12 Jan, 2009

Euro-Phobia

12 Jan, 2009

For the British, skiing in the Alps has suddenly become unaffordable and those summer vacations on the Costa Brava are under grave threat. The pound, formerly one of the world’s most expensive currencies, is only worth a bit more than the euro. Brits, however, are still insistent in their refusal to adopt Europe’s common currency. Sterling-shock, pound zero, the one-pound euro. For weeks now, Britain’s tabloids have been painting a dark picture of an approaching national trauma. There were moments when it seemed like everything was over: The proud sterling, outflanked by the euro, was ridiculed as a “toilet paper currency.” In recent days, the wobbling pound has recovered slightly, but the P-word is still on everybody’s lips: Parity. Reports trickled in of British tourists receiving less than one euro in exchange for the pound. The Sun even calculated that so-called “booze cruises” across the English Channel to buy beer and wine at once bargain prices were no longer worth it, since alcohol in France has become much more expensive. Even the left-leaning Guardian lamented: “Mamma mia! Has the financial crisis really made us poorer than the Italians?” In the past year, the pound has lost around one-fourth of its value. At the start of this week, the currency’s precipitous fall was halted, for the time being, by markets expecting the European Central Bank to reduce interest rates and speculating against the euro. Still, with Britain especially hard hit by the financial crisis, the pound remains under pressure. Weak Pound Gives Euro Advocates Hope The weak pound has given British euro advocates hope for the island. For the first time in years, they’ve been given an opportunity to break through their countrymen’s deepset euro-phobia. A strong euro, they speculate, will make switching currencies more attractive. A well-timed report will be presented in London next week: “10 Years of the Euro – New Perspectives for Great Britain.” The general tone of the report, which features contributions from 30 politicians, professors and influential leaders, is that it’s time to embrace the euro. In the past, the governing Labour Party consistently shied away from the euro. Prime Minister Gordon Brown has always been a resolute euro-opponent — even as chancellor of the Exchequer under Tony Blair — because he considered Britain’s economic model to be superior. Despite the fact that the Anglo-Saxon model of capitalism has been discredited, he wants to avoid the spread of dangerous rumors. When European Commission President Jose Manuel Barroso recently rejoiced that important people within Britain’s government were considering adopting the euro, his statement was speedily refuted. The opposition Tories immediately suspected the rumor’s source as being Business Secretary Peter Mandelson, a former EU commissioner and well-known euro fan. Brown has good reason to be cautious: Talk of the euro is fodder for the Conservatives and their supporters in the press. In a recent Sun article, the Tories’ shadow foreign minister, William Hague, accused people like Mandelson of being responsible for “talking down the sterling.” 71 Percent of Britons Oppose the Euro The Tories are well aware that voters stand behind them on the issue. Nothing has changed in terms of the country’s widespread aversion to the euro. “Currency fluctuations do not affect the British love for the pound,” says Martin Boon, a pollster for ICM. Many consider their currency to be synonymous with national independence. In a poll conducted shortly before Christmas, Boon’s institute found that 71 percent of those surveyed were against Britain joining the euro-zone. Only 15 percent said they were open to adopting the euro because of the weakened status of the pound. These results come as little surprise to pollsters. “The underlying hostility towards the euro runs deep,” says Graig Baker of the polling company Comres. The middle and lower classes, in particular, oppose adoption of the euro. National pride plays a role too, but conservative aversion to the new is an even greater determining factor. Also, those who don’t travel much haven’t had the positive experiences with the euro that have become a regular part of life for Europeans living on the Continent who can move from country to country without having to exchange their money. Baker hasn’t give up hope, however, that, as the full brunt of the recession hits the United Kingdom in coming months, public opinion might shift in favor of the common currency. Nevertheless, he considers a total reversal as improbable. “People don’t see the pound primarily in financial terms,” he says. Indeed, the recession has actually created new arguments for the European common currency’s detractors. Instead of retreating into the euro, some government economists suggest making use of the weak pound: Cheap exports and an uptick in tourism could stimulate the economy.

«
»