UK "Is Suffering" Says ECB Chief

Wim Duisenberg - "Mr. Euro", President of the
European Central Bank. Source: BBC On-line.

The UK's economy "is suffering a great deal by not participating in the euro," believes the head of the European Central Bank Wim Duisenberg. He also informed the Italian business newspaper Il Sole 24 Ore that "Great Britain satisfies all the conditions to enter, except that foreseen for exchange rates." Mr. Duisenberg, who calls himself 'Mr. Euro,' is bound to stir up more accusations of alarmism from the anti-euro camp. Mr. Duisenberg's comments follow a report by the Invest in Britain Bureau (IBB), showing record inward foreign investment in the UK.

The anti-euro group Business for Sterling has rejected Mr. Duisenberg's comments. The organisation's chief executive Nick Herbert countered: "Far from 'suffering', Britain has the lowest unemployment for twenty years and record inward investment, more than any country in the Eurozone." In a press release he argues that "Britain has met nearly all of the Maastricht criteria for years, but they do not measure the full impact of euro entry on Britain."

Mr. Herbert added that there is "no evidence" that Britain has met any of the Chancellor of the Exchequer Gordon Brown's five economic tests. He made particular reference to the Treasury's test on economic convergence with the eurozone. He accused Mr. Duisenberg of being inconsistent.

Earlier in the year, the ECB chief said that Britain was "years away" from joining the single currency. As a result this has "undermined confidence in the euro." Mr. Herbert believes that Wim Duisenberg as the ECB president has presided over the euro's weakness on the financial markets, causing "problems for manufacturing and exporters."

Economics professor of Bradford University, Dr. Brian Burkitt, illustrated this point in March. Mr. Burkitt talked about the Rover crisis and the strength of the pound, which he said was relatively weak against the Japanese yen and the US dollar. Dr. Burkitt argued that "the problem for Britain is that the euro is very weak." He also believed that the reason why the Confederation of British Industry stopped its own pro-euro campaign, is down to a longer term Government strategy. He argued that Economic and Monetary Union (EMU) will only create "greater instability" within Britain's economy.

East Midlands Labour MEP Mel Read, contrary to suggestions from frustrated Europhiles, doesn't think that the "no" campaign is being damaged by the Government's line on the euro. " I don't think it is damaging the "no" campaign, I think it's giving people adequate time to pause and reflect," she said. Mel Read supports the Government. Talking about the euro and the European Union she added: "..for me it's been a journey of optimism, a vision of people of being able to acknowledge the past and put it in its place, but live for the present and the future."

Dr. Burkitt thinks that the Government's hesitancy over the euro is more politically motivated following the beef crisis, the withholding tax, and the constantly high opposition to the single currency in the opinion polls. Even so, with the average industrial tariff being at 23%, " we gain very little from being within the EU," he said.

He countered Frank Oliver's comment that joining the North American Free Trade Association (NAFTA) would be "silly." Dr. Burkitt enthused that "it would be a terrific possibility." Mr. Oliver, spoke on behalf of the European Movement, and is a retired reader of Econometrics at the University of Exeter. Mr. Oliver blamed the euro's troubles on capital movements from the eurozone to the "booming US economy."

The Prime Minister Tony Blair hinted on the BBC's Question Time last night that he intends to take Britain into the euro. He pointed out that the UK has the lowest inflation in Europe. With that in mind he insisted: "the conditions will be right." Mr. Blair told the audience that the time was not yet right. Interest rates are twice as high at 6% as those within the eurozone, he pointed out. He also believes that if Britain were to say "never" to the euro, the foreign investment reported by the IBB "would go virtually overnight."

Contrary to Government claims that the euro will bring stability to the UK's economy, Frank Oliver pointed out in February that "no currency can be stable against the other currencies of the world." He nevertheless supported the Government's line, which was reiterated by Tony Blair last night. In principal the membership of the euro has considerable advantages, but the conditions and timing have to be met," Mr. Oliver asserted.

The Prime Minister reminded the audience that the UK's membership of the Exchange Rate Mechanism (ERM) failed. He said this was because the UK joined at the wrong rate. Under fire from anti-euro members of the Question Time audience, he explained that it was his duty to back the "unpopular" euro. He said that it's a prime ministers job to "tell people things they often don't want to hear."

Foreign Secretary Robin Cook has also told a conference of Trades Unions for Europe that British membership of the euro is "inevitable." Following Mr. Cook's comments Downing Street refuted his suggestions of the euro's inevitability regarding the UK. Meanwhile, on Question Time, Mr. Blair pledged to sack anyone caught spinning against other members of the Cabinet. A statement later on from Mr. Cook, indicated that he actually supports the validation of the Chancellor's five economic tests.

Blair Fails To Cover Cracks on Euro