I\’m not sure what Hutton is smoking these days. Something extremely powerful I\’m sure though.
The last, best and most palatable option is to join the euro, and fight a referendum campaign on it being our get-out-of-jail-free card – a means of avoiding de facto national bankruptcy and emasculation of the property-owning middle class while offering a route to reindustrialisation and underwriting the City of London. Inside the euro, both the government and the City would be able to sustain the spending and lending necessary to avert recession. The competitive level at which we would join would boost industrial exports for a generation. And the middle class would not have its savings wrecked by inflation. We would avoid the clutches of the IMF.
As we\’re all surveying the rubble we\’re agreeing that the root cause was that interest rates were set at inappropriate levels. So, in order to counter act this we\’re going to give away our power to set interest rates?
Good one, good one.
Especially since the people we\’re to give this power to would have, in the recent past, have set them at even more inappropriate levels. Lower than we did in the boom (which would have increased the boom of course) and now higher than we do in the bust (making the bust deeper of course).
Plus we still have a massive structural problem which makes the UK economy not part of an optimal currency area with the euro. Our method of financing housing is 1) massively more based upon owner occupation and 2) financied at floating interest rates. Compared, to, say, Germany that is.
So as and when interest rates change (assuming we join the euro) those changes will have a much greater impact upon the UK economy than it will on, say, the German.
Euro membership would thus makes the booms and busts greater…as it observably has done in Spain and Ireland in recent years…..which isn\’t really what we\’re trying to achieve here, is it?
Finally, membership of the euro would mean that we cannot change our exchange rate: worth remembering that the UK began to recover from the Great Depression the day it came off the gold standard. That is, the day that we adopted a floating exchange rate rather than a fixed one.
Perhaps someone ought to have a word with Will about his ingestions. Clearly something is causing him to fall off his rocker.