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Meg Munn MP - Sheffield Heeley's voice in Parliament | Welcome
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Thoughts on the Euro - for Co-op News

Wednesday, May 7, 2003

Meg Munn's article for Co-op News

As I write speculation mounts about the likely outcome of the Chancellor’s five tests for entry into the Euro. Like you I am not privy to the inner workings of the Treasury and await the official announcement. My personal view is that Britain should be a full and central member of the European Union - and this means being part of the Euro.

During my parents lifetime Europe has gone from being divided by war to a period of unprecedented peace, economic growth and prosperity. Britain’s place is as part of the European community of nations. But it is difficult to see why we would be in the EU and voluntarily sacrifice our ability to influence one of the key elements of the economic side of the Union - that of the currency. By staying outside of the Common Market for so long Britain was unable to influence the development of key parts of the Common Agricultural Policy and the Common Fishing Policy, let us not make that same mistake again.

However it is not just the benefits of influence that we sacrifice. The economics alone should take us in. Countries within the Euro zone, benefiting from price transparency, have seen significant convergence in the prices of goods. In contrast, in Britain we are literally taking a pounding. Overall, prices in the UK are 15 % higher than those in France - enough to make the residents of Ashford in Kent hop on the train and do the weekly shop at Lille. Before you’ve had your breakfast you will have spent 25% more on your toothpaste, deodorant, shower gel and shampoo than our German cousins. In Spain your weekly shopping basket would be 11% cheaper. The only credible explanation for this must be that companies can get away with it.

Added to the drain on your purse are the missed opportunities for trade. Studies show that the Euro has increased trade by 30% amongst those countries that have it, boosting their productivity and raising their incomes. If we continue outside the Euro we will lose out on inward foreign investment. When I visited the United States in 2001 they were not concerned about investing in Britain provided they knew we would join the Euro sooner or later - never, would mean much investment shifting to continental Europe.

Readers will know about the job losses that are going to affect the steel industry in Sheffield and other parts of the UK. Corus sensibly linked up with a European competitor - a Dutch company - in order to have some of the economies of scale and a foothold in one of the largest markets in the world. However, while we remain outside of the Euro, Corus will continue to incur the cost of currency transactions for its British made steel making it less attractive in an extremely competitive market.

So if it’s right to join the Euro how do we know whether now is the right time? The answer is we don’t - it will always be a matter of judgement. Unfortunately much of the debate has centred on the risks of joining with little analysis of the risks of not joining. A new independent report into the economic consequences of saying no to the Euro concludes that staying outside is already costing the UK in terms of jobs, investment, trade and higher prices - do we really want to see this trend continue.

The world does not stand still - the EU will grow by 10 countries next year, followed by more within a further 2 years. It is an expectation that they will join the Euro. We risk being marginalised as the centre of gravity shifts toward the East as those countries with decision making powers on the EU’s future become overwhelmingly the same as those steering the Euro. As the EU builds its financial institutions do we want to be in the room discussing the issues and ensuring that Britain’s interests are included or outside with no say? I believe Britain’s interests demand that we play a full part in determining the shape of the European institutions that will have an increasingly important role in all our lives in the future.

Meg Munn MP
Sheffield Heeley
7th May 2003

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