Gary Arthurs - "How I Came To Love The €uro"
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These are notes from the talk by NW Britain in Europe Organiser Gary Arthurs, taken directly from the Deane-Cum-Heaton Labour Party's Branch minutes.
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Gary was warmly welcomed by those present and brought a selection of literature from the Britain in Europe Campaign of which he is the northwest organiser.
He explained why he believed that Britain would be better off in the €uro and presented the background to the campaign. Britain in Europe was founded in 1999, or rather it was re-formed from a campaign in 1975 to keep Britain in the then Common Market. It has a staff of 25 - 30 country-wide, shared with another pro-Europe organisation. It was originally based in London but in January 2001 it began recruiting full time workers in the regions and has recently appointed an organiser in N. Ireland. There are still gaps in the S.E. and S. and W. Midlands. Gary has been appointed as N.W. organiser with a very wide remit. At present funding is from a few major companies, a number of trade unions and a few wealthy individuals.
The €uro came into being as a currency in 1999 and there was then two years of dual pricing and accounting before the real notes and coins came into circulation on 1st January 2002. Within a couple of months national currencies were replaced by the new one.
Gary pointed out that opponents of the €uro have predicted failure all along but the introduction went very smoothly, deflating its adversaries.
As is well known, there has to be a referendum in the UK, a crucial part of which will be a statement that Gordon Brown's five economic tests have been met. Gary thought that the referendum could be held in spring or autumn 2003.
The "No" campaign has been doing a lot of campaigning hoping, Gary said, to stop a referendum. He said that there were three main reasons why we should be a full part of Europe:
1. Britain is an island nation and cannot afford to be
isolated from an area which represents more than ½ of its
trade.
2. The single currency will keep the
economy on track.
3. Overall, in the medium and
long term, it will help bring prices down.
He said that the country is already paying the price of not being a member. The change has happened and the status quo is not an option. He admitted that there are risks but these need to be balanced against the disadvantages of staying out.
Economists reckon that we are losing, or failing to gain, 3,500 jobs per month by being out of the €urozone. At present the UK economy is doing well and growing. €uroexporters don't have the currency risks that they used to have but there is always uncertainty in the UK because of the varying exchange rate between the Pound and the €uro. Every day British companies spend £12 million on currency exchange. At least half of this would be saved.
Gary predicted that the benefits could be seen in as little as three years. Before joining the then Common Market, Britain's inward investment share was going down year by year. Since being in the EU, inward investment has increased very rapidly because non-EU companies see Britain as a gateway and are keen to build production plants here. Until recently 40% of investment into the UK was from outside the country. Since the introduction of the €uro this decreased to 28 and now to 19%.
Gary said that the €uro is central to the future of public services in the UK too. In Germany and France investment in essential public services is significantly higher than in Britain.
To protect the €uro as a currency there are certain rules that €urozone states must follow. For example, no country over a 4 -5 year economic cycle (when not in recession) should borrow more than 3% of GDP (present UK borrowing is 2%).
He believed that the best time for the UK to enter the €uro is when the economy is strong. If we joined now ours would be the second biggest economy.
In the €urozone prices are generally lower, e.g. cars 15% less, Harry Potter sets much cheaper (!) and there is price transparency across borders. The differential would not completely disappear in the short term but would certainly reduce. Overall there has been a 0.16% increase in prices in the €urozone since the currency's introduction. This varies from country to country and is largest in Germany. Spain has had very tough regulations to stop prices increases and Gary thought that the UK would have to introduce similar rules.
On interest rates the issue isn't "one size fits all". In the past there was a greater than 5% variation between states but the difference between the UK and the €urozone is now less than 1%. Gary concluded by saying that Britain can't afford to be isolated. There are now two big currency blocks, the Dollar and the €uro and in the last few months these currencies have been much more stable than the Pound. The €uro would be good for our economy, and the UK's has started to slip behind those of the €urozone states. Being out of it is an obstacle to trade that other countries don't have and it will be good for prices.
Gary's talk was then followed by questions and answers and discussion:
| Paul: | Presented a view of
the "No" campaign. He said that "No To Britain in Europe" is a very broad
group. Britain will still be in the EU even if we don't join the €uro and
trading in foreign currencies has not been a great obstacle to business in the
past. He expressed concern with regulation of the system. He believed that
diversity is strength and compared it with the biological argument that a
monoculture is weaker than a heterogeneous mix. Paul believed that the €uro could be a huge success or a huge failure and didn't consider taking the risk of the latter would be justified. |
| Gary: | Agreed that there should be some reform of the European Central Bank but if the UK isn't part of the "club" it won't be able to participate in making the rules. He didn't agree that trading in other currencies is not a disadvantage to business. He said that the pooling of defence resources in the EU hasn't diminished our ability to decide our own defence policy and entering the €uro will not significantly affect our decision making over the economy. He agreed that there are risks of going into the €uro but said that there are even more serious possibilities if we stay out. |
| Paul: | Germany's problems are due to getting the exchange rate wrong at the time of reunification. |
| Alan: | The £ is quite strong now compared with the € and this makes European goods cheap to us. He commented that his business contacts don't have such big problems with exchange rates as has been portrayed. He believed that the problems in this area have been greatly overstated. He wondered what would happen as other countries join the EU, many with weaker economies than existing member states. He was also concerned about pensions and worried that if Britain joins the €uro we would have to support the, often better, pensions of other €urozone states. |
| Gary: | The pensions issue is just a myth. There is no truth in this at all. The Maastrict Treaty specifically excluded pensions being supported inter-state. |
| Alan: | Agreed that we should join the €uro but shouldn't dismiss those who put forward opposing arguments. |
| Gary: | We need to discuss and weigh up all the options. Some issues presented as facts are just not true and it is often difficult to decide which is fact and which fiction. |
| Paul: | In other countries pension funds are often even more underfunded than in the UK and we have to be very vigilant on this issue. |
| Terry: | Asked if currency speculation would be much more difficult with Britain in the €uro and therefore the currency would be more stable. |
| Gary: | Agreed with Terry's point. |
| Alan: | Why are businesses in
the UK moving to some European countries, e.g. Belgium but not to others such
as Italy? He believed that it was because of more favourable employment laws
for business. Alan and Terry discussed the advantages and disadvantages for business of the €uro. |
| Terry: | At the end of the day, as Socialists, we should have a common policy on the €uro, even if we are not all in favour of the prevailing view. |
The "Yes" campaign is not as vocal as the "No" one but Gary said that we must campaign even before the referendum is planned.
It was suggested that the Government is waiting until people get back from their summer holidays, familiar with handling and seeing the advantages of the €uro. Gary agreed but said that this could backfire if tourists are told anecdotes while on holiday abroad about prices going up.
Graham thanked Gary for his talk and members for their contribution to the discussion.
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