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IT’S A Euro Countdown!

The Italians, on the other hand, may find the euro more confusing than any other eurozone state. The Italians have to get used to decimalisation at the same time as changing their national currency, the lira, which has been in circulation since about the 1850s. They are likely to be the most confused by the euro changeover. An Italian fruit and vegetable seller at the Campo dei Fiori market illustrated this point to BBC News Online: “For us it will be more difficult. For a kilo, it’s okay but for 300 grammes…we’ll have to make some impossible calculations,” said Andrea Trovalucci. One euro itself is worth 1,900 lira.

The Italians are also not used to carrying a lot of change around with them. With the introduction of euro cents, this will change. As a result of the large euro notes and the likely increase in change some Milanese tailors and fashion designers, including Gucci, have had to redesign their products. Trousers now need stronger pockets, and suits are being given larger pockets to cope with the euro notes, which are much bigger than their lira equivalent. To add to the problems decimalisation, most fear, will increase prices as figures are rounded up. This is apprehension not unusual, because the same happened when the UK decimalised sterling in 1970.

Yet the Italian Euro Committee’s Mr. Del Bufalo thinks that retailers will resist the temptation of raising their prices. Traders are apparently anxious not to send out the wrong signals; ones that could weaken consumer demand. “They are doing things to tranquillise people…they are really worried that consumption will go down and make the economic situation worse, “ Del Bufalo said to BBC News Online. He also revealed that the Italian government is putting pressure on the public sector to make sure that they do not increase their own prices.

One bank, IntesaBci is even offering a prize Toyota 4X4 to those who sign up for an early changeover to counter public antipathy towards the single currency. All of the banks across the eurozone have a mammoth task to complete. All bank accounts need to be converted from national currencies into euros as quickly as possible. Some countries are aiming to achieve the task within days of 1^st January, but Finland is the exception because it is adopting “a different philosophy.” The Fins are taking a more gradual approach to the introduction of the euro. There are no prizes there!

The rapid changeover also has another potential problem. No-one is quite sure whether there will be enough euro notes and coins in circulation to meet the demand of the January sales. The Belgian government has thus postponed the sales by two weeks, but this concern is prompted not by prices rises but reductions. It’s felt that this would confuse the Belgians even more. “You would be advertising in Belgian Francs, also saying what these prices are now in euros, but also saying the fact [the products] are 25% or 20% cheaper. It would be a huge mess for the consumer to understand, explained the Federation of Belgian Enterprise (FBE) economic department manager Baudouin Velge to the BBC.

Back in the UK Tony Blair and Gordon Brown are presenting a conflicting message. Following a series of hints, and while Britons watch events in the eurozone, it is widely speculated that the British government will decide whether to hold a referendum by 2003. Tony Blair, the prime minister, has spoken more enthusiastically about Britain joining the single currency. Yet the Chancellor of the Exchequer Gordon Brown appears to be always trying to put the brakes on. He insists that a decision will not be made unless the conditions set out by his five economic tests have been met. “There will be no fudging the issues,” he is reported to have said.

Back in August Blair seemed to have set off a political bomb. While on a state visit to Mexico, Blair was reported to have declared that he wants to be “remembered as the prime minister who dumped the pound and took Britain into the single currency” (BBC News Online). Mr. Blair’s aides swept rapidly into action to deny that the prime minister had ever said it. Later on it emerged that Tony Blair had not even mentioned the single currency, but had referred to the European Union and not monetary union. Even so the Liberal Democrats saw it as an opportunity to encourage the prime minister to speak out more favourably about the euro.

The new Minister for Europe, Peter Hain, also made his own hints about euro membership at the end of August. He indicated that the Government regards British membership of the single currency as inevitable; a suggestion that will no doubt be refuted by most eurosceptics. In an interview with the left-wing magazine The Tribune, Mr. Hain was reported to have said: “The euro is marching on and no-one thinks the decision can be postponed forever.” In typical New Labour fashion these comments were also played down, and were said to be nothing but official policy. The Liberal Democrats, however, feel that the Government’s stance is bound to confuse the electorate.

Mr. Hain hopes that the introduction of euro notes and coins will eventually soften British public opinion to become more in favour of the new currency, when UK tourists come into contact with it on holiday. That might happen, but maybe these people won’t realise that the EMU debate isn’t just about notes and coins. To many eurosceptics the core arguments against the euro are based on what is seen as diminishing economic and political sovereignty. The Lords’ ratification of the Treaty of Nice on 17th October won’t help to change their minds.

As usual the Government, which was clearly indicated by Mr. Hain, intends to make sure that any future referendum campaign focuses on the economic benefits of economic and monetary union. European Political Union (EPU) is too divisive for them to discuss, even within New Labour’s ranks. The Tories during the leadership elections still found this to be the case, even though many eurosceptics joined the europhile camp of Kenneth Clarke. Iain Duncan Smith said “never” to British membership of the single currency, which was a departure from William Hague’s wait and see policy, while Mr. Clarke said Europe and the single currency should be off the agenda. Even though most Tories agreed, Mr. Clarke spent most of his leadership campaign talking about EMU and Europe.

In September the Foreign Policy Centre produced a report – Winning the Euro Referendum - claiming that the Government could still win a referendum in favour of euro entry. In order to achieve this, according to the think tank’s Mathew Taylor, the Government must start its campaign now. With the Government offering a more positive insight into its thoughts and then rapidly back-tracking it’s unlikely that a campaign will start until after Gordon Brown fulfils his five tests.

Even though europhiles complain that there is an information void about the euro, there is in fact a mountain-full available to the any discerning member of the public. Yet the press and public opinion by and large remain hostile to British membership of the single currency( seven out of ten still oppose the euro). Questions are being raised too about whether the fledgling currency can cope with an economic slowdown, particularly following the events of 11^th September in the United States.

We shall have to wait and see, but meanwhile the report suggests that it is a patriotic act to support the euro. Most eurosceptics will find that notion rather odd though. How can you be patriotic, they would ask, while handing over both political and economic power to a foreign institution? To them, patriotism relies on retaining the sovereignty of national parliaments. A counter attack against the report’s optimism came from 700 business people, including their staff, who signed an advert that appeared in the national press. The advertisement warned of the “dangers of entering the euro,” according to BBC News Online.

Blair created much controversy across the world by speaking openly about his determination to take Britain into the single currency. The timing, with the international crisis looming just days after the terrorist attacks in New York and Washington, was simultaneously both bad and appropriate. At the beginning of October the prime minister set out his Utopian vision of a new world order. Part of this new world order would be Britain’s membership of the euro. Yet again Gordon Brown’s five tests were highlighted, but he added that if they were met the Government should “have the courage of our arguments” and go for a referendum. Tony Blair even suggested that it is a matter of principle that a referendum must be held within the term of the current parliament. Gordon Brown might disagree though!

Some saw the prime minister’s speech as the beginning of a pro-euro campaign. Others like Sir Stanley Kalms, a “No” campaigner, accused him of being opportunistic given the current international climate, because he appears to be taking advantage of the international coalition’s “war on terrorism.” The Government though appears to be keen to use the introduction of euro notes and coins as a wake-up call “to British business and to the British public,” said Foreign Office Minister Denis MacShane on BBC Radio 4’s Today programme in early October. Even so Mr. MacShane added: There is unprecedented solidarity and support across the Atlantic for a common cause, now is not the time to get out the old, anti-European, isolationist arguments.”

Eurosceptical New Labour MP for Glasgow, Ian Davidson, felt that Mr. Blair’s speech suggested that a referendum is a long way ahead still, and may not be held within the next two years. “I think the prime minister recognises that the economic situation is likely to move against joining the euro within the next period,” he commented to the BBC. Some think that a referendum on the euro will not be held until well into the next parliament. Mr. Blair was also highly criticised by the Conservative’s new shadow foreign minister Michael Ancram who said that it was potentially “divisive” to bring up the issue at a time of international crisis.

On October 26^th Peter Hain denied that his party’s advisor on Europe policy told Labour MEPs at a private supper in Brussels that a date had been set for the referendum. “As Europe minister, I think that I would know if some deadline had been set to target for a referendum,” he said. He made his comments just as he was about to begin a “tour de Britain”, by which he aims to persuade the British electorate to accept the benefits of joining the single currency. Eurosceptical groups portrayed Mr. Hain’s tour as the Government’s preparatory steps to euro entry. Indeed a spokesman for the “No” campaign suggested that more time should be spent on “sorting out our dreadful public services instead of wasting taxpayers’ time and money on a pro-euro tour.”

Welsh First Minister Rhodri Morgan stepped into the debate by urging Welsh businesses to “embrace the euro”, according to BBC News Online. “Whether you are part of a blue chip company, a taxi driver or run a corner shop, you cannot ignore the euro, especially when it is turned into coins and notes on January 1^st, “ he said. Mr. Morgan believes that, even though Britain remains outside the eurozone, it will have the potential to touch every aspect of our lives no matter who we are. Wales is said to sell more than 70% of its exports to the European Union, which are worth more than £4bn to its economy.

Four days later Gordon Brown reaffirmed the importance of his five economic tests to the Confederation of British Industry (CBI). Yet he also went a step further, according Dharshini David of BBC News Online. “He revealed that preliminary analysis is underway,” she said. So it seems that the Government is set upon producing a full assessment within its two-year timescale, at least that’s want we expect will happen or is happening.

The message from the Government, with Blair and Brown often at odds with each other, is often far too confusing to tell exactly. Perhaps this is more about Brown’s “pro-euro realism and caution” than supporting the single currency in principle. Yet he admits that Britain has a long way to go before it can join the euro. This stance will only frustrate those who’d like to see a referendum now, whether they are for or against the single currency.

By Graham Jarvis 6^th November 2001

War: The Warrior and The Saviour

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