Magazine article Global Finance

The Hidden Costs Are Unacceptable

Magazine article Global Finance

The Hidden Costs Are Unacceptable

Article excerpt

Last month saw the launch of a new organization, Business for Sterling, opposing British membership in EMU and adoption of the euro. We are keen to discount the myth that the great majority of the UK business community favors early membership. Business for Sterling will set out to demonstrate exactly why the best future for Britain lies outside EMU.

The group is chaired by Lord Marsh, former chairman of British Rail, and is supported by a wide range of representatives from the UK business community, including Lord Hanson; Lord Wolfson of Sunningdale, who heads Great Universal Stores; Sir Michael Edwardes, former chairman of British Steel; Sir John Craven of Lonrho and Deutsche Bank's advisory board; Sir Rocco Forte of the Forte hotel chain, and myself, as well as Britain's Institute of Directors and the Federation of Small Businesses.

Like many other businessmen and women we believe EMU carries particular problems for Britain not shared by our European partners, many of which are already in de facto economic and monetary union. If the UK's economy mirrored that of Euroland we would be less concerned. But it does not. Widespread use of variable rate mortgages makes Britons uniquely sensitive to interest rate policy. Moreover, British and continental business cycles are out of step, as they have often been in recent years.

Any convergence would probably be unsustainable because of well-documented structural differences. In the 1980s Margaret Thatcher successfully rolled back socialist practices and replaced them with a free-market ethos. …

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