"As, over the next ten years, all the accession states will adopt the Euro there is no real future outside the single currency". Critically discuss the above statement with particular reference to the UK.
The Euro debate is intensely emotional. Whilst on the one hand Trichet describes the Euro as "[t]he crowning achievement of the single market" (2001, p.7), others believe that the Euro is nothing less than a conspiracy to create an (evil) European super-state. There can be no doubt that this is an important issue, particularly in the United Kingdom given its government's "definitely-maybe" views on the Euro. Accordingly this essay will consider the Euro question with particular reference to the UK. Firstly, it will consider the arguments for and against the UK entering the Eurozone.
Section 2 sets the scene by outlining a brief history of the Euro. Section 3 then describes the famous five tests set by Gordon Brown to enable a decision upon the vexed question of whether Britain should join the Euro. Section 4 considers the political aspects of the debate, which this writer sees as the real issue in this debate. Section 5 examines life outside the Euro, and its implications for the UK. Finally, section 6 draws conclusions on the Euro debate.
2.A Brief History of the Euro 欧元的短暂历史
The road to the Euro began in the Maastricht Treaty , which agreed upon a common currency.
The then British government (Major's conservative government), however, was deeply sceptical about this, seeing monetary union as a step towards federalism  . Britain therefore negotiated an opt-out clause (as did Denmark). Maastricht run into difficulties (notably, rejection in the Danish referendum), but despite this the Euro-bulldozer rolled inexorably forward, moving from aspiration to reality. A European Central Bank was established in Frankfurt. And in 1999 the Euro became the national currency of the majority of EU states.
3.Brown's Five Tests 布朗的五次测试
In 1997 Gordon Brown, the British Chancellor, set out a series of five tests, designed to enable a decision upon the vexed question of whether Britain should join the Euro. These tests give a clear answer: "definitely, maybe."#p#分页标题#e#
These tests are, first, whether there can be sustainable convergence between Britain and the economies of a single currency; secondly, whether there is sufficient flexibility to cope with economic change; thirdly, the effect on investment; fourthly, the impact on our financial services generally; and fifthly, whether it is good for employment. (1997)
This test asked if the UK's economy was sufficiently convergent with the rest of Europe (presumably the Chancellor remembered Black Wednesday). It was not met in 1997, and failed again in 2003. As Schwartz commented:
Giving up its own monetary policy to be ruled by EU monetary policy will expose it to interest rate movements that are not appropriate to its economic situation and can plunge it into recession. (2000, p.68)
But although one can certainly argue there is insufficient convergence, Howell points out that: "[i]f the UK gives a strong signal that it wishes to join in a set time frame, UK interest rates, just like Italy's or Portugal's are likely to converge towards the core states."(2002, p.31)
This test aims to examine whether there is sufficient flexibility to cope with economic problems that might emerge. This test was not met in 1997, a conclusion repeated in 2003.
Clearly there are differing views on the effect of the Euro upon inward investment. Nonetheless, it was held that this test was met.
The financial services industry has always been crucial to the UK's financial well-being, and Brown obviously felt the need to underline this. Again, there is conflicting evidence upon the effect entry into the Euro would have on the City. Ultimately though, it was held that this test was met.
3.5.Growth, Stability and Employment
Brown held that growth, stability and employment must be considered - a test held to be met.
With only three of the five tests met, Brown was not obliged to ask the country its views on the Euro; conveniently for Brown, given that opinion polls consistently show British public dislike of the Euro. It is unsurprising, however, given that the tests are sufficiently impalpable to ensure that they can be met, or not, as political expediency demands.
Brown has stated unequivocally that there will be a referendum before the Euro is adopted, saying: "[b]ecause of the magnitude of the decision|, whenever the decision to enter is taken by Government, it should be put to a referendum of the British people." (1997)
Thus, whilst it is clear that a referendum cannot be won, the government will claim the five tests have not been fulfilled, preventing them from fighting an unwinnable referendum. But if in the future the electorate is more open to the Euro, the government can say the tests have been met, and hold a referendum.#p#分页标题#e#
4.The Political Arguments 政治争论
By acknowledging the need for a referendum Brown obliquely refers to the real issue: the political aspect of the decision. The decision will go to the heart of a state's sovereignty - although Brown denies this:
If a single currency would be good for British jobs, British business and future prosperity, it is right in principle to join. The constitutional issue is a factor in the decision, but it is not an overriding one. Rather, it signifies that, in order for monetary union to be right for Britain, the economic benefit should be clear and unambiguous. [emphasis added] (1997)
But these constitutional issues cannot be swept away so readily. As Gamble states, "the economic case by itself will never be conclusive or decisive. It is the political choice that counts."(2000, p.4)
Joining the Euro is permanent. It takes away, forever, one aspect of a state's independence. This is no small issue, and it should not be treated as one. Whilst a state remains outside the Eurozone, its options remain open. Entry will, necessarily, curtail its options. Once in it would be extremely difficult (and legally dubious) to leave. Further, there can be no doubt that the common currency is a move towards a federal state for, as Issing points out, a single currency is used as a "pace-setter towards political integration"(1996, p.20)
This may, of course, be no bad thing. One Euro supporter (who, unusually for a pro-Euro writer, acknowledges its profound political impact) suggests that joining the Euro would mean joining: "[a] social democratic Europe, a trade union Europe, a citizens' Europe" (Gamble, 2000, pp.4-24)
Ultimately, the issue of whether or not to join the Euro will always be political. As Jones points out, governments are political beings: "Governments regard the choice for monetary integration from a self-interested rather than an altruistic perspective. Their calculus is subjective rather than objective."(2002, p.4)
It is perfectly possible to provide a solid case for joining the Euro. Equally, a convincing case for remaining outside the Eurozone can be made. Ultimately, the real decision is political, not economic. It must, however, be emphasised that whether or not the United Kingdom enters the Eurozone, a choice is still being made. Inactivity is here as positive an act as activity. As Huhne points out: "Britain cannot merely opt out and pretend that nothing is happening." (2001, p.96)
There is no simple answer to this question. It is a political question that continues to reverberate in Westminster.
5.Life Outside the Euro: A Lucky Escape or an Opportunity Missed? 欧元以外的生活：一个幸运的逃脱或错过的机会？#p#分页标题#e#
When states accede to the European Union, they are explicitly accepting the entire body of European law, the acquis communitaire. They are, therefore, accepting that when their economy meets the Euro's requirements, they will join the Euro. In order to do this, they will need to join the Exchange Rate Mechanism for a two year period, and keep their exchange rate within the ERM's limits. After this, they will become members of the Eurozone. The diagram below explains this process.
Integration of the AC into the monetary union through the ERM-II (Krawczyk, 2004, p.3)
(at least two years)
EU accession and the ERM II membership
Convergence assessment and (eventually) adopting the Euro
The accession states do not have an absolute timetable for joining the Euro zone. But in time they will join it. The Euro, therefore, is set to grow  . In the meantime, Britain and Denmark retain their "opt-out" rights vis-à-vis the Euro, and Sweden has yet to move to it.
It should be noted that there is some concern about the accession states joining the Eurozone. Indeed, "Mr Koch-Weser, a Germany finance ministry official, has advised the future Member States that they should first strengthen their economies."(2003)
Given that the Euro will only expand, what will happen to those states that remain outside the Eurozone? Will their currency be "comparatively small.squeezed between the great tectonic plates of Europe and America"? (Huhne, 2001, p.96) It is tempting to assume that they will be isolated, but is this really the case? Once again, this essay will focus upon the UK.
Whilst many authorities emphasise the difficulties which will be faced by the UK remaining outside of the Euro, others argue that the UK's interests are actually best served by remaining outside the Eurozone. Indeed, Ferguson and Kotlikoff go as far as to suggest that the Euro might not itself survive:
What matters is whether the entire monetary union will hold together in the years ahead. The Euro's medium-term future will prove much shakier when Europe is hit by the fiscal crises looming for the majority of the Euro zone's member countries. (2006, p.111)
There can be no doubt that, as individuals, we might save money when going on holiday should Britain join the Eurozone. But there are many problems which will face the Euro over the next ten years - in particular those of expansion, and the entry of less financially sound economies into the Eurozone. This leaves open the possibility that rather than suffering outside the Eurozone, the UK's economy may even outstrip the European economy. As Eddie George points out:#p#分页标题#e#
The UK, overall, has suffered no ill-effects from keeping the pound, while the Euro-zone economies have done less well than expected, and, in many respects, less well than the UK. These economic phenomena are almost certainly structural, not transient. (2000)
It is possible that if Britain continues to refuse to join the Euro we will be left shivering, whilst other states bask in the warmth of the Euro-glow. But it is equally possible that Britain will, on the whole, prove to be better off by refusing to join the Euro. Ultimately, Britain may prove to be the only person marching in step.