Thursday, January 15, 2009

Much ado about nothing - more Conservative flapping over the Euro

This morning's Metro newspaper leads with 'Minister hints at joining the Euro', after a comment by Europe minister Caroline Flint, opposing a promise made by David Cameron yesterday to keep the pound regardless of the circumstances.

It is clearly a slow news day because, when you actually read the article that follows, she is quoted as saying,

"We will make a decision based on economic conditions. We have identified five tests that have to be met: convergence with other European economies, flexibility, impact on investment, the impact on the financial services industry and growth, stability and employment. At the moment, those economic tests have not been met."

So far, so sensible. Ms Flint is merely reiterating existing Government policy and, as most sensible politicians do, leaving options open.

That said, the exchange does raise two interesting questions. The first is, "Are the tests now met?". The last Treasury assessment was carried out in 2003, and much has changed since then. I am not so up to speed that I believe that they have been met, but it would be interesting to see how the situation looks now, would it not?

And, whilst the Conservatives and their friends in the media would doubtless get on their high horses about loss of sovereignty and saving the pound, a commitment by the Government stating categorically that entry to the Euro would be preceded by a binding referendum would shoot that particular fox. Given that the Liberal Democrats are already committed to such a referendum, the existence of a coalition of political parties representing more than half of those who voted in 2005, would legitimise the position quite effectively.

My second question is, "What are the Conservatives thinking?" I accept that Conservatives have a virulent aversion to the Euro, but to say that they would keep the pound 'regardless of the circumstances' is economic idiocy of the highest order. Are they seriously suggesting that the retention of a currency trumps the wider economy in terms of their policy priorities? I can't imagine that they really mean it, so is Mr Cameron's comment merely a bit of red meat for the troops, and a bit of a white lie for the rest of us? Given the rumours regarding the return of Ken Clarke to the Shadow Cabinet, one's gut reaction is that it is exactly that...

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