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Monday, 8 May, 2000, 16:16 GMT 17:16 UK
Was the Euro a mistake?
The Euro has been plumbing new depths on the world's financial markets. So has the single European currency been a terrible mistake?
Critics say Euroland failed to deliver what it promised: a strong currency, and for those outside, there's the problem of exporting against a low currency.
Almost exactly two years ago, Europe Today asked two of Europe's leading economists whether they thought the Euro would be good or bad for Europe. Now we've brought them back together again.
From Frankfurt Professor Norbert Walter, Chief Economist of Deutsche Bank, and in London Ruth Lea of the British Institute of Directors.
Listen to this week's Europewide Debate, hosted by Mark Reid and then tell us what you think.
The Euro will play a part in this cross border integration. So as long as inflation is kept low the euro can go to whatever levels it wants to.
Robin Drinkall, Denmark
One message here says 80% of Euroland trade is internal. Another says 43% of UK trade is with Euroland. This would seem to be an excellent indication why joining would be idiotic. Their economies simply do not have the same needs and priorities as ours...
And if the consumer level taxes were reduced - VAT is ridiculous - economies everywhere in Europe wouldn't have such tight grips on how people could freely spend their money. And in my point of view I think it's sad that Germany has had to take much of the weight in all of this.
The one near unchallenged economic success of this Government was to give interest rate control to the Bank of England. So why now join the Euro and throw this control away? It's like buying a car and then ripping out the accelerator and brake pedals...
Whatever the level of commitment shown by member nations, no amount of social and engineering can account for the myriad of global factors that affect economies and exchange rates. The danger for the Euro now is that in its very rigidity it will shake itself apart in trying to accommodate all the pressures that now assail it.
Chris Harper, UK
Euro a mistake? When I go abroad to another European country and I have to change money in other currencies, or when I have to manage with three different currencies in my pocket I only can say: God bless the Euro!
A common currency for the whole of Europe can only make sound financial sense. It seems to me that the only people opposed to it are those making vast profits out of currency changing.
When UK currency was decimalised there were 240 old pence to the pound sterling. Under decimalisation there were 100 new pence and most people felt cheated. At the moment there would be 2 Euros to one pound sterling and it seems that, if ever there was a good time for UK to enter the Euro it would be now. UK trade with Europe would then be on an even playing field.
The Euro was a financial answer to a political question. As a believer in the principal of European "togetherness" I believe the right question was asked and it required a positive answer, but the EU jumped straight to a distant goal bypassing the necessary groundwork. Meanwhile, the more immediately urgent task of bringing the rest of Europe together has been constantly delayed, leading to a rising disillusionment and even hostility among our less wealthy cousins; Europe needs sound basic institutions for all, not a fancy-but-flawed dream for a lucky(?) few.
The single currency is successful, provided all measures pertaining to the real world are ignored and it is seen as simply a symbol of the political will of unelected and unrepresentative cliques. However, it is real money in the real world and has to be used to buy and sell things. As money, how can anybody possibly claim that it is a success?
This currency is based on something that simply does not exist and never will exist: a state called "Europe"
Alex, Great Britain
I think the Euro was and is a good idea. It makes people more independent and it is better to compete with other countries outside the EU.
The "Euro" has and will have more advantages than disadvantages. I think the Euro will recover its position up against the US dollar. Europe is for a great part self-contained thanks to the Euro. So the problem isn't as big as it looks. I don't worry about the Euro. Things like this need some time to settle in !!
I worry about the UK attitude to Europe. I have no doubt, the Euro would not be having problems, if the UK had joined as good Europeans. The whole attitude in the UK or perhaps I should say England, is to go it alone, as if they were still a leading nation of the World. Are they frightened to hold their head up to real competition, instead of hiding behind a Sterling Pound versus Euro battle. Surely they are going to fall, rather heavily, when the Euro grows stronger, as it surely will in the foreseeable future.
Two years ago we needed to be part of the strong Euro. Now we are told we must join because it is weak. Those who advocate it should realise that the pound is not strong, it is the Euro which is weak. Yes our goods are more expensive abroad but then the raw materials, many of which are imported should be cheaper. I certainly don't see foreign imports coming down in price and anyway, what about the issue of sovereignty.
The euro has been a great idea. Europe is an economically self-contained area so why should we worry about the euro's weakness against the dollar? I think the UK should join too. After all, British citizens should be allowed to have an education, a health service and a public transport system up to the standards of a developed country.
I think the Euro should be named after a country which will most likely end up as a member - the Turkey! It's just a shame there isn't a sovereign nation called White Elephant.
I think it is astounding that many English people feel closer to the US than our European neighbours. Were it not for the common language I am sure that this would not be the case.
It is time we English move on from our insular, narrow-minded and out-dated world view, realise that we are part of "the Continent" and embrace Europe.
The Euro might just help us do this!
The Euro is a waste of time and money. Can't anybody see that? Speaking to a number of Europeans working in the UK - they are all against it.
The sooner we join the Euro, the better. The US dollar had a pretty rocky ride when it first became the currency of the States and look at it now - stable and wanted by all! The bulk of our dealings are with Euroland and we are losing out heavily through not being a part of it. The level of the Euro against other currencies is irrelevant, it is what goes on within Euroland that matters.
I think the Euro will survive and prosper. The E.U. will eventually become a Federal State. The E.U. is laughing at the doomsday people who are mainly in the U.K. The Union is growing while the U.K. loses jobs to its partners. We can sell our products easier than ever to the U.S, U.K. and the rest of the world. While Ireland still depends greatly on the U.K. this is shrinking rapidly and trade with our E.U. partners is growing.
Long live the Euro
I find it very, very strange to see so many comments from fellow UK residents saying that the euro is doomed and was a mistake because you can't have a single currency spanning several countries each with their own culture and economic differences. Therefore, by definition, sterling must be a failure and it is time for Scotland & Wales (N. Ireland?) to set up their own currencies.
Any word with "euro" in it is always an unmitigated disaster.
John Brownlee, England
Basic economics point out that single currencies only work within homogenous economies with low barriers to labour movement (cultural as well as legal), harmonised fiscal regimes etc. Trying to get the economies of northern and southern Britain to converge is hard enough. The EU, intent on geographical expansion, is far, far from being one happy social and economically convergent market.
The way things are going, the Euro will not be an issue at the next General Election in the UK, because it will by then have ceased to exist. Sooner or later the speculators will move in against this joke currency and fatally undermine it. We already have grass roots pressure against the Euro among German voters, and it will not be long before their politicians have to act. The moment Germany withdraws from the Euro, it is finished.
With oil prices creeping up yet again, I wonder if the weak Euro wouldn't push the inflation up in the Euroland. Possibly triggering a panic selling and the resulting interest rate increases just like what happened to the Pound in the last decade. May be the ECB is taking a gamble of holding the interest rate and hoping sense will prevail in the currency market. The question is will it face the same fate of Bank of England and face a one way bet of Euro going down? Although knowing just like the pound it will eventually comeback up.
The EURO cannot be spoken about out of the context of the EEC. I voted against the original Common Market on very simplistic grounds. The 'hard sell' put out by the government, under Ted Heath, at the time was 'there are 7 countries out there just waiting for our lorries. My small brain immediately realised that this meant there were 7 countries exporting to us. For every one of our trucks going 'that way' there would be 7 coming 'our way'. This sadly proved to be the case with the ruination of the UK 'white goods' industry, to Italy, the Channel Islands tomato and flower industries, to Holland and the loss of good productive farming to the French by way of the CAP. My opinion on this state has never wavered. It has got stronger.
I have read many times that the UK is inextricably part of Europe and as most of our trade is with Europe we should stop resisting and join the Euro. What all these people fail to realise is that Britain is the largest investor in US industry in the world. The UK owns a larger percentage of US industry than any other country, including Japan. We live in a global economy, not a Eurocentric one, wake up and face reality. The Euro was doomed from the start because the individual members will not surrender their economic policies for the sake of the single currency. My personal belief is that the Euro is doomed, the Germans will be the first to pull out, they are already extremely unhappy to have traded one of the worlds strongest currencies for one of the worlds weakest. By the time the UK gets around to joining it will be entirely academic, because there won't be a Euro to join.
Sean Fear, UK
It's a shame to see the Euro so weak right now, but hopefully things will pick up again soon. The idea of a single currency is a fine one, and will create greater unity between the EU states. Perhaps, though, the procedures have to change, in that there should be more political intervention from the governments of the member states. People see the euro as being too remote for them to be able to exert any influence over its fortunes.
I have read many times that the UK is inextricably part of Europe and as most of our trade is with Europe we should stop resisting and join the Euro. What all these people fail to realise is that Britain is the largest investor in US industry and owns a larger percentage of US industry than any other country, including Japan. We live in a global economy, not a Eurocentric one. My personal belief is that the Euro is doomed and that the Germans will be the first to pull out as they are already extremely unhappy to have traded one of the world's strongest currencies for one of the world's weakest.
Clark Brown, USA
The Euro is weak because the economic realities behind it are wrong. Margaret Thatcher said that you can't "buck the market". This is a graphic demonstration of how right she was.
From the point of view of most "in" countries, the Euro has been a total success. Weaker economies like Portugal and Ireland have seen business - mainly services business - flood in from across Euroland thanks to their competitive labour rates. The stronger economies such as France, Germany and the Netherlands enjoy net exports outside Euroland and, as a result, are now earning more high-value dollars and pounds for their Mercs, Burgundy and Gouda. This is a classic win-win. The losers are people exporting into Euroland, not those sitting pretty inside.
I'm a British ex-pat living in Leipzig, formerly East Germany. My only complaint about the weak Euro is that it makes my visits home more expensive! I find most complaints from people in the UK are based on ignorance and the island mentality.
The Euro will be strong. Stock markets are merging; the euro will soon fill our pockets and Britain will most likely join. The only mistake is the pathetic patriotic defence of something as abstract as a currency.
There are two questions to ask. Do we really need the Euro and why are we outside of it? Because we are so much stronger without it, and we don't need it. Why weaken our strength just to follow the crowd, If it ain't broke don't fix it.
Britain's absence from the euro is why it is having so many problems. People are worried about losing identity, a currency does not define its people, a central Europe could work if we as citizens all got together and tried to make it work.
Nis Quadri, England
The Euro was a crazy idea from the start. It is the beginning of a European super state that would never work. Politicians hoped it would compare to USA, but there are too many different nationalities and cultures.
Maybe the UK should quit the EU and join us in NAFTA. Having the USA and Canada as a favoured trade partner makes more sense than aligning with the corruption plagued bunch of dithering crooks in Brussels. Maybe add in Commonwealth countries as well and create the world's most capable, democratic and fair trade bloc, bar none!
Of course it was a mistake. Apart from the issues of national sovereignty
that are raised it links all economies across Europe under one currency. This means the weak economies will drag us all down.
Yes and no. The concept of the euro is not a failure. The problem is how the euro came to be. That's where it has failed.
The fact that Britain remains outside of EMU, as well as Sweden and Denmark, undermines the single currency. As long as there are opt-outs, it will never gain the strength it needs to do what it was set out to do -- compete against the dollar and yen.
Britain will ultimately join the euro which will become the world's favourite reserve currency. At present the UK economy is more aligned to the USA but the position is changing. It is too early to talk about success or failure of the Euro. An exchange rate of one dollar or 80 cents makes no difference. This is because the euro zone is largely self sufficient with the majority of trade internal.
It is entirely fallacious to state that the Euro has failed simply because it is weak against the pound and the US dollar. If the EU is such a big disaster how
come everyone else in Europe appear to be enjoying better health and
education services than us? What do the anti-Euro school think is the main
reason for the failure of Rover? It's perfectly obvious to anyone with half a
brain that the high value of the pound and high interest rates are hammering
our manufacturing industries into the ground. Aside from the strong economic
arguments closer integration with Europe will bring continued political
stability and, hopefully, a greater sense of social justice which has been lacking
in this country since the last true Labour government.
Like it or not, the Euro is clearly affecting monetary policy in the UK in the value of the Pound and the interest rate changes necessary to support the Pound.
I think the only question to be settled is at what price does the UK decide to buy into the Euro.
The Euro is a mistake and thank goodness the UK stayed out. It was born of political ideology rather than economic reason. After all, countries like Italy would never have qualified on purely economic criteria without substantial fudging.
Matthias Vogelsanger, Switzerland
At least 80% of Euroland trade is within Euroland, so the value of the Euro against other currencies is largely irrelevant to those who are 'in'. Whether we like it or not, our strongest trading links are with countries that have adopted the Euro. Unless we join rapidly we can say goodbye too much of the foreign investment (Ford, Microsoft, Bayer, etc. etc.) on which we depend.
The Euro is a flawed concept. The member country economies are too autonomous to make it work with a single interest rate (look at Ireland Vs Germany now). The economies have fiscal and structural differences, and dare I say it, anomalies which means that a single currency is more likely to cause discord rather than harmony. Certainly it is a political invention, and should be treated as such.
Of course it was a mistake and many people in continental Europe are now waking up to this disaster. But what is worse for the UK is that our Government is spending millions of pounds of our money to prepare for us to join, despite the fact that we have not yet voted on whether to join the Euro.
Substantial export growth and job creation across all of Europe's largest states? I would have thought the only mistake was that of the UK not joining early enough.
The Euro was born for political reasons. Euro-federalists didn't pause very long by the question of what economic reality would do to the Euro. They wanted a symbol.
Well, now they have one. A symbol of the EU's inherent weakness.
Has anyone noticed that the North American Free Trade agreement which has a similar goal of economic union has made no attempt to unify the Mexican peso, the U. S. dollar and the Canadian dollar. Indeed sentiment here in Canada is that it would be an attack on our very culture, even though the cultural similarities between Canada and the U. S. are much closer than those between the countries of Europe. In my opinion the Euro is doomed unless there is a radical rethinking of the concept of the EU.
Raymond Holt, Canada
A single European currency is nothing more then ideology, and a part of sacrificing our sovereignty to a socialist superstate. We were right to stay out and should stay out altogether! We should also hold a referendum on whether any more of our power should be taken away from us and given to the unelected bureaucrats in Brussels, must of whom believe their country comes first! It is quite obvious to everyone that the Euro is a complete failure, how would federalism be any different?
The Euro fiasco is a clear example of the outcome of behaviour governed by irrational political nonsense rather than sober economic analysis. European leaders want to be equal to the US instead of pursuing sensible economic measures to make life better for their citizens. It would make better economic sense for the UK to join NAFTA and the dollar than to join the Euro but anti-American sentiment in Europe stops leaders from making sensible choices choosing instead to pander to rabid anti-Americanism. The over-governed over-regulated economies of Europe stifle economic progress but are maintained in preference to acknowledging the better sense of the American model.
The Euro brings individual European nations closer to loss of sovereignty. Europe is not the United States, one nation with one language and one culture. Europeans should remain independent countries each with their own language, culture and currency. Good neighbours can get along well, they don't have to share the same house. Europe is special because of its many wonderful and individual cultures. Those differences do not have to lead to conflict, as many are led to believe.
Britain is an integral part of Europe (whether she likes it or not). Perhaps She likes to think of herself more as "Anglo-American" (in deference to her successful efforts -- two times now -- to enlist the states in her cause against Her continental brothers. But these times are gone and dead. The Cold War is Dead! Someone tell the Brits, please!
I hope that the people in England wake up from this silly idea that everybody is going to be happy with the 'Euro'. Because the 'Euro' is no solution to anything. I think that is amazing that a few people have been able to sell the world on such a bad idea. But, those are the ones who stand to benefit. I say 'NO' to the Euro. Allow everybody to be what they are. Free to bargain in the manner which suits them best. This is the right of every country providing it does not infringe on the rights of others.
Dave Adams, USA
It all started as a small economic union called the EEC. Now it's a horribly huge and over-powering force on the UK! Soon they will force us into the euro and that doesn't really look promising, does it?! I think we should resist joining the currency all together. So there Brussels!
Jon Worth, UK
No, the concept of the Euro was and is not a mistake.
Ever since there have been floating currency rates the gap and standard of living between countries have greatly varied.
Peter Mash, UK
Three months before the Euro came into being, doubts were being raised as to whether it would be a successful, strong currency, or not.
At least the euro is a step towards a more united Europe. Can you imagine the US with 50 different currencies? I want my children to live in a Europe united by more than written declarations.
So how do you judge what is good or bad??? We have to see it in the very long term before we know if it's right or wrong.
Sooner rather than later, some of the countries are going to have to pull out as Britain did in the ERM crisis. They, as we are today, will be all the better off for coming out. Britain should learn the lesson of the ERM fiasco and never even contemplate joining such a politically-orientated white elephant as the Euro.
Matthew Illsley, England
Euroland countries are obviously using a policy of benign neglect to stimulate growth without making economic reforms. But monetary union started to work before the launch of the euro. No-one of the weak European currencies were devalued after the Asian crisis, and this was definitely a success.
1. Given the trend towards service industries in Europe, ideas and the communication of these will depend on the diversity of cultures within the EU body. Cultural diversity within the EU will be a powerful force given the single currency.
2. Economic and Political stability. As a body, the EU political machine will provide a steady bedrock against future movements in global policy decision making.
Although the downside is a political inertia (associated with all large organisations), the upshot is that the Euro will give a very reliable measure of global economic health and investment in the EU will be seen as safe.
Dr Jon Barnard, Sweden
From a purely economic standpoint, I don't think the Euro is a mistake given the disappearance of transaction costs. It is, however, a political mistake because no one knows what it should be. Some, like the French, want to dethrone the dollar, others want the Euro to help discipline their own economies (Italy). Lastly, I agree with an editorial that I read at the Euro's launch that stated that the Euro will never save the Europeans from themselves.
No longer do we have to pay charges on currency exchange (provided you exchange with your own bank). The exchange rate no longer fluctuates, and therefore you don't have to run around trying to find the best rate. We can now compare relative costs in each country as expressed in Euros e.g.: for cars etc¿Cheques can be made out in one currency wherever you are. All the financial information is expressed in Euros, whether in Frankfurt, Paris etc¿
Things will really change when we have the currency in our pockets. That day cannot come early enough for most of us.
Roger Bartlett, Belgium
People tend to overlook the strength of the dollar, they prefer to talk about the weakness of the Euro. In fact, the Euro has remained remarkably firm against such stable currencies as the Swiss Franc (Switzerland's major trading partner is the EU) while the dollar has appreciated significantly against the Swiss Franc.
It may have been a mistake for Euroland. Those countries outside of it benefit. It is
a powerful example of what happens when policy ignores fiscal reality and economic rigor. It would be apt to rename it Disney Euro, or Mickey Mouse money.
Nevertheless, it is difficult to ignore its failure in economic terms (predictable given its inherent flaws), and I, personally, find no virtue in its political aims. Only for those who wish to see the creation of a European super-state, can the Euro ever be deemed a success.
Charles Brasted, UK
Despite the decline of the Euro, its not easy to say for now that the Euro was a mistake. It's a new currency and it will take some time for Europeans to adjust to it. Besides, the coins and papers of the Euro are not yet published - therefore, there still exists a strong dependence on the old currencies of the EU.
Monetary union would probably have a better chance if public thought that it was being dealt with by pragmatic and wise people. However, the Euro carries with it the spectre of corruption and lack of accountability of unelected bureaucrats making decisions based on wishful thinking and not on the facts of the real world.
The corruption scandal in France this week (involving the next head of the European Central Bank) is just one in a long line of cases which taints the Euro and the Union.
With the Euro there are few signs of altruism. Unelected officials who have increasingly healthy bank accounts (probably in Swiss banks) are leading Europeans like sheep to the slaughter. It certainly was no mistake for those that didn't join. Just watch what happens when inflation starts rising in the Eurozone. It will all end in tears.
R Gardiner, Norway
Obviously it was a big mistake. It is nonsense to standardise currency among completely different nations.
We are in the middle of a technology boom, the USA is thriving, Asia is recovering and even Britain is not doing too badly. Yet the Euro is at a new low - I would dread to see it during a crisis! I do not believe anything positive has come out of the Euro or ever will. If it is peace and stability that is being sought, remember that co-operation and not integration over the last 50 years has served us well.
Definitely not a mistake. The mistake was us not joining at the start. The strength of the economy at the moment would have been spread throughout Europe and helped smaller businesses by not having to sell overpriced goods due to the strong pound. I'm a firm believer that the Euro would never have come anywhere near parity with the Dollar had we been there from the start.
The single currency has been a mad crusade all along, thought up by so-called euro politicians who are oblivious to what is going on around them. Previous attempts throughout history to create one currency ended in failure.
Of course the Euro has been a mistake, simply because it has not been thought through from an economic perspective. This is a political project designed to create a United States of Europe - whether the individual members agree with it or not.
I think that the Euro problems are very much related to the image of EU - huge bureaucracy, structurally unmanageable, politically and militarily weak group.
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