Time to end the phoney war on euro entry

IN THE game of political cat and mouse with the electorate over joining the euro currency zone, the Prime Minister has given his strongest endorsement of entry.

It is no real secret that Mr Blair wishes to join the euro, though his reasoning remains tendentious and his logic often contorted. He constantly refers to this being a rigorously economic (and thus "scientific") choice and castigates opponents who want to keep the pound as being overtly political (code for being anti-European). But surely it is a balance of the political gain and loss as well the economic? And what could be more political than when Mr Blair asks Jeremy Paxman: "Should we stand apart from the alliance right on our doorstep as a country? It would be crazy to do that." Or again, when he descends to Messianic rhetoric: "I think Britain’s destiny is as a leading player in Europe."

Mr Blair is more concerned about calling the referendum as and when he can win it than about the results of the supposedly objective economic assessment. The Blair dilemma is that opinion polls have consistently shown a majority of the electorate opposed to entry. His only hope of victory in a referendum is to obfuscate by suggesting the decision is about economics and that the Treasury analysis (which few will comprehend) proves it is a good thing on this count. But Mr Blair has begun to run out of manoeuvring space. His hold on power will not be eternal, especially if there are more embarrassing stories about fat cat financial donors to the Labour Party. And the jury is still out on his gamble of raising public spending with its likely inflationary impact on economic prospects: ie causing a divergence between the European and UK economies over interest rates which might wreck the prospects of euro entry. Hence Mr Blair’s sudden positive rhetoric on joining sooner rather than later.

So let us end this phoney war. Messrs Blair and Brown should publish the economic assessment this year, and let us have the euro referendum as soon as possible thereafter. At best, the assessment might infer (in the Treasury’s view) a certain convergence between the UK and core EU business cycles. So what? It is still a moot point whether Britain should give up the right to set its own interest rates (and mortgage rates) or hand that over to Frankfurt. Nor will Britain’s presence in the EU be strengthened by abandoning our monetary sovereignty. In fact, given the political instability revealed recently in France and Holland, there is everything to be said for a determined Britain, free to pursue its own economic policies, being good for Europe at this juncture. Let the campaign begin.

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