Euros from heaven
The Euro debate has been taken out of politics, and given over to the Gods of the Five Economic Tests.
UK chancellor Gordon Brown is expected to give his judgement to the House of Commons in the near future about whether or not Britain should join the Euro.
Joining the Euro would mean handing over monetary policy, such as the setting of interest rates and exchange rates, to the European Central Bank in Frankfurt – if not for good, then certainly for the long term. This is one of the most important political decisions to face Tony Blair’s government.
You wouldn’t have guessed, from the tenor of the discussion. The euro debate is often seen as an issue of Blair v Brown – as the showdown in the battle between the Treasury and 10 Downing Street. Alternatively, it is seen as a technical question, of whether particular tests have been met, or whether it will be good or bad for British consumers or British businesses. The political implications of giving control over the British economy to unelected, unaccountable bodies rarely seem to be discussed.
It was back in 1997 that chancellor Gordon Brown outlined the ‘five economic tests’ that would judge whether the UK economy would benefit from joining the euro. These included factors such as the compatibility of business cycles and economic structures; whether there is sufficient ‘flexibility’ to deal with problems if they arise; the effect on external investment and financial services; and the effect on growth, stability and jobs (1).
The five economic tests both placed power for the decision in the hands of Brown, and made the decision into an objective, technical question. As the guardians of the tests, Brown and his economic advisers have been able to position themselves as the only ones with sufficient technical know-how to judge what is in the British national interest – and they have guarded their position fiercely. When the Treasury select committee interrogated Brown about how the decision would be made, he replied: ‘The case will be clear and ambiguous, when we make our assessment and at the appropriate time. We will make our assessment one way or the other.’ (2) Butt out, in other words.
Of course, both the design and the application of these tests involves subjective judgements. But because the Treasury has sought to remove the five economic tests from the realm of general political debate, they appear as mystical powers that will tell Britain what its destiny should be. Apparently, Brown and his advisers have produced a 2000-page report on the euro issue – the result of years of beavering away, running statistical tests and checklists. This is less a discovery of the genuine national interest than it is akin to some modern-day consultation with animal entrails.
From time to time, the British public gets clues as to what Brown’s elves are discovering behind Treasury walls. One source said that Brown was ‘not a never man’; another said that the option of having a referendum before the end of Parliament will be left ‘very much open’ (3). But these signals are easily misread. On 11 May, Brown said that the reform of financial institutions was ‘absolutely crucial’ – but he dashed the ensuing speculation that financial reform was a ‘sixth test’ (4).
Brown is against entering the euro in the near future – either because he thinks it will be bad for Britain, or because he wants to preserve his fiefdom stationed outside the euro gateway. Prime minister Tony Blair is reportedly in favour of the euro – either because he thinks it would be good for Britain, or because he wants to get into the history books.
This has given an personal edge to the debate. Statements by pro-euro pro-Blair ministers, like John Reid, Patricia Hewitt and Peter Mandelson, were reported as attacks by the ‘Blair camp’ on the ‘Brown camp’. Brown’s aides responded by dismissing their comments as ‘tit-for-tat briefing’ and ‘low-level stuff’ (5).
The decision on the euro has become a battle for political authority between Blair and Brown. Leader of the house John Reid (described by one paper as ‘Blair’s ministerial hitman’) warned that ‘ultimately these decisions are taken by the cabinet under the leadership of the first lord of the treasury who is the prime minister…the cabinet will discuss these matters collectively’ (6). The question of who controls government is playing out in terms of who controls the entry to the euro.
But the pro-euro and anti-euro arguments largely remain within the domain of Brown’s five tests. Rather than attempting to have a political debate about the euro, both sides have merely bandied around different economic consequences of joining or not joining. The question of whether we should be giving control over the economy to an unelected, unaccountable body is not really addressed – the only question, it seems, is whether the euro ‘works’.
On the pro-euro side, trade and industry secretary Patricia Hewitt said that staying out of the eurozone could mean a loss of investment. Business chiefs sent a letter to Tony Blair arguing that ‘the conditions for entry are right’; and others argue that entering the euro will bring down prices of goods. On the anti-euro front, trade unionist Bill Morris argued that the euro would damage the NHS and economic stability. Many have noted that the British economy is doing well relative to the rest of Europe at present.
The context for this is the depoliticisation of debate about all aspects of the economy. The question of how production and distribution are organised has become progressively reduced to a managerial issue, to be dealt with bureaucrats and accountants, rather than an arena of political contest and discussion. It is telling that Brown’s first step as chancellor in 1997 was to hand over control of interest rates to the Bank of England – so as to make interest rate policy ‘free of political manipulation’.
Handing control over to the European Central Bank, or deciding on the basis of the five tests to keep control with the Bank of England, would both be further steps along this route. The two sides of the debate are further removing the question of the organisation of the economy from politics and public criticism.
The secrecy, personality politics, and bandying around of investment figures has made for a woeful public debate. Not surprisingly, most members of the public have become entirely indifferent to the whole issue – Blair v Brown, cheap high-street v cheap healthcare…who cares? A referendum without political discussion will mean little. Which is a shame, because the question is an important one that will affect us all.
The debate has been worsened by the ‘wait and see’ inertia that hangs over it. Nobody in the British political class seems willing to actually push the question one way or the other. The interminable postponement of what many see as a boring decision only serves to make it still more boring. After years of anticipating crunch-time, it seems unlikely that Brown will actually announce a yea or nay in a few weeks’ time. According to reports, he is expected to say that the tests have not been categorically met, but that Britain should remain open to the issue.
The political terrain of the euro debate has been left to marginal groups or campaigners. The Tories, who fought the 2001 elections on the basis of saving the pound, have abandoned the issue – although there was dispute about whether the Tories damaged the anti-euro cause more than the anti-euro cause damaged them.
Right-wingers and little Englanders complain about signing over our patrimony, in much the same way as the ‘metric martyrs’ moan about having to weigh their bananas in kilograms rather than pounds. And these campaigners often have similarly undemocratic approaches towards the Europe issue – one group petitioned the Queen, urging her to withhold Royal assent from any bill incorporating the European convention into British law.
From the other side of the spectrum, Guardian columnist George Monbiot supports joining the euro because he argues that it will check American power in the world (7). This represents the euro being used as a bandwagon for campaigners’ particular political agendas.
Perhaps the real question is not whether Britain will join or stay out of the euro, but whether Britain will join or stay out of its own euro debate.
Euro: it’s only money?, by Daniel Ben-Ami
(1) See the Fact Sheet: The Five Economic Tests
(2) Brown keeps MPs guessing over euro, Guardian, 27 February 2003
(3) Cabinet told to lobby for euro entry, Observer, 11 May 2003
(4) Daily Mail, 12 May 2003
(5) Financial Times, 13 May 2003
(6) Reid and Kinnock push Brown on euro, Guardian, 12 May 2003
(7) The bottom dollar, Guardian, 22 April 2003
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