It is a national humiliation for Britain that the pound has
fallen to effective parity against the euro.
Some politicians cite his as evidence for their view that
Britain would be better off adopting the European single currency because the
latter is stronger at present.
Yet that suggestion is itself an appeal to economic
The pound’s dramatic fall against the euro is actually
indisputable evidence of the fact that the British and European economies are
totally out of sync.
The enormous differences between the economies of Britain
and Europe have always been the decisive argument against any common currency
project. In the 1990s, this meant that the British economy was far more
competitive. Now it appears that the opposite is true and that the recession
has caught Britain in a much weaker position than Germany.
In both cases, the economic priorities of Britain and Europe
have been different. The frank comments of the German Minister of Finance last
week are a rare public acknowledgment of that difference. They are themselves
only a symptom of something much deeper.
For economies with such different needs to have the same
monetary policies would be a disaster for all.