Thirty years ago Britain was known as the sick man of Europe. Dragged down by a decaying infrastructure, rampant union power, ineffective and weak government, and uncontrolled inflation, we found ourselves sliding down almost every international league table.
The years since then have seen a real change in the nation’s fortunes, thanks to Margaret Thatcher’s reforms and the good fortune that shone on the economy under New Labour. But now the question is beginning to be asked abroad: Is Britain again the sick man of Europe? And, if so, what can be done to cure her?
Despite the protestations of Gordon Brown, the general opinion in other financial markets is that the UK is worse placed than almost any other country to weather the storms of the recession. To a great extent, this is due to the growing weakness of sterling and the threat this will pose to raising money on foreign markets to pay for the government’s rapidly increasing debt.
As the Wall Street Journal – a Murdoch newspaper – has just put it “with the rapid fall of sterling, servicing British debt denominated in foreign currencies is becoming increasingly costly…A veritable sterling crisis would anly aggravate the banking problems.”
It concludes: “There is safety in numbers. As a global reserve currency, the euro enjoys advantages the relatively small sterling zone lacks. In this global financial crisis, investors increasingly will seek relative security in the dollar and euro zones.”
Yet despite a few lone voices in the British media – such as Jeremy Seabrook in The Guardian, who believes that the insistence on clinging to the pound may represent “the final attachment of Britain to a world that has vanished” – there is virtually no debate on joining the euro.
This is an abject failure of leadership on an unprecedented scale and could do unimaginable damage to the future fortunes of the country. Even when David Cameron warns that we may be forced to return with the begging bowl to the International Monetary Fund, he does not consider that one of the conditions it might impose is to apply for membership of the euro.
At least Nick Clegg, the Liberal Democrat leader, has now come out of his shelter and is suggesting that we should be “keeping an open mind about whether Britain would be better off in the long run as a member of the single currency.”
Our political leaders need to consider the simple fact that last week sterling dropped to a 23-year-low against the dollar and a record low against the yen. It has fallen against the euro by 27 per cent in a year, almost twice the drop in Harold Wilson’s infamous devaluation of 1967.
And still the Prime Minister, his Chancellor and the Leader of the Opposition refuse to even consider that euro entry might be part of the solution.