The immediate answer is not right now. Joining the euro requires fixing an exchange rate between the pound and the euro forever, and with sterling falling every day, no-one can be sure what the right rate would be. The Maastricht treaty itself requires two years of membership of the Exchange Rate Mechanism as a means of establishing a viable long-term rate, and it would be an enormous error to fail to do this properly.
It is necessary to point this out in view of the near-hysteria among some anti-Europeans that the government might try and sneak euro membership past them under cover of the current crisis. If there is anything we can rely on Gordon Brown for, it is his lack of desire to join the euro.
There are also the Maastricht convergence criteria regarding public debt and the public deficit. Debt is supposed to be no higher that 60 per cent of GDP – the UK’s is currently much lower than that but will get close as the recession unfolds – and the deficit is to be less than 3 per cent of GDP. That figure will be exceeded comfortably in the depths of the recession, which amounts to a further brake on membership talk. Government projections suggest that the deficit will not fall below the Maastricht level before 2013 at the earliest, so that’s another reason for thinking in terms of several years.
But if that is when the process might be completed, when might it start? Does that also have to be put on hold until the recession is over?
The government’s view is that it is in favour of membership of the euro, if the economic conditions are met. The famous five tests are intended to bring some kind of objectivity to this judgement, but in truth they attempt to justify the decision to stay out, not the decision to join. For the economic conditions are never going to be met without a conscious effort to meet them.
The recovery plan should be drawn up with euro membership in mind. All kinds of aspects of the British economy need to be rethought – the excessive obsession with rising house prices (step forward, the Daily Mail), or the disproportionate influence wielded by the City of London (the only industrial sector to get its own test in the famous five) – so let’s do so with the intention of joining the euro. This isn’t a commitment to joining, so if other things go wrong, then Britain still has its options open, but it is a necessary and essential stage in that journey.
Lastly, there is the question of a referendum. To join the euro would be a major step of constitutional significance and it is the policy of the parties that support euro membership that there should be a referendum first. To win that referendum will require a very different public attitude towards Europe than the government has shown in recent times. Gordon Brown’s usual approach has been to denounce the other European countries for not following closely enough the British economic model, which was hardly the way to win public support for a pro-European economic policy. (As an aside, after all the criticism he has voiced at them, he can hardly be surprised when the German finance minister finally answers back.)
To join the euro amounts to more than simply reprinting the banknotes. It is more than just a policy: it is a strategy, encompassing the government’s approach to economics, its approach to European politics, and its approach to its own voters. It is a step comparable to joining the EEC in the first place, and no-one should imagine that it will be done more easily. But equally no-one should forget that it is just as important.