Economist Will Hutton says that both the EU and the UK would be much stronger if the country had adopted the euro currency 10 years ago.
He argues that if Britain had entered the single currency, the euro’s rules would have been very different, with the European Central Bank adopting a model close to that of the US Federal Reserve, with more scope for “fiscal and monetary activism”. Germany would have insisted, in return, that the EU banking system be much more conservatively managed, he adds.
Hutton says that the UK created an “economic doomsday” by not joining the euro, with disastrous results for the country’s real economy.
“By not locking in a competitive pound, Britain suffered a decade of chronic sterling overvaluation, made more acute by the City of London sucking in capital from abroad to finance the extraordinary credit and property boom of those years,” he says.