Two opposing fantasies about the Euro

There are two opposite and equally ludicrous British fantasies about the Euro. The one which most of the political class believed fifteen years ago was that joining the Euro would be good for Britain and it was inevitable that we would join within at most a decade.

Only a handful even of the dwindling band of Federalists still think that now - Ken Clarke does not expect to see Britain replace the pound by the Euro in his lifetime.

Much more persistent among the far from diminishing band of hardline Eurosceptics is the view, in my opinion equally silly, that the Euro has been a disaster for all participants and will collapse soon.

People who have convinced themselves of this are living on another planet.

The Euro has been a disaster for countries like Greece, Spain and Italy which were insane to join it and should never have been allowed to. For Germany, and for countries which have economies closely aligned to Germany and are willing to accept the loss of independent economic policy which it entails, the Euro has been reasonably successful.

"But what about the recession" I hear some voices cry.

The world recession was caused mainly by poor worldwide regulation of banks. It was admittedly exacerbated in the Eurozone by overly severe monetary policies, but I believe that most of the relevant countries would probably still have followed similar policies if they had retained their own currencies. The problem was the policy, not the Euro per se.

"One size fits all," or rather doesn't, is a massive problem if countries try to share a currency with Germany when their economies or economic policies are not in sync with the German economy. That is why Britain would have been mad to scrap the pound for the Euro, and why Spain, Italy and Greece were foolish to join.

However, for the majority of the Euro's history, countries which ARE in sync with Germany have found the single currency a net advantage.

If the Euro was likely to collapse, it would almost certainly have done so five years ago. A monetary system which has survived the past sixteen years can survive almost anything.

The fact that I think the Euro is here for the long term does not mean Britain should have joined it or that Greece should stay in it. When someone as pro-Euro as Ken Clarke, but who unlike many people of that view has a mind capable of being influenced by evidence, thinks and says publicly that it is time to start planning for "Grexit" then the case for preparing a positive future for Greece outside the Euro and the Eurozone without Greece is strong.