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The Euro referendum: if not now when?

Simon Morley Mon May 05, 2008 at 06:37:07 PM GMT Facebook

With the current slowdown in financial markets and the continuing strength of the Euro, now is as good a time as ever to launch a referendum campaign for Britain to join the Euro.

On 9 June 2003 the Government published its assessment of the five economic tests, the 18 supporting studies and the third outline national changeover plan. At that time the economic tests were not met. But Labour government policy remains to join the euro “if Government, Parliament, and the people, in a referendum, all agreed that it would be the right thing to do”. Five years on there should be another look.

The benefits to economic stability in the long term, alongside Europe’s more equitable wage differentials and social security systems, make it more sensible than ever to join as soon as is practical.

In terms of the mortgage market, where the short-term potential difficulties lie, the current conditions are very conducive. Once a referendum supported joining, Euro mortgages should be made available for property in Britain. In 2003 the estimated equilibrium exchange rate was 1.37. Currently it is 1.28. So taking out a €200,000 mortgage now would pay off a £156,000 mortgage, which if conversion was at 1.37 would be worth €214,000. The current headline rate for the Euro is 4%, and for the Pound it is 5%. While these do not correspond directly to mortgage rates, they do give an indication of the relative interest payments in the meantime.

The economics look like making very good sense, and in terms of the politics there also may not be a better time for some time to come. We can still have at least two years in government, but what we hope to achieve in headline terms is not clear, though much good work on details continues apace. The City and business have always supported the move, so it would be difficult for Boris as London mayor not to. It would be a real test for Cameron, either to win support for British families within the Tory party, or succumb to its vocal little England wing.

European parliament elections are due on 11 June 2009. Lets make that referendum day!

I have just set up a facebook group to see if we can drum up support for this, so please join and ask your facebook friends to as well: http://www.facebook.com/group.php?gid=13712058308

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tags: Euro, EU (all tags)

The Euro referendum: if not now when? | 6 comments (6 topical)

Re: The Euro referendum: if not now when? (#1)

by NorthernMonkey on Mon May 05, 2008 at 06:42:47 PM GMT

I fully agree with Britain joining the Euro, but I really can't see it happening for at least another 10 years.

We are an extremely Eurosceptic country unfortunately and the odds of winning any such referendum now when Labour are very unpopular, are remote to say the least.

Re: The Euro referendum: if not now when? (#3)

by Angiem on Mon May 05, 2008 at 08:25:12 PM GMT

I think that at this time it realiy would be the final nail in the coffin. Our candidates are going to have a hard enough time of it in next year's Euro Elections with a Tory Party on the rise making maximum capital on the Eurosceptism that exists in much of the British public.

My region has one Labour MEP who is very good. I would like to keep him.

Re: The Euro referendum: if not now when? (#4)

by alexhilton on Mon May 05, 2008 at 09:43:48 PM GMT

That's actually a brilliant idea - we just get the eurozone to join the pound!

Re: The Euro referendum: if not now when? (#5)

by matt1986 on Mon May 05, 2008 at 11:35:16 PM GMT

I think it's incredibly unlikely we'd get the support required to win a referendum. Let's put it off until the public are more receptive to it, and in the mean time concentrate on other things.

We should definately join eventually though, and it's worth making the case for joining. Something similar to Black Wednesday would be very unlikely to happen again. It only happened because Germany had just been reunited and needed to flood money into the East to rebuild it. So we were right to pull out and put off pursuing a single currency at the time, but it's unlikely it'd happen again.

Also, at the time, our economy moved more in step with the US's. Now, we're doing more trade with EU countries so our business cycles are more similar. And we shouldn't worry about independence when it comes to interest rates etc; it's meaningless. We know from this latest crisis that when trouble happens abroad, we're forced to react and have few options to deal with problems in our own way.

By the way, we shouldn't be too worried about how 'strong' the Euro is either, or the pound for that matter. Having a 'weaker' currency can make your exports cheaper, meaning more people buy from us, thus providing jobs for people here.

So I'm not sure there's any good reason not to join, but perhaps let's wait a few years.

Re: The Euro referendum: if not now when? (#7)

by HenryG on Tue May 06, 2008 at 12:54:46 PM GMT

We didn't get the support from the country for the Euro during Blair's heyday so we're hardly likely to get it now! We would get utterly smashed and it would set back the cause by decades.

Re: The Euro referendum: if not now when? (#8)

by jkitleft on Tue May 06, 2008 at 07:06:06 PM GMT

I am not so mouch Eurosceptic as EUsceptic. I actually do not think that the Euro would infringe upon our sovereignty, as much as the needless beaurocracy of the EU does. My scepticism towards the EU is towards the needless legislatures, and the CAP and CFP. It was intended to be a free-trade agreement. The CAP negates this. And I don't buy that if we fail to homogenise into a super-state, that Europe will endure a renaissance of fascism. Besides, the EU's reputation on 'Never again' is not as intact, as they assume it to be. They were pathetic on the issue of the Balkans descending into anarchy in the '90's.

My objection to the Euro is this though. Although it is currently strong, if one of the countries who have the Euro, were to have a recession, it could distort the interest rates across Europe. I personally believe that having the Euro, would be to pretend that all of Europe was egalitarian.