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William Hague: Why Britain will never join the euro

Rt Hon William Hague, Thursday, January 1 2009

William Hague

So it's nearly there. As the pound lurches, veers and staggers, this week's falls have brought it to within an ace of parity to the euro, so that in tourist exchange rates one pound is already sometimes worth about 99 cents.

Only a year ago there were 1.4 euros to the pound. 

And as the pound has plummeted in recent months, so there have been the first flickerings of life around an idea dormant for the last six or seven years: that Britain, too weak to maintain its own currency, should sign up to the euro instead.

When you think about it the idea of abandoning your currency when it has lost a lot of its value is a pretty stupid one: rather like thinking that if you have let your house run down in value until it is the same as a smaller one next door, it is a good time to swap.

We all know that in that situation you have to learn to look after your house better.

But that hasn't stopped some members of the British Government telling Mr Barroso, the President of the European Commission, that 'people who matter in Britain are thinking about it' and that 'if we had the euro we would have been better off'.

No member of Labour's Cabinet will admit to having this conversation, although whoever it was needs to do some urgent studying of what has happened to Britain's economy. 

Since the interest rates in the eurozone have been lower than ours for many years, it is fair to assume that, had we been in the euro all this time, Gordon Brown's boom would have been even more unsustainable.

And since those euro interest rates are now higher than those set by the Bank of England, it is also fair to assume that Brown's bust would now be even more dramatic and painful.

So for Britain, being in the euro would have made matters even worse, and our jobless totals would now be climbing even faster.

In the light of that truth it is incredible that the policy of Labour ministers, as Lord Mandelson has clearly put it, is that 'our aim, our goal, should be to join the single currency'.

Something of a cheek isn't it, to make this country's economy so badly prepared for recession that our currency goes weak at the knees, and then say that if it's that weak we had better get rid of it?

Of course, Labour have promised to hold a referendum if ever they want to go ahead and scrap the pound.

But then they also promised everyone a vote on signing up to the European Constitution, and do you remember having one? 

The truth is we need rid of our Government rather than our currency.

The reasons Britain didn't join the euro when it was launched a decade ago are as valid today as they were then; if anything, they have become stronger over time. 

The economic reasons are simply stated: British families have many more of their mortgages in floating interest rates than people on the continent; we have a much bigger financial services sector, and more of our trade and investments are denominated in U.S. dollars.

All of these factors mean that the right level of interest rates set for people in Greece, Germany or Italy is not necessarily the right one for us.

Giving up our currency would mean we would lose a vital tool for trying to run the British economy in the interests of the people of Britain - and that means an unacceptable loss of the independence of this country.

So a Conservative Government under David Cameron would have no ministers telling Brussels we would be better off without the pound, and no goal of joining the euro one day. 

We would never join the euro.

The jobs and businesses of this country are too important ever to sign away our right to do our utmost to defend them.

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