Euro or no, we will never be 'at the heart of Europe'
Nigel Lawson, Daily Telegraph 15/6 2003
Lord Lawson was the Chancellor of the Exchequer from 1983 to 1989.
As Prof Wilhelm Nolling, the distinguished former Bundesbank director, pointed out in this newspaper last week, for Germany in particular - the euro-zone's largest economy - the strait-jacket of a one-size-fits-all monetary policy has been unequivocally harmful.
Mr Brown did, however, offer a clue about what is fundamentally wrong with the European monetary union when he quite rightly stated that "it is important to learn the lessons not just from the experience of the euro area but also from how the states and regions adjust successfully in the United States monetary union".
And so far as the United States is concerned the lessons are clear.
Three absolutely crucial conditions are satisfied. First, there is a very high
degree of labour mobility: Americans are prepared to move long distances,
within the union, to find work.
Second, there is a high degree of labour market flexibility, allowing wages to move down as well as up.
And third, as a result of a genuinely federal system of taxation and public expenditure, substantial sums of money are automatically transferred from the more prosperous to the less prosperous parts of the union.
Not only does the European monetary union satisfy none of these conditions, but the first could fully be achieved only if the union were bound together by a common language, the second is a feature of the "brutal" Anglo-Saxon economic model which the "civilised" European social model explicitly rejects, while the third is the characteristic of a single federal state.
It is not, of course, remotely surprising that the European monetary union as we know it is fundamentally flawed since, as is openly avowed by its continental promoters, its raison d'etre is not economic but political. There is nothing remotely disreputable about this: what is disreputable is to deny it.
Mr Blair's seldom-articulated reason for so obsessively wishing to see the UK sign up to the euro is also political rather than economic. He appears to believe that, once inside EMU, we could exert a decisive influence over Europe's role in world affairs that would be unattainable outside it. It is, however, a motivation that is implausible to the point of incoherence. In the first place, just as we have always been anxious to exclude France and Germany - particularly France - from the intimacy of the Anglo-American special relationship, so they have no wish to see Britain complicate the Franco-German special relationship by turning it into an uneasy menage a trois.