The
British Dimension and the Labour Government's Five Economic Tests
The
British Dimension
The
Labour Government's Five Economic Tests
The Verdict of the European Central Bank
THE BRITISH DIMENSION.
"The problem that Europe in general and
the euro in particular poses for Prime Minister Tony Blair and his Chancellor
Gordon Brown can be simply stated: both men are genuine Europhiles, eager to
carry forward the whole process of European integration in foreign and defence
as well as in domestic policies, keen to bury the pound sterling in the single
currency, seeing Britain's future as above all centred in the European Union -
and undeterred by the accelerating progress being made towards transforming the
European Union into a fully fledged European State. Both men want, if not a Federal Europe, then something very
close to it indeed. Their problem
is that they dare not admit it".
[The Right
Hon. Lord Peter Shore of Stepney PC]
The late Lord Shore, a former Labour MP, Cabinet Minister, and Labour Peer,
summed up what many people believe to be the truth about Tony Blair and
Gordon Brown's real position on the euro and the United States of Europe.
British politicians have always
known that the British people have no interest in being part of a European
super-state. Therefore Britain's
gradual transfer of her sovereign powers to the European Union has been achieved
by a technique practiced by successive governments and pro-EU politicians from
all the main parties: they simply pretend that what is demonstrably happening
isn't in fact happening at all. Conservative
and Labour governments since 1972 have at every stage of further European
integration told the British people that these were purely economic
arrangements, that no 'essential loss of sovereignty' was involved; and
that the prospect of Britain's absorption into a new European super-state was
nothing more than scare-mongering by so called 'anti-Europeans' .
Very few people now believe this.
Britain now finds herself in a most bizarre situation. The most important constitutional, political and economic change is being portrayed by the Labour government (and politicians of the other main parties) as a matter of mere economic policy hardly worth thinking about until the time comes; and then a decision will made purely in Britain's 'economic interests'. However there are profound tensions within the Labour cabinet between those who wish to ignore the constitutional issues in the hope that the old technique of pretending they don't exist will fool the voters once again, and those who realize that unless they address the arguments (albeit dishonestly) they have no chance of winning a referendum on the subject.
THE LABOUR GOVERNMENT'S FIVE
ECONOMIC TESTS
To get themselves out of the
hole described above Gordon Brown invented the five economic tests in October
1997. These were to justify Mr
Blair's decision to rule out scrapping the pound until after the June 2001
geneal election,
and to enable the Chancellor to put the issue on the back-burner. The Treasury
would be the 'guardian' of the five tests, thereby giving the Chancellor the
power to state when they had been met and when to recommend Britain's entry to
the euro.
The five economic tests are:
1)
Whether there can be sustainable convergence between Britain and
economies of the single currency.
2)
Whether there is sufficient flexibility to cope with economic change.
3)
The effect on investment.
4)
The impact on Britain's financial services generally.
5)
Whether it is good for employment.
These tests all have one thing
in common: they are purely subjective. If
Mr Brown decides that all test have been met anyone else could say that in their
opinion they have not. They contain
no objective, measurable criteria. The
tests are pure political fudge. They
are intended to take the issue out of the spotlight until such time as the
Labour government decides that the time is right to resurrect it and to announce
that the test have all been met and that they recommend entry to the euro.
THE VERDICT OF THE EUROPEAN
CENTRAL BANK
Wim Duisneberg, President of
the European Central Bank, has pointed out that the British Chancellor's five
economic tests are irrelevant to the EU decision making process.
In giving evidence to the European Parliament's economic affairs
committee he said, "It is only the Maastricht criteria which I regard
as relevant for eventual entry of the UK into monetary union".
This seems to indicate that Britain would have to rejoin the Exchange
Rate Mechanism and peg the pound to the euro for two years before being allowed
to join.