Why the Euro doesn't work. Article for Advertiser

 

I am a foot taller than my wife, it’s not a problem- we generally muddle along pretty well and the difference in height doesn’t really impact on our lives... we come to a reasonable accommodation, with me getting hold of those hard-to reach items on high shelves. Not crucial and not an issue. I imagine, though, if we strapped ourselves together and tried to compete in a three legged race, apart from looking rather comical, we wouldn’t win any prizes. Similarly, tying the robust German economy together with that of Greece, Spain and Portugal and trying to make the Euro work, hasn’t exactly been a success. It’s not polite to say I told you so, but frankly some of us did.  I pledged in 1997 that I would never vote for British membership of the Euro. I gave a lecture in memory of the late Nicholas Ridley recently and said that he warned of the consequences back in 1991:

‘It is not in fact possible to have a single currency except where the various economies are moving parallel in their pace of development. This manifestly does not apply in Europe, with countries whose economies are as far apart as Greece and Portugal and Ireland on the one hand and Germany on the other. It is a basically flawed concept… there has to be economic ‘convergence’ before there can be a single currency. That convergence must not only exist at the time of merging currencies, but it must persist thereafter or strain will emerge.’

Twenty years ago, but it’s not a bad summary of where we find ourselves today. That’s why I was astounded when I heard Nick Clegg say that no-one could have foreseen the difficulties which Greece is now experiencing.  It’s breathtaking that those who are devotees of the Euro and advocated British membership are still unwilling to admit that they were profoundly mistaken.

This article appeared in the Sale and Altrincham Advertiser