It is very unfashionable in Britain to say we should have joined the Euro at the beginning. Indeed the kindest would fail to take the observation seriously and the nasties would tell one to seek some help. So it is with some enthusiasm that this blog, which likes be be out on a limb, will now make the point.
Had GB joined with the project the Euro would have been properly structured and properly managed from the very beginning, not from Frankfurt but from London. It would have a governance system that worked and a much more robust approach to dealing with errant members, with a much more realistic one for those about to go over a cliff. Most important of all the UK would have enjoyed a structural devaluation of sterling’s competitive position on the lines of Germany, which would have powered up our manufacturing base and produced a much more industrialised economy than our current model driven by shopping and house price inflation. The tax base would have been larger and with it the revenue, so that the cost of delivering good quality public services would have been more in balance with income.
There are a multitude of other advantages but in the current context it is necessary to mention only one. The government constantly asserts that EU migrants flood in (perhaps many more than official figures show according to leaks today) because of benefit generosity. Yet statistics show we make more in revenue than we lose in payments so that is an emotional rather than a fiscal argument. The real reason migrants come is to profit. The pound is valued higher than the Euro, although each currency unit buys roughly the same in its own zone. So if you are, say, Polish and you come here to work whilst leaving your family at home, and you earn £100 and send it home to Poland, your dependants get E137. See?
Add to that the fact that GB has a trading deficit with Euroland of £50 billion annually and it does not look a opting out was quite as clever as we thought.