12/09/00 - Weighing the case for sterling: Chris writes to The Birmingham Post

Sir, - The Labour Party is to publish a document at its autumn conference which places a new emphasis on the benefits of euro membership. The document will list the following benefits of membership: elimination of transaction costs; increased price transparency across the EU; elimination of exchange rate risk and participation in a 'zone of macro-economic stability of comparable size to the US'. It also criticises the Conservative policy on the euro, saying that ruling out euro membership in the next Parliament would undermine British influence and threaten inward investment.

The Labour Party document significantly overstates the benefits of euro membership. The costs of changeover, amounting to tens of billions of pounds, will dwarf savings in transactions costs. The Internet is already delivering price transparency on a global basis.

Fixed exchange rates with Euroland will benefit some exporters but the instability caused by the wrong interest rate will affect every business. Far from being an area of 'stability', the euro has declined by around 25 per cent against the dollar since its launch, driving inflation above the ECB target.

The Prime Minister's leaked memo earlier this summer revealed his personal position on the euro: 'the truth is that the politics (of the euro) is overwhelmingly in favour.'

Business and the public were told that the decision would be taken on economic grounds but the decision to join has clearly already been made for political reasons.

CHRIS D KELLY
Tettenhall,
Wolverhampton.