's Kathimerini newspaper.

'It is no coincidence that other countries in the European Union are now thinking of joining the euro zone,' said Provopoulos, who is also a member of the European Central Bank's (ECB's) governing council.

Member countries must, however, adhere to the guidelines of the EU's Stability and Growth Pact for it to remain successful, he said.

However, in cases such as Greece's, where there is high public debt and a large current account deficit, relaxing fiscal responsibility would have a reverse affect.

'Such a relaxation would worsen fiscal credibility, would increase the cost of servicing the debt and the current account problems,' he said.

Expanding the euro into new member states is a challenge for the ECB and for the common currency, while there are three main challenges for central banks worldwide: globalisation, technological progress and ageing populations.

'It is important to revise the global system and strengthen it with regulations.'

During the past 10 years the euro has benefited the most when fiscal imbalances were avoided, especially in countries with large public debt, he said.

'The continued success of the (single currency) ... will also depend on the ability of member states to align their fiscal and structural policies in ways that strengthen and promote the public good,' he said.

Chaobam Armour

Thats very rude of you, obviously a very bitter Aus!!!!!

dave lukins

CA you'll have to forgive Freddie. Remember, they only changed their money to plastic so it can float on XXXX. As for the EU, I don't know anyone who wants to stay in it

Ironduke

The idea of having each European country keep the name of its old currency was floated when the euro was first proposed, e.g. euro-mark, euro-franc, and so on. It seems you're suggesting that Britain adopt the euro, but call it the pound, keep the queen on the front. It would ultimately be nothing more than superficial and belie what would really happen -- Britain would cede sovereignty over its monetary policy to the European Central Bank in Frankfurt.

__________________
The Buck Stops Here

BenRoethig

I think ceding that sovereignty is inevitable, especially if the Lisbon treaty passes. The Brits have themselves far too deep in the Third French Emp... err, European Union. The question is when does Britain loose it and does at least want the illusion of being independent.

Ironduke

They have a foot in the door, a foot out. The Europeans make many general allowances for the British that they don't for any other country. I'm sure regardless of any new treaty, there will be concessions to the British.

Blackleaf

European politicians whose countries are in the Eurozone WOULD say that the Euro is a good thing for their country.

But I'm not sure the majority of the people of Greece, or any other Eurozone country, would agree with them (though, when do EU politicians ever listen to the people?)

The German public calls the Euro the "Teuro", from the German word "teuer" meaning "expensive."

There were even consumer strikes in Germany in 2002 as shoppers protested against the sky-high prices caused by the currency, and 54% of Germans said they wish the mark was back in their pockets.

And an email was sent to 1 million internet users in Germany in 2002 which said:

"Dear All: You barely needed to be reminded but here’s what we’re all saying and feeling: prices in Germany have increased by between 8-100 per cent. Bars and restaurants are ridiculous. Remember the DM 3.50 beer? Long gone, my friends. When did you last get a beer for 1.75?

"Let’s get continental about this. Let’s strike! Monday 1 July is teuro day. People are being urged to buy nothing on that day.

"Even a tiny drop in expenditure by half a million people would send a powerful message. Overcharging shop owners will think twice when they see deserted stores. We’re being massively exploited and if we don’t do anything, prices will stay the same. If we don't take part, we’ve no right to complain about euro prices ever again."

http://news.scotsman.com/latestnews/...-of.2339812.jp

Anyway, it would be suicide for any British government to make Britain join the Euro, as a recent poll has shown that a whopping 71% of the British people are against it. Any government who starts the process of entering Britain in the Euro will not be in power for much longer.

gunnut

UK will adopt the Euro only when the EU accepts Her Majesty as the head of state and puts her portrait on every single note.

__________________
"Only Nixon can go to China." -- Old Vulcan proverb.

Blackleaf

William Rees-Mogg looks at how the PIGS (Portugal, Ireland, Greece and Spain) have been performing in the euro, and asks the question: "How long can the PIGS feed at the German trough?"

People have also been saying that now Britain is in a recession, shouldn't we join the euro?

In fact, being in a recession makes it almost IMPOSSIBLE to negotiate Britain's entry into the euro...

How long can PIGS feed at the German trough?

By William Rees-Mogg
18th January 2009
The Telegraph



The euro: It would be difficult enough to negotiate British entry to the eurozone at the top of a boom, and quite impossible in the trough of a recession

TODAY'S TELEGRAPH POLL

Will the weaker European economies create problems for us all?

YES: 87%
NO: 13%

In the early months of the current recession, it was widely assumed that the impact on Europe would be less serious than the impact on Britain and America.

It was thought the recession would vindicate the European model of integration and go against what is called the Anglo-Saxon model.

There were even calls for Britain to join the euro.

It would be difficult enough to negotiate British entry to the eurozone at the top of a boom, and quite impossible in the trough of a recession.

However, the recession is the first big test of the euro in its ten-year life.

When the euro started to operate, its critics said it was a fair-weather yacht, well adapted to short cruises in sheltered waters, but dangerously vulnerable to the pressure of the high seas.

We then argued there had been several 20th Century crises that would probably have caused any single European currency to break up.

The two World Wars of 1914 and 1939 would have made it impossible to maintain a single currency between the combatants. The Great Depression of the early Thirties forced Britain to abandon the gold standard in 1931.

In 1971, President Richard Nixon’s abandonment of gold convertibility for the dollar marked the end of the Bretton Woods exchange system.

In September 1992, at the Bath conference, Germany refused to lower interest rates, which forced Britain to leave the European exchange rate mechanism (ERM).

There were, therefore, five occasions in the 20th Century in which events caused a rupture of the existing European fixed-rate exchange system.

All of these represented real economic adjustments that could not have been made inside a single currency, or political conflicts that could not be resolved.

The European powers then decided a single currency, with no provision for withdrawal, would force the weaker European countries to make other economic adjustments because the option of devaluation would have been taken away.

To devalue its currency, a country would have to withdraw from the euro, and the departure of even a small European country would create a major political and economic crisis.

The critics foresaw a gradual divergence of the different European economies: that has occurred. German productivity has risen steadily and the costs of reunification with East Germany have been absorbed.

Other European countries, including the so-called ‘PIGS’ – the four problem countries of the eurozone, Portugal, Ireland, Greece and Spain – have been much less successful in maintaining their competitiveness. We shall be hearing much more about the ‘PIGS’, in the same way as we had to learn about sub-prime mortgages.

Some people think there should be two Is or that the I really stands for Italy.

No doubt Italy will, in the end, be a bigger problem for the eurozone than Ireland. I do not like to see the emerging pattern of a North-South divide in Europe, with Italy, Spain, Greece and Portugal suffering from the pressure of an overvalued currency.

Obviously, the deeper the recession, the greater the pressure on the weaker European economies.
The critics of the creation of a single European currency also pointed to a central contradiction.

In the eurozone, the European Central Bank (ECB) is responsible for managing the currency, but the governments of the European countries are responsible for national economic policy.
This is not the same as the arrangement we have in Britain, where an independent central bank sets interest rates.

In a crisis, as we have seen, the Government and the Bank of England co-ordinate their policies. If the Bank of England has a major disagreement with the Government on a critical issue, it is the Government that prevails.

The gap between the powers of the ECB and a national government shows up in the cost of borrowing. We can, therefore, measure the risk of a country leaving the euro in market terms.

Despite the setback last week when a German bond issue was under-subscribed, Germany was able to borrow on a ten-year, euro-denominated bond at three per cent.

France, almost as good as Germany, borrows at 3.47 per cent. The weaker countries pay a higher rate – Greece 5.34 per cent, Ireland 4.73 per cent, Italy 4.40 per cent, Portugal 4.12 per cent and Spain 3.97 per cent.

If there were market confidence that each country would be honouring its commitments inside the eurozone in ten years’ time, the prices ought to be the same.

Greek bonds yield 80 per cent more than German bonds of the same nominal value.

Of course, if the Greeks were to leave the euro their cost of borrowing would be much higher. Europe will fight hard to keep the eurozone together, but the market measures its perception of the risk of default, country by country.

In this situation, almost everything turns on Germany, Europe’s strongest economy.
In 1992, the Germans failed the test. They put the concerns of the Deutsche Bank ahead of the preservation of the ERM. Now Germany’s economy is under pressure.
Germany is a major manufacturer of high-quality heavy engineering equipment. In a recession, it is normal for investment equipment to be hit late, but hard.

For the first year or two, manufacturers are still completing existing orders. Then when the orders run out, customers do not reorder. The latest Berlin report is that the German economy contracted by eight per cent in the fourth quarter of 2008.

Belatedly, the ECB has cut interest rates to two per cent, with an overnight rate of one per cent. But it takes the ECB almost as close to zero as a central bank can get. The next step after zero rates is the printing of money.
The European governments are determined the euro should survive, but they also want their own administrations to survive. If the recession calls for a further stimulus, are they going to give the ECB a printing press?

Would Jean-Claude Trichet, the ECB president, who hates inflation as the devil hates Holy water, be willing to use a printing press if he were given one?

dailymail.co.uk

Blackleaf

I think it's arrogance and ignorance to poke fun at Britain's economy and imagining that the Eurozone will recover from this recession quickly than Britain.

In fact, many respected economists have recently said that Britain's economy WILL recover quicker than those in the Eurozone (it's common sense, as the British economy has consistently outpaced the eurozone economy)

http://www.iht.com/articles/reuters/...MIDSESSION.php

Being outside the Eurozone, Britain has the great advantage of being able to control its own interest rates. We can set our interest rates to suit our economy.

Most countries that have the euro don't have that luxury. All the eurozone countries share the same interest rates, controlled by the European Central Bank, so thare are times when the bank INCREASES interest rates even though Ireland, for example, or Spain, may what LOWER interest rates.

This one-size-fits-all policy is a major disadvantage for any country that has the euro.

Only rarelt has the eurozone economy grown faster than Britain's. In the third quarter of 1997, the UK economy grew almost 4%, growth other large EU countries such as France and Germany can only dream of. The Eurozone managed a paltry 2.3%. I the fourth quarter of 2002, the UK economy grew 2.1%, whereas the snail-like eurozone could only manage 0.7%.

Britain has the tools to force through measures beneficial to its economy. Most eurozone countries don't. So don't bet against Britain recovering from this economy quicker than the eurozone, or individual eurozone countries such as France, Germany or even the so-called "Celtic Tiger" Ireland. The IMF predicts that Britain's economy will shrink 2.8% this year - but predicts Ireland's to shrink by 5%.

Blackleaf

Imagine if the Australian government proposed scrapping the Australian dollar and adopting the euro. Would most Australians be supportive of this? I doubt it.

Or what if the countries in your neighbourhood of Oceania - such as New Zealand or Papua New Guinea etc - propose creating a single currency to be adopted by each country called the Oceanian Pound, but Australin can't control its own interest rates (something you'd want to do in times of recession) because your interest rates are controlled by a group of foreigners at the Oceanian Central Bank in Auckland, New Zealand and are therefore not always want the Australian economy needs to recover. I seriously think most Australian would prefer to keep the good old Australin dollar - and to keep control of your own economy - than joining the Oceanian Pound.

Just imagining all this helps to put you in Britain's shoes regarding the euro.

Your post is just typical of a loudmouthed Aussie with an inferiority complex towards the Mother Country.