Says Martin Vander Weyer, who concludes:
Finally, will these experiences make us wish we had joined the euro, as both the former Monetary Policy Committee member Professor Willem Buiter and the FT columnist Wolfgang Münchau have been suggesting? Will we decide, like the bankrupted Icelanders, that having a free-floating currency and an independent economy is no longer desirable in such a dangerous world? Quite the reverse, I suggest: as we watch the likes of Spain going through agonies of real-wage adjustment which might have been alleviated by a floating peseta and localised interest rates, we will be all the more glad that we can still have a run on the pound when we need one.
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Very good point. The relative economic success by the end of the Major years was an inadvertent result of the failure of Major to keep within the ERM.
ReplyDeleteI think history will also conclude that the recession of the early Thatcher years was caused at least as much by the £ being artificially pushed up by North Sea oil as by the government pulling the rug out from under lame ducks. Without imports being artificially cheapened the potential of the productive part of the economy would have allowed expansion.