Our Currency, our Country: The Dangers of Monetary Union

Citation

Gamble, C.J. (1998), "Our Currency, our Country: The Dangers of Monetary Union", European Business Review, Vol. 98 No. 2, pp. 138-139. https://doi.org/10.1108/ebr.1998.98.2.138.6

The former Yugoslavia was held together by a powerful dictator, Tito, upon whose death this artificially constructed union quickly disintegrated and became a gory battlefield with a huge loss of human life, architectural heritage and precious manuscripts and books.

A not dissimilar dictatorship is being imposed to hold together 15 disparate European countries of 350 million people, with different languages, traditions and cultures. This nascent dictatorship is in the form of the European Central Bank in Frankfurt, supported by the European Commission in Brussels, which will control the economic policy by using interest rates to control inflation without regard to the needs of the countries and regions of Europe. As Redwood’s chapter on the ERM shows, Britain has already had a taste of what it is like to be locked in an EMU when its dry run in the Exchange Rate Mechanism (ERM) ended ignominiously, with increasing unemployment, interest rates soaring to 15 per cent and the resignation of the Chancellor of the Exchequer.

John Redwood’s clearly argued message is that the establishment of a European Community monetary policy and a single currency inevitably results in a single economic policy with one exchange rate, one interest rate and one set of rules over borrowing for all member states (p. 71). He argues that this in turn will lead to common taxation set by a European parliament. Thus at a stroke, the Bank of England and the Westminster parliament will be rendered powerless.

Redwood explains why taxes will inevitably have to go up under EMU due to the need to support huge pockets of poverty and unemployment in, for example, Greece and Portugal, and to finance the cost of non‐UK retirement pensions, and the massive cost of the bureaucracy.

Why are the French and Germans particularly keen for Britain to join EMU, arguing that the exclusion of London (one of the world’s three biggest financial markets) would be bad news for the London stock exchange? Redwood’s ingenious answer is that it is joining EMU which would be bad news and that this is precisely what Germany and France are seeking, in order to fulfil their aim of redirecting business from Britain to Frankfurt and Paris. In the unhappy event of Britain joining EMU, Redwood proposes that the City of London should go offshore from the Euro. He concludes Part 2: “Imposing continental controls on London would not sustain the City’s pre‐eminence. It would undermine it” (p. 130).

After a careful explanation of the meaning and impact of EMU on Britain, Redwood looks to a future in which Britain should renegotiate its deal in the European Community, and in his final chapter argues for a more prosperous Europe without the Euro.

By giving up our currency, we give up our country ‐ for what? A big European dream? A poignant question which should be asked might be: ‘Would you share your bank account with your neighbour?’

John Redwood’s thought‐provoking and clearly stated case against European Monetary Union is essential reading as the debate continues subsequent to the Treaty of Amsterdam.