UK government Treasury Chancellor Gordon Brown is going to argue that Britain is becoming even less of a fit into the euro currency because the Euro zone economies and Britain are diverging economically.
The gap between British and euro zone interest rates, which was 1.75 per cent last June, is now 2 per cent. The British unemployment rate is now 4.9 per cent compared to 8.8 per cent in the euro area, compared with 5.1 per cent and 8.7 per cent a year ago. And economic growth in the UK is forging ahead at 2.8 per cent compared to a sluggish 0.6 per cent in the euro zone.
Now even the most ardent pro-euro MPs concede it has been relegated to a long-term goal that could take more than a decade to realise. "The whole pro-European movement needs to be rebuilt," said one.
The use of a common currency was supposed to speed up growth in European economies. Where is the evidence to support this? The euro zone is sluggish. Britain continues to outperform it. The biggest problem with the euro is that it extends a common currency over an area which has so many different spoken languages which reduce labor mobility and laws that cause rigid labor markets. The various economies can not all grow at the same rate and they can not shift labor around to adjust for the different growth rates.
|Share |||By Randall Parker at 2004 March 12 03:24 PM Europe and America|