The great economics commentator Bill Keegan wrote an article in the Observer last month which argued that the UK did not give up the pound and join the Euro because of decisions by certain people at the Treasury who bravely resisted a push from Tony Blair to take us into the single currency. That’s not how it appeared at the time as I explained in an unpublished letter sent to the Observer below.
William Keegan repeats the myth that Britain was poised to enter the Euro but stopped by wise decisions in the Treasury. (In My View 9 February 2014) For Britain to enter the Euro at any time after 1997 three conditions had to be met. First, a referendum had to be won. Second, the pound had to come down significantly from its overvalued level of DM 3.20 or 13 French francs. Third, there had to be a broad political consensus with acceptance if not support from the press. None of these conditions were in place. The Conservative Party and the mass circulation press were fanatically hostile. Labour ministers loved the virility of the overvalued pound. There is no consensus in either the Labour or Liberal Democratic parties. The chances of winning a referendum were zero. The decision before 1997 to make Euro entry conditional on a plebiscite made it impossible. Nothing said or done after 1997 made any difference. The real credit for the UK not entering the Euro belongs to John Major and Tony Blair when both agreed that a referendum would be required. The rest was persiflage.