'Is it Time to Adopt the Euro'? Review of event

INTRODUCTION

The CSPP (“the Centre”) held a discussion on the Euro at this year’s Scottish Labour Party Conference. It was a stimulating and productive session, the details of which are described in this report.

The event was the latest development in our European programme and precedes a range of hustings events (in cooperation with the European Movement and the Hansard Society) that are due to take place in advance of the European Parliament elections in June ’09. The first of which will take place in Edinburgh on the 21 April, an informative session aimed to outline why the European Parliament matters and why people should vote.

Details of other events will be posted in due course.


THE ROLE OF THE EUROPE EVENTS

The European Union (“the EU”) has a profound impact upon the lives of Scottish people. Yet interest in what the EU is and does, is startlingly low. Recent polling confirms this fact: turnout in the 2009 elections is expected to be around 30%.

There is a thus a clear need for more engagement with the EU. The Centre’s Europe Events are designed to assist in meeting this need, in three ways. First, the events provide a forum for politicians to explore questions about the EU from a Scottish perspective: a perspective that very directly relates to the concerns and interests of the Scottish public. Second, they enable a range of Scottish voices (beyond just politicians) to participate in the conversation on the EU: voices with fresh perspectives and ideas. Third, it is hoped that they will contribute to raising awareness—and so to kick-starting discussion—about Europe among the wider Scottish public.

The events of the past year only make the case for engagement more urgent. The financial crisis has revealed starkly how interconnected the lives of European (indeed all) citizens are.


The EU will therefore naturally be expected to play a major role in shaping the future. It is crucial that the conversation about how it ought to do this is as full and as thorough as possible.


OVERVIEW

What follows is an overview of the event. It covers the main points made by the individual speakers, and the content of the ‘Question & Answer Session’.

SPEAKERS

David Martin MEP began by discussing the topic of British entry into the Euro. He queried whether the “five economic tests [imposed by the UK Treasury] are still appropriate today”. He pointed out that Labour are “in principle” in favour of the Euro if these conditions are met, but stressed that now is “not the time to join”. The economic crisis makes membership “more urgent” but “not immediate”.

He stressed that support of the Eurozone is important: because European solidarity helps marginal countries (like Ireland); and non-membership makes countries less stable (consider Iceland).

He argued that more needs to be done to publicise the issue of the Euro at home. The lack of attention presently paid to the question arises from “a combination of Labour apathy and Conservative antipathy”.

On the topic of banking reform, he stressed that constructing a secure banking infrastructure will be “easier to achieve in Europe”.

Peter Jones focused his remarks upon the question of British entry into the Euro. Like David Martine MEP he believes that “now is not the time” to join.

He argued that the Euro still has “a lot to prove”. On the one hand, it has been the source of a lot of stability in the Eurozone. Yet on the other, the economic crisis presents big questions, among them: (1) Whether Ireland can pay its debts (the markets are worried about this); and (2) Whether the enormous pressures in Eastern Europe will lead to severe consequences (he pointed, in this regard, to the fact that several banks (particularly in Austria), lent large sums to countries like Hungary. There is, he argued, a “worrying historical indicator” in that the depression of the 1930’s depression was “kicked off” by the collapse, in 1931, of the Austrian bank Credit Anstalt)

He stressed that the seriousness of the current economic crisis should not be underestimated: these are “perilous times”. He raised the possibility that a crisis in the EU—more probable in light of increasing social unrest (consider e.g. Greece, Italy, and others)—could bring down the Euro.

Looking forward, he suggested that if the Euro does survive, and so it proves itself to be adept at coping, then a renewed debate on entry into the Euro should begin.


QUESTION AND ANSWER SESSION

With Labour going into the European elections, what campaigning line should we take to assuage voters’ fear of the economic crisis?

David Martin MEP: We need to inform the voters’ that European economies are currently acting together to set “new rules for financial banking”. Recently, United Kingdom Prime Minister Gordon Brown called on the European Parliament to do just this (See an excerpt here).

If Greece breaks, what would happen?

David Martin MEP: There is no real debate in the Eurozone about Greece leaving the Euro. It would be “disastrous’ for them as they would be “crucified by the markets”.

Peter Jones: There is no signal that countries are considering leaving Euro but these are “extreme times” in which things can happen very quickly. Logic tells us that countries are ‘better together than apart’ but logic and rationality “fall out of the window in such times”.

What would be the best outcome of the G20?

Peter Jones: What we need now is international institutions to enforce a renewed “transnational framework”. How a reformed global financial architecture will look is “up in the air” but the EU can point to the European Central Bank (ECB).

What can the Centre for Scottish Public Policy do to promote UK entry to the Euro?

David Martin MEP: Get people talking about the issue again “exactly like we are doing today”. Have a discussion “within and out with the party”.

Peter Jones: Be the vehicle to “campaign for Euros to be accepted in shops in Scotland”. Now is exactly the time for this due to the currency rates.


Paul Hughes, CSPP Research Associate