The future of the euro

Ministers, according to the Sunday Times, have now denied that the euro-zone is about to break up, and as Bernard Woolley put it in the magnificent satirical comedy programme, "Yes Minister" you should never believe anything until it has been officially denied. The euro-zone is a football team on the brink of relegation, and the chairman has just expressed full confidence in the coach. We all know what that means.

Hans Eichel (German finance minister) and Axel Weber (Bundesbank president) have been consulting about the possible break up of the currency union. Imminent break up remains unlikely, but ECB president, Jean Claude Trichet, may be the coach who pays the price.

But what, then, of Britain? Euro-enthusiasts have been urging Tony Blair for years to lead Britain into the euro. Paddy Ashdown even showed his ignorance of classical history by urging Blair to "cross the Rubicon" in support of the euro. It seems no-one told him that Caesar's crossing of the Rubicon was an illegal act of war against the Roman Republic, which plunged Europe into two generations of civil war, and led to the abolition of Rome's consitution and 400 years of continent-wide dictatorship.

What Ashdown meant is that Blair should have the courage to enter the euro. And courage is, it seems, what is missing in this case, as Blair seems genuinely persuaded that joining the euro would be good. But joining the euro now seems extremely remote and for several years at least, off the agenda.

But this has come about solely because the continent is in an economic mess and Britain is relatively prosperous. Enter, Gordon Brown.

Brown held spending to Conservative plans - which re-elected Conservatives would probably not have done - for his first two years as Chancellor, while ramping up taxes substantially. This meant that when he allowed expenditure to rise there was money in the kitty. His first term as Chancellor was pretty good, though growth was down on the previous Parliament. Over the last four years, however, expenditure has shot out of control, and sixty tax rises have not kept pace. Sooner or later, Labour governments run out of money. Brown's first Parliament success ensured that this time it would be later. But it is still coming.

The British economy does not have a smooth path ahead of it. So there is a real chance that as the economy begins to struggle, some poor fool will suggest that entry to the euro is the solution. Could such a rallying cry have resonance? As long as the continent is struggling that is unlikely, but if the euro survives the current crisis, expect renewed calls for British entry in two to three years.

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