'A DOOMED CURRENCY BASED ON SYMBOLISM'

Daily Telegraph – 1 January 2007

[This article, though not involving Julian directly, is included because of its historic relevance to the campaign to Keep the Pound.]

Leading Article

When the euro notes and coins were launched five years ago today, the question was who would be the next to join; now it is who will be the first to leave. Of the 15 EU members on January 1, 2002, it is the three that stayed out – Britain, Denmark and Sweden – that have prospered. The two Nordic nations have voted by handsome majorities to keep their currencies. In both countries, political leaders warned that a "No" vote would lead to a downturn; and in both countries, the "No" was in fact followed by a surge in the stock exchange, a fall in inflation and a drop in long-term interest rates.

In Britain, public opinion is granite hard for sterling, to the extent that no serious politician proposes joining the EU currency, and the lobby group set up to campaign for it has folded.

Meanwhile, opinion within the euro zone has shifted. In France and Germany, majorities say they would rather have kept their old money. In Italy, some shops have started to accept lire again, to the delight of their customers. It may well turn out that membership of the euro has peaked at 13 with Slovenia's accession. The scenic Alpine state, which joined the euro at midnight, is the goody-goody of the new intake, keen to adopt every harmonising measure. Perhaps its euro-enthusiasm owes something to the fact that, uniquely among the ex-Communist entrants, it has been run continuously by the old regime. Not that Slovenia's rulers are Marxists these days, of course; indeed, they never really were. Rather, they are managerialists, supreme technocrats who have taken naturally to the Brussels system.

Supporters of the currency are clutching at the news of Slovenia's membership, but there is a hollow and perfunctory tone to their jollity. Looking back, their mistake was to rely on mood and symbolism to sell the new currency. Unable to argue convincingly that the euro would make people better off – as, indeed, it has not, bringing slower growth and higher inflation to most participants – they instead concentrated on claiming that monetary union was inevitable.

At first, their tactic worked. No one likes to be on the wrong side of history and, faced with a choice between progress or backwardness, most people swallowed their doubts about the enterprise. But remove the sense of inevitability and the entire construct collapses. The optics of the Danish and Swedish referendums were especially telling in this regard. In both countries, the "Yes" campaigns were largely run by middle-aged, middle-class men, while the "No" sides were made up of pretty girls in tight T-shirts. Suddenly, it seems only a matter of time before states start withdrawing.

How funny to look back at the predictions of the Heseltines and Pattens and Kinnocks. Had these men been City forecasters, they would all now be out of a job. But, for some reason, we continue to invite them to pontificate on the BBC, to decorate and defer to them. Odd, really.