Friday, 27 March 2009

South West MEP presses Gordon Brown to scrap the pound

The South West's only Liberal Democrat MEP, Graham Watson, seems to be on a quest for maximum unpopularity.

And on current form he might just end up taking the whole Lib Dem campaign for the European Parliament elections down with him.

During the Prime Minister's visit to the European Parliament in Strasbourg this week - on the first leg of his pre-G20 'world tour' - Watson used his regulation three minutes speaking time to press Gordon Brown to take Britain into the euro.

Responding to Gordon Brown's address to MEPs, Watson said that he expected the single currency to "emerge stronger from this crisis" and asked the Prime Minister "Will you now work to bring the United Kingdom into the euro in the post-recession period?"

Euro problem

Ever allowing his starry-eyed enthusiasm for EU centralisation to cloud sound economic judgement, Watson's call came despite almost daily evidence that the inflexibility of the euro has exacerbated a boom-bust cycle in some countries and is now making the recession worse for its members.

Neither has the euro prevented banking crises and the need for bailouts among member countries.

Ireland's construction-led economy has collapsed so spectacularly that a leading Irish economist has warned that the country may have to quit the euro. Unemployment in Spain has grown to over 3 million and, in the eurozone as a whole, is at its highest for more than two years.

Markets fear debt defaults in Italy and Greece, where debt has risen to huge proportions of GDP. And European Central Bank president, Jean-Claude Trichet, has admitted that the currency bloc is under "extreme strain".

Both Greece and France have already seen major public protests against insufficient action by their governments to relieve the effects of the recession - governments that simply can't afford to replace with cash bailouts and 'stimulus packages' what a drop in the value of their currency would deliver.

Even arch EU fanatic and former European Commission president Jacques Delors admits to pessimism about the euro's future.

This is what Graham Watson MEP bizarrely wants to embroil us in.

It's little wonder that the EU has recently been pushing for the IMF's resources to be increased dramatically, likely hoping that the emergency funding body will help to bail out those countries suffering the worst inside the euro straightjacket.

How much Britain and other EU countries who have wisely kept control of their economies will be asked to splash out via the IMF towards papering over the euro's widening economic cracks remains to be seen.

Sterling boost

Of course, Britain has similar economic problems to those being suffered by other European countries mentioned above.

But thanks to our flexible exchange rate as a result of keeping the pound, Britain's goods and services have at least been made considerably more competitive in world markets right when we needed it most.

The benefit of British exports becoming cheaper due to the recent fall in the value of the pound means that businesses selling to the eurozone have been given a timely boost that would not have been possible had we joined the euro when people like Mr Watson were first campaigning for that change years ago.

Had we followed his advice back then, British companies would today be locked into a fixed exchange rate with the eurozone and facing greater pressure to make cuts to wage costs and jobs instead - just like those inside the euro.

Real lessons

In the face of this recent overwhelming reminder of how unpredictable economic conditions can be, Mr Watson's perverse view seems to be that we should lock ourselves into the 'one-size-fits-none' euro and give up control of key economic levers like our interest and exchange rates.

Not for him has the crisis illuminated, in reality, how critical it is to retain maximum economic flexibility to respond to rapidly changing conditions.

That, of course, can only be achieved by keeping the pound.

No surprise, then, that public opinion remains strongly against Britain joining the euro.

A BBC poll at the start of the year showed that, despite the economic troubles, 71% of people would vote against Britain joining if it were put to a referendum.

Not liberal - Not democrat

Watson's controversial euro demand follows a pledge earlier this month to help Ireland's ruling political party fund a second 'Yes' campaign in any new vote on the Lisbon Treaty.

A second referendum is predicted for this autumn, following the Treaty's rejection by Irish voters last year.

Given Watson tops the list of his party's candidates in the South West, anyone in Bristol, Gloucestershire, Somerset, Dorset, Wiltshire, Devon, Cornwall or Gibraltar voting for the Liberal Democrats is essentially voting to re-elect him.

So far, such a vote stands not just for bullying the Irish people into reversing their clear 'No' vote to the Lisbon Treaty, but also for scrapping the pound.

And there's very little either liberal or democratic about that.

1 comment:

Anonymous said...

Here he is: