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A Financial Times editor apologises for urging entry into the euro

Most of those in the UK political, industrial, and media elites who favoured joining the euro have chosen not to comment on their woeful miscalculation, and on their efforts to sell this disastrous project to the British people. Many of them have quietly resurfaced, and are now intent on selling the Single Market and EU membership to the British people, much as if the euro was no more than an optional extra, and that British participation in the project could and should continue much as before, without any searching re-examination of the assumptions of the project, and without too much regard for the misery it has already inflicted on millions, with more to come.

The euro was in fact an integral part of the Single Market driven by the same logic and rationale as the other policies it has inspired and justified. Its failure might therefore have provoked a careful reconsideration of what the Single Market entails and what it has achieved thus far. It has not, and some of the notes in this handbook are intended to make good that deficiency. Andrew Gowers is one fervent and influential supporter of the euro, and editor of the Financial Times when the euro debate was at its height, who did not take the view that we should simply forget it and move on. In 2011 he reflected on his part in the campaign.

 

‘Why I should have foreseen the euro inferno’ by Andrew Gowers, editor of the Financial Times 2001-2006, writing in the Sunday Times, 13 November 2011

It’s confession time. Exactly 10 years ago, I was cheering as the preparations to launch notes and coins for Europe’s bold new single currency reached their climax. For more than a decade before that, mine was among the voices egging on Europe’s leaders as they agreed to pool control over their money and form an economic and monetary union (Emu). In the years that followed, with the euro establishing itself as an instrument of European power and integration, I was one of those celebrating its success and urging Britain to join the party.

I now believe I was wrong…

After describing the crises in Italy, Greece, Portugal and Ireland, he decided:

It is possible that apocalypse will be avoided and that the EU will find a way of muddling through to save the euro in some form…

But even so, for me something fundamental has changed. The travails of the euro have done irrevocable damage to the political assumptions I have carried around for most of my adult life — that the evolving “European project” is, for all its much-discussed faults, by definition a force for good; that economic integration driven by the EU is the essential motor for peace, prosperity and economic development across the continent.

In fact, watching Europe’s leaders floundering and fumbling for the past 18 months and more, it is hard not to conclude that the single currency is achieving the precise opposite of what its progenitors intended.

Where they promised greater economic stability, the euro has exacerbated uncertainty and volatility. Where the single currency was supposed to promote trade and integration, it has instead created new divisions. Where it was portrayed as a vehicle to enhance Europe’s influence in the world, it has reduced the EU to an international laughing stock, or worse. Where it was promoted as a forge for closer political co-operation in Europe, as part of the formula to end the wars and bloodshed of the 20th century, it has fuelled conflict, undermined democratic structures and reawakened age-old national resentments…

What makes this litany all the more humiliating is that we should have seen it coming…

…it is a comprehensive and devastating failure of political leadership and economic understanding — Europe’s worst fiasco since the second world war. Its roots go back to the origins of the project and, to me regrettably, its consequences now threaten the long-term future of the European Union…

All of those involved — the political leaders who signed the 1992 Maastricht treaty that created Emu, the central bankers, officials and policy experts who designed the common currency and its institutions, the cheerleaders in the worlds of journalism, economics and business — bear a share of it. All of us paid too little attention to the arguments of those who opposed the project in principle and of those who worried about its viability.

For there were enough voices, both in continental Europe and in Britain, warning of the economic and political risks inherent in the euro’s conception and design as the project gained momentum in the 1980s and 1990s…

Too often, their arguments were drowned out by the political imperatives driving the project forward and, frankly, by a tendency among euro supporters, including myself, to lump together the critics — the die-hards who had always opposed European integration and who had been mostly wrong, and those who saw the point of Europe but worried about the euro — under the prejudicial label “sceptics”. It was, in that sense, an epic-scale exercise in “group-think”.

The remainder of the article he reports the random reflections of euro enthusiasts, most of whom prefer to remain anonymous, from which Gowers attempts, with some difficulty, to draw four points.

First, most insisted that for reasons of economic structure and competitiveness, the idea of a common currency remains right in principle — with or without Britain…

Second, all agree that the design of the euro as launched 10 years ago was fatally flawed, largely for political reasons involving those former bitter enemies France and Germany…

Third, even the project’s staunchest supporters concede that since the launch, member states’ management of the euro has been somewhere between miserable and catastrophic…

[The fourth point] …is that having set out down the road, Europe is doomed to carry on. There can be no turning back. It may be messy, but the consequences of failure and the collapse of the single currency would be much worse.

And one by one he knocks down all the proposed solutions which he decides either won’t be accepted by the parties involved or will have disastrous consequences.  He therefore finally decides that:

…there is nothing for it but to overlook the history of this mis-shapen creation and throw money at it. The political consequences, though, hardly bear thinking about.


 

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