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Letters to the editor
Please email your views on Europe and the Euro or comments on this site to MinfordP@cardiff.ac.uk (if you wish your mail not to be considered for publication on this page please say so; otherwise we will assume it may be published freely here.)
Question....Why is it that we keep talking about the five economic tests having to be met.....they may be satisfied at some moment in time, but, what happens once satisfied, then, after joining circumstances change and the so called conditions are no longer suitable? Can we come out, or to do so would the other States effectively wage war against us? I believe the Maastricht Treaty intimates this!!
Dear Mr. Whitehouse, The idea of the 5 tests is that if satisfied it is 'for keeps' at least as seen at the time of the tests. That is their meaning- 'convergence' does not mean just passing in opposite directions in the night, so to speak.
As for coming out should we go in mistakenly there is nothing to stop us doing as we wish though 'exit' is not an option to be found in the Rome/Maastricht Treaty. It is really not clear what anyone might or might not do- technically we could be in breach of the Treaty though since exit is not mentioned that is not entirely clear,
Dear Patrick Minford,
I don't know whether you have a moment to provide an answer to a point made by someone in discussion on the single currency.
One of the supporters of a single currency for Europe has acknowledged that there is a problem with "one size fits all" with respect to interest rates.
Although he recognises that the EU would not contemplate it he has wondered why it is not possible to have the "nations" of Europe still setting their own interest rates to allow them to adjust for the stresses and strains that a common currency brings.
I would imagine that this itself would bring about competitive interest rate setting with the object of gaining 'unfair' trading advantages for a nation, a concept which of course would be alien to the whole concept of removing boundaries in Europe with the goal of creating a European Superstate.
I imagine that there are other reasons too.
It's quite impossible to have different interest rates within a single currency unless you erect capital controls between each country- which would destroy the singleness, be immensely damaging to economies and is illegal in any case within the EU. The point is that capital flows to wherever the return is highest (arbitrage); thus if interest rates in Belgium were higher than elsewhere, people would borrow elsewhere and deposit their money in Belgium. This Belgian banks would go bust with no lending business.
Good afternoon !
My name is Oscar Overgaard.
I am studying Economy at Senior Highschool.
I support you Mr Minford and all the other anti Euro People in UK, Denmark and Sweden.
Sweden is where I live and just like you I want to keep the Pound in UK and the crowns in Sweden and Denmark.
What If Germany will be infected be a huge economic depression, then Sweden and UK would be infected too if we would us Euro. With our national currencies we are independent and would suffer of economic desieses in other countries.
I would be glad If you answer this mail.
Dear Mr. Overgaard,
Dear Professor/Dr Minford,
Do you believe it to be of any great concern that the Pound Sterling is (as was stated in the last mail) at a "greater than one-to-one exchange rate with the US dollar" than any other currency. Bearing in ming that the Euro was worth more than a dollar a few days ago.
Again referring to the last mail you replied to, do you believe that war is imminent between, say, France and Italy or Britain and Luxembourg? Or Greece and Spain? I could go on, but yee-haw! I don't think I will.
Also, who does that American thinks decides British monetary policy? An elected band of cognoscienti? Or a designated band of economists and bankers?
I should just like to point out that as a Belgian resident Briton I have had no problems whatsoever with the Euro, the transition has been very smooth with inevitable but fairly irrelevant inflation. Please, Britain, stay the f*** out of our currency and let us get on with it.
Thanks, Michael Parr.
P.S. Why oh why, Dr Minford, did you not mention Mundell's classic Optimum Currency Area paper in the reading list? Surely that's 'the daddy' of any currency area discussion? Oh, but of course, that points out that different places in the same currency area can adapt to differences in AD. Differences in language aside, forgive me for expecting a balanced discussion group.
Dear Mr. Parr, thanks. I am surprised the Mundell piece is not in the biblio. It should be.
The point is about whether it suits people living in Britain for it to join the euro. That is what euro-know addresses. It may well indeed suit people living in Belgium. The Belgian franc was fixed to the DM for decades with as I recall one large devaluation in the early 1980s; many of the arguments apply quite differently to Belgium of course.
The work of Robert A. Mundell (external link)
July 07, 2002
Could you please detail the five economic tests that the government is always quoting.
Dear Mr. Harrison, you can find full details on www.no-euro.com and click on The economic case against the euro. But this is my short version taken from a paper that the IEA will soon publish:
In brief (for a full list see Bush, 2001, p. 27), the first test concerns whether the UK has achieved 'convergence' with the rest of the EU; the second whether there is sufficient economic flexibility in the UK and the EU to avoid problems; the third concerns the effects on inward investment; the fourth those on the City of London. In a fit of common-sense, the Chancellor and his economic advisers listed as the 'fifth test' for Britain's entry into the euro the general economic effects of monetary union on the British economy, thus in effect sweeping all the other tests up into this very one. [ref: Bush, J. ed. (2001) The economic case against the euro, New Europe for The No Campaign, downloadable at www.no-euro.com.)
Dear Professor Minford
I am having a debate with a supporter of the EU on europa the EUs own website. He claims that the EU is our largest export market but I know that our largest export market is the US but I cannot find the export figures to the EU and to the US. I was wondering if you would be able to provide me with the figures.
Dear Mr. Morris,
The point is really that when one takes all trade flows including services and investment earnings (which are a proxy for our huge capital flows around the world-foreign investment is an alternative to trade as the plant and other inputs goes to the country concerned) the share of the euro-zone is just over 40% and the rest, non-euro, is almost entirely dollar-related, in the sense that most non-euro countries are closely linked to the dollar. The way I usually put it is that our trade with the euro and dollar zones are roughly half and half., so that our relationship with the dollar is as important to a global trdaing nation like the UK as is that with the euro. Consequently if as often happens the euro gyrates against the dollar, tying to EITHER one of them is dangerous for us; if we float then we can 'move between' them as they gyrate.
I am very much against the introduction of the Euro in this country: I believe that the general public's atavistic feelings against the single currency are just as valid, and demand just as much respect, as financial reasoning.
However - I am appalled by the crassness of the Hitler cameo in the cinema advertisement. Sir Stanley Kalms says that it is "satire" and "makes a point". He should be more articulate in his choice of words. Satire requires a degree of irony, depth and skill of presentation. This appearance by Rik Mayall has nothing of wit or satire about it. I regard modern Germany as putting us to shame in many respects - one being its refusal to chain its identity to the horrific events of WW2 - and this advert sorely tempts me to change my mind on the question of the Euro.
If the likes of Stanley Kalms and Rik Mayall are representative of the anti-Euro campaign, then I am not at all sure I want to give their cause my support - or vote.
Dear Mr. Stirling, I have not seen it. But the thing to remember is that it is a set of sketches by comedians. We shouldn't get all politically correct about sketches. Don't you watch stand-up comics?
July 03, 2002
Dear Mr Minford,
Absolutely, I take your point about stand-up comedians. But of course we should get politically correct about this issue - it is political. If - as every instinct in me tells me - the Euro is a bad idea, then lets meet the enthusiasts argument for argument. The advert was not intended to make a genuinely satirical or witty comment on the issue, but rather to make an obvious yobbish point that requires no thought or degree of interaction.
I truly believe that if the brains (or lack of) behind the making of this advert constitute the company the Euro sceptics are keeping, then I am very wary indeed of lining up with them. I am in no way a Euro enthusiast - I am exactly the sort of person the sceptics need to keep onside - but this so-called "satire" (as Stanley Kalms calls it - please) degrades my intelligence and makes me much more interested in listening to the other side.
I do appreciate your contacting me. Please believe me when I say I make this point in good faith.
Dear Mr. Stirling, thanks. I understand. I need to see the cinema advert myself to comment further anyway! Time will tell whether it works to raise awareness among those less involved in the economic arguments about it.
I've just read the EU has condemned the latest Pro-Pound campaign featuring Rik Mayall, Jonny Vaughan, & Bob Geldof, etc.
Clearly the advert is working then, they are now terrified we will all see through their fascist lies.
Goodbye EU & good riddance.
Dear Mr. Foster, Thanks. It has certainly caused a furore!
We have just returned from a 2 week holiday in Greece and this was my first experience of the Euro. On the face of it, we found it convenient to use the smaller denominations and a familiar unit of euro (dollar) and cents.
On our arrival, we asked the operator what effect the euro had had. She told us that since it's introduction, costs have risen by 17%. Local businessmen said that while they welcomed the Euro, there was an underlying inflation which has yet to peak. Their suppliers prices had risen and these were being passed directly to the consumer plus the retailers own increase. Pay rates were not affected by the introduction of the Euro (funny that) so the Euro has eroded the spending power of the consumer. This to me appears to a spiral scenario where increasing prices and reduced spending power will lead to a weaker economy.
It also became a sport at tavernas to spot the increases in prices from the initial conversion from drachma's to euros and then the advertising of the euro price by itself. In 99% of the cases they were not just rounded up to the nearest 5 cents, they were rounded up to the nearest 20 and in some cases 50 cents.
This 'hidden' inflation is never discussed in the press but I think it is the sort of thing 'ordinary' people can understand.
Questions. Can you answer the following?
Is what we experienced in Greece common in the Euro zone?
If so, what safeguards are the Government putting in place to protect the current low inflation rate in this country from these rises?
Will pay rates be increased if these rises are allowed to happen as part of the 'level playing field' process?
Thank you for your time and I look forward to the 'Yes' Campaign reply!
Dear Mr. Blakelock, thanks. Yes this rounding-up has been quite general across the euro-zone. As for our government doing something about that if we join, there is not much it can do. The only point is that the more competitive the marketplace the more pressure to reverse any such rounding-up; after all people will soon twig that they are paying more than they want. The UK market is pretty competitive unlike some continental ones.
Pay rises would not be likely to be rounded-up in this way because they occur at quite long intervals. However, I doubt whether the problem with prices in the UK would last long so I don't see this as a serious euro problem. The serious things are other, as set out elsewhere on euro-know.