The Rt Hon. Lord Lamont of Lerwick

EMBARGOED UNTIL: Midnight 31st December 2001

As the citizens of Europe wake up to the reality of what their politicians have committed themselves to, Britain should count its lucky stars it is not in the Euro.
All the glitz, all the razzmatazz, and all the self-congratulation cannot disguise the reality that the Euro has not lived up to its’ billing:

– It was meant to be a hard currency - it has been weak.
– It was meant to be stable - it has been volatile.
– It was meant to rival the dollar, it hasn’t.
– It was meant to promote convergence, but inflation rates are wider apart than in 1998.
– It was meant to generate low inflation. The European Central Bank has missed its inflation target for long periods.

"Most seriously the Euro has increased the risk of recession in Euroland. European Central Bank interest rates have been too high for Germany, and too low for Portugal, Finland, Spain and Holland. Thanks to the Euro Ireland first moved to overheating but is now swinging rapidly in the opposite direction. As the Commission itself has admitted “the lack of tailored monetary policy in individual Euro-area member states increases the risk of pronounced financial cycles”.
In other words the Euro will cause more boom and bust.

"Meanwhile the British economy continues to perform well. Oxford Economics has calculated the GDP per capita in Britain is now higher than in France or Germany. This is due, not just to the strength of Sterling, but to the superior performance of the British economy. Britain now has one of the best monetary policy regimes in the world. It would be madness to throw it away.

"The introduction of Euro notes and coins means that the Single Currency is for the time being irreversible. Far from adding to the credibility of the Euro however, the most likely result is that the internal strains will grow over the next decade. It will take the politicians of Europe a long time to wake up to the reality of the monster they have created”.