Britain's Euro Ambiguity: A Year of Uncertainty and Shifts in Government Strategy

A year after British Prime Minister Tony Blair seemed to nudge the country towards joining the European single currency, the economics of the euro have sunk deeper into British ambiguity. The currency has lost 29% of its value against the dollar since its introduction in January 1999, pushing the price of British exports to the Continent ever higher. Opinion surveys have shown sentiment in this country swinging not only against joining the euro zone but also against remaining a member of the European Union.

Key Takeaways:

• The British government has switched tactics, focusing on reforms on the Continent rather than persuading the British people of Europe's virtues.
• Prime Minister Tony Blair has demanded that Europe take on "the attitudes and interests of the past and move decisively to gain a lead in the new economy and industries of the future."
• The government has committed itself to seeking popular support for joining the single currency in a referendum after the next national election, which must be held by May 2002.
• The trade and industry minister, Stephen Byers, cited recent studies to say that three million British jobs depended on membership in the European single market.
• William Hague, the leader of the opposition Conservative Party, argued that the real debate in British politics is not about Europe -- in or out -- but about the euro -- in or out.
• Some government ministers acknowledge that the opposition has a point, saying that they "haven't done enough" to engage in the debate.

Statistics:

• The euro has lost 29% of its value against the dollar since its introduction in January 1999.
• The euro has lost 14% of its value against the pound.
• Three million British jobs depend on membership in the European single market.
• More than half of Britain's trade is with Continental Europe.
• Britain's unemployment rate is below 5%.

Sources:

• "The Economist" on January 12-18, 2001, citing Ben Hall, research director at the Center for European Reform
• The World Economic Forum in Davos, Switzerland, where Prime Minister Tony Blair spoke last month
• Stephen Byers, trade and industry minister, stating that three million British jobs depend on membership in the European single market
• William Hague, leader of the opposition Conservative Party, arguing that the real debate in British politics is about the euro -- in or out.