Posted on 04/23/2003 2:43:22 PM PDT by knighthawk
GORDON Brown insists there is no such thing as a “window of opportunity” for joining the euro.
He won’t risk a leap in the dark simply because a row of traffic lights happen to show green for a few minutes.
Yet this is exactly what Tony Blair wants the Chancellor to do when he announces the results of his famous “five tests” on convergence next month.
Mr Blair believes Britain’s political destiny lies in the single currency — whatever the economic risks.
Mr Brown knows the euro is a one-way bet. Once in, there’s no way back.
If it all turns sour, we go down the tubes along with it.
The consequences for jobs, investment and economic growth would be horrific.
The Chancellor has a near religious hatred of unemployment.
His Treasury stint has been marked by a crusade to shift people off benefits into work.
Mr Brown looks across the Channel and is appalled by the spectre of 20million jobless. Almost a quarter — 4.5million and rising — are in Germany.
The blame lies in part with powerful unions who demand “job protection” for those in work but leave the rest to swing in the wind.
Generous benefits discourage those who can use a pen from taking a job where they might have to use a shovel.
But eminent US economist Martin Feldstein blames the euro — and the one-size-fits-all interest rate policy run by the European Central Bank.
“It is the euro that raised German unemployment to 10.6 per cent,” says the Harvard professor.
“The German example shows Britain’s decision about the euro is not a question of whether the time is now right.
“Adopting the euro is a permanent commitment with permanent consequences.
“My judgment is that it would not be in Britain’s long term economic interest to accept the constraints of the single currency.”
The ECB is remote, secretive, and unaccountable — unlike the Bank of England, liberated by Gordon Brown to set interest rates appropriate for Britain.
So Germany has to cope with borrowing rates up to 2 per cent higher than required to stimulate economic growth.
Without this artificial straitjacket, Germany could slash the cost of borrowing and free its industries to compete on world markets.
Prof Feldstein also explains why the EU — which has not created a single additional job in 20 years — cannot match America where countless millions have been created in the same period.
“The answer is that American employees move within the country, facilitated by a common language and a culture that regards moving across the country as perfectly normal,” he says.
“Wages are much more flexible in the US, reducing the decline in regional employment.”
America also has a tax system which offers relief to states hit by hard times.
Prof Feldstein says adopting the euro would be an “economic mistake” for Britain, fuelling unemployment and putting inflation at risk.
And in words which will find an echo in Gordon Brown’s Treasury, he concludes: “It is hard to believe there are political advantages that can outweigh long-term negative effects on the British economy.”
If people want on or off this list, please let me know.
Got that right.
Oh, ho ho...what a horrific stat. Knighthawk, how is the Euro faring in your neck of the woods? Popular??
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