Arguments Against British Membership of the Euro

In February 2001, I was commissioned to draw up a set of arguments against various Europhile claims made by Kenneth Clarke in his article "The Case for Joining the EMU", published in the 2001 Investment Yearbook. The purpose was to help someone prepare for a debate where he would be speaking against Mr Clarke. In the event, the debate was first postponed, and then cancelled. Though I was paid - and paid rather well - I was eventually told that I could use my work for any other purpose. And so I have decided to publish it as an issue of Free Life Commentary.

As is often the case with false or recklessly negligent claims, adequate replies need to be considerably longer than what they are contesting. Therefore, these notes of evidence run to more than 11,000 words. I have fully sourced all counterclaims that I make in perhaps greater detail than would have been required for the debate. To my client I justified this attention to detail, though, on the grounds that any figures or facts produced against the Europhile case would be passionately denounced as what Mr Clarke calls "the myths and misrepresentation that is the stock in trade of anti-European politicians and newspapers".

This being said, I also supply an executive summary of my evidence.

In order to subdue any objections about the objectivity of sources, I have tried my best to source the evidence that follows from Europhile or broadly neutral publications. I have had on a few occasions to rely on articles by Christopher Booker and Ambrose Evans-Pritchard. Even so, my preference has been to use material from The Financial Times or The Guardian and The Independent as often as possible. In a few cases, I have looked at the provincial press, as this can be a good source for letters from Europhile bodies, and local newspapers are more likely than the national press to reprint news releases without major alteration.

Because this document was not originally intended for publication, I have not in several sections used all my own words. When a newspaper writer made a point that I thought did not require paraphrasing in my own words, I simply incorporated his words into the main document. Though anyone familiar with my style will be able to see where I leave off and someone else begins, I cannot remember all the incorporations that I made. Such incorporations make up only about five per cent of the whole document, and in all cases are fully referenced in the notes.

The evidence is arranged under the following headings:

• Whether 56,000 jobs were lost in 2000 as a result of currency instability;
• The cost of conversion to the Euro, and whether these are justified by the benefits of joining;
• The cost of admitting the former Communist countries of Central and Eastern Europe;
• The vetoes surrendered at the Nice conference in December 2000, and their significance;
• Whether there really are plans to harmonise personal or corporate taxes across the European Union;
• Whether any other countries in the European Union aside from Britain would block tax harmonisation;
• What is happening in the Republic of Ireland?;
• Whether the main Euroland countries are balancing their budgets;
• The various tax and social security cost burdens in the European Union countries;
• Whether prosperity and productivity are greater in the Euroland countries than in the United Kingdom;
• What is meant by the claim that the Euroland countries created three million jobs in 2000?

Whether 56,000 jobs were lost in 2000 as a result of currency instability

The figure is a statistical trick played by Britain in Europe. It is not the first of its kind played by theat body - recall the NIESR report early in 2000. We have a trade surplus with the European Union, and attracted £38 billion of foreign investment. If jobs are being exported from this country, most are not going to Euroland, but to Eastern Europe and the Far East,.and jobs are going there also from Euroland. And jobs are being imported to this country from both Germany and Japan.

Since 1992, Britain has created more jobs than France and Germany combined.

If we do join EMU, it will be as members of the ERM again - and locked into the same overvalued rate as led ten years ago to 100,000 bankruptcies, a doubling of unemployment, and more than a million homes pushed into negative equity.

If there are three million jobs in this country engaged in European trade, there are even more European job involved in trade with us. No one in the European Commission says these are in any way under threat if we do not join EMU

The cost of conversion to the Euro, and whether these are justified by the benefits of joining

According to the House of Commons Trade and Industry Select Committee - presided over by Europhile Labour backbenncher Martin O'Neill - the cost of conversion might be as much as £32 billion. The highest benefit - claimed by the European Movement - is &poound;2 billion per year. That gives an asset with 15 years' purchase, or a return of 6.66 per cent a year. Is EMU worth this?

The cost of admitting the former Communist countries of Central and Eastern Europe

The East European countries are all much poorer than the European Union average, and have large farming sectors. They cannot be excluded form the benefits of the Common Agricultural Policy once they join, and there is no will in Brussels to reform this before they join. According to a report published in mid 2000 by the Brussels think tank the Centre for European Studies, the annual cost in farming subsidies and regional aid could reach £24 billion. The European Commission estimates £28.5 billion per year in regional aid alone.

The vetoes surrendered at the Nice conference in December 2000, and their significance

Conservatives Against a Federal Europe count 43 items of qualified majority voting extension, though it depends how these are counted - EUobserver counts 43. If so, that makes the following total for the European treaties;

• 38 in the Treaty of Rome
• 37 in the Single European Act
• 41 at Maastricht
• 19 at Amsterdam
• 43/34 at Nice

• Article 100 § 1. This will allow for massive transfers from Britain to fund the insolvent European pension schemes. See section 8 below.
• Article 157. This allows the European Union to set up a Common Industrial Policy. Bearing in mind what has happened to agriculture, this is rather ominous.
• Article 191. This allows for the licensing of political parties, and therefore for the banning of parties that have aims and objectives disapproved by the European Union.

Hardly anyone will talk about tax harmonisation, but The Financial Times regards it as a logical next step:

The economic logic is compelling. The absence of tax co-ordination is a gaping hole in the single market - a barrier to further integration in all areas from financial services to the free movement of people. Harmonisation would put companies on an equal footing and ensure the smooth functioning of the euro-zone.

Although, as Community law stands at present, direct taxation does not as such fall within the purview of the Community, the powers retained by the Member States must nevertheless be exercised consistently with Community law.

According to According to Joschka Fischer, the German Foreign Minister, speaking in 1998:

The top priority [is] to turn the EU into a single political state.

What is happening in the Republic of Ireland?

Ireland is enjoying a long boom that started before entry to the Euro and was caused by semi-Thatcherite supply side policies and tax cuts. This is now threatened by interest rate and exchange rate policies that have plunged Ireland into inflation and perhaps a runaway boom. Many in Ireland are now questioning the wisdom of Euro entry. The Chairman of the central bank wishes he could raise interest rates, but he cannot, as Ireland is now locked into a monetary policy set in Frankfurt for the benefit of the big continental economies.

Whether the main Euroland countries are balancing their budgets

In 2000, the main Euroland economies ran a combined deficit of around one per cent of GDP. Economic theory suggests that they should be in surplus at this stage of the economic cycle.

Moreover, the ageing populations of Euroland and the ay as you go pension arrangements there mean even larger deficits in the future.

The various tax and social security cost burdens in the European Union countries

At 36 per cent, Britain has one of the lowest tax and social security burdens in the European Union - compare with the French 45.7 per cent and the Italian 43.2 per cent.

Over the past 25 years government spending has been rising faster than national output in most of Europe. By contrast, in Britain, government spending has been roughly stable relative to what we produce. According to the OECD, taxes in 2000 were under 40 per cent of British GDP, whereas in Euroland, they were over 46 per cent of GDP.

According to Professor Tim Congden, the big difference between Britain and the rest of Europe today is not in income tax. Instead, the area of taxation where Britain has an advantage over the rest of Europe is in social security contributions. These amount to 6 per cent of GDP compared with 12 per cent in the rest of the European Union.

Whether prosperity and productivity are greater in the Euroland countries than in the United Kingdom

They are, but they have been for over a generation. The reasons are complex, but plainly have nothing to do with the Euro. The main reason may be that Britain has a much higher participation rate in the job market - 71 per cent as opposed to the French 59 pper cent - and this is causing diminishing returns to labour. However, Britain has been catching up in the 1980s and 1990s. According to Samuel Brittan, brother of Leon:

the performance of euro-zone countries is not superior to British performance, whatever euro enthusiasts say. The main effect of their more centralised system of wage bargaining and greater labour market regulation has been a higher rate of unemployment and non-participation in the labour force.

With an international boom in which most countries have falling unemployment, a currency devalued against the Dollar by at least a quarter, and interest rates fo between three and 4.5 per cent, it would be hard for the Euroland economies not to have reduced their mass unemployment levels somewhat.

However, there is evidence that in France the jobless falls have little to do with labour market reform of the kind seen in Britain and America. With nearly 10 per cent unemployment, there are labour shortages across the economy - suggesting an old-fashioned Keynesian boom that cannot last. Also, 250,000 of the "new jobs" in France have been created in the state sector.

Much the same can be said for Italy. And now that German growth is faltering, we may not see much more improvement in the Euroland economies.

Whether 56,000 Jobs Were Lost in 2000 as a Result of Currency Instability

In column 2 of his article, Kenneth Clarke claims that:

It has been calculated that, in the first ten months of 2000, at least British 56,000 jobs were lost because of sterling's volatility outside the euro.

These comments may be made on the claim:

• Without knowing the methodology used to construct them, statistics are always to be doubted. How were these two very precise figures reached? Who counted? The language used by Ms Usher indicates a very subjective approach. Her words "wholly or partly linked" suggest that much personal judgement has gone into deciding the cause of job losses. Probably a larger figure has been chosen rather than an equally legitimate lower figure. This is supported by the use of "could" to introduce the larger figure of 56,000.

• The figure is contested by other Europhile bodies. In a newspaper letter published in January this year, Nick Milligan, who is Organiser for the European Movement in the North East, claimed that 41,262 people had been "affected" by currency volatility in 2000.⁽²⁾ In another newspaper letter, this time from last December, Collis Gretton claimed on behalf of the Pro-European Conservative Party that 81,000 jobs were lost in the first nine months of 2000, "the majority of which came as a result of currency volatility".⁽³⁾ When figures purporting to prove the same fact are so widely at variance, the fact itself may often be doubted.

• Indeed, any facts provided by Britain in Europe can be doubted unless positively corroborated from other sources. It has been responsible for at least one other provable and major distortion of statistics. In February 2000, Britain in Europe previewed a report it had commissioned from the National Institute for Economic and Social Research on the effects of a British withdrawal from the European Union. In its news releases, Britain in Europe claimed that "Britain's exports could halve if Britain withdrew from the [European] union. If there was no change in prices and wages, employment would fall by around eight million as the effects of lower demand [fed] through the system". This would mean an unemployment rate of more than 30 per cent. "Every family in Britain would suffer" Britain in Europe continued. "Everybody would be related to somebody who lost their job."⁽⁴⁾ These releases were promptly attacked by the authors of the report and the NIESR. Commenting on the eight million job losses claim, Martin Weale, Director of the NIESR said: "It's pure Goebbels. In many years of academic research I cannot recall such a wilful distortion of the facts.⁽⁵⁾ In fact, the report claimed that withdrawal from the European Union might, after 20 years, reduce national income by about two per cent below what it would otherwise be, and that immediate job losses could be as few as 50,000 and not more than 175,000.⁽⁶⁾ I have not been able to find any retraction and apology by Britain in Europe, or any expression of regret by Mr Clarke, for this bizarre distortion. It tends to cast doubt on any other figures produced by either.

• Another distortion of fact by Britain in Europe came in November 1999, which it claimed that Rover, Fiat and Ford had all threatened to end car production in Britain if no date were soon announced for entry to the Euro. All three companies hotly denied these claims. Again, Mr Clarke did not condemn or even distance himself from the "myths and misrepresentation" of Britain in Europe.

• Leaving aside the tainted source for the 56,000 job losses figure, its truth can be doubted. In August 2000, Britain recorded its first trade surplus with the Euroland countries since 1995 - £39 million.⁽⁷⁾ Though the pound had risen as high as DM3.40, exports to Euroland were growing twice as fast as imports from there.⁽⁸⁾ In general, manufactured exports were up 14 per cent on the year ending August 2000.⁽⁹⁾

• Moreover, in 1999, Britain attracted direct inward investment worth £38 billion - a sharp increase on the previous year, despite non-participation in the Euro. Britain attracts more foreign investment than Germany and France combined, and is the second main destination for foreign investment after the United States.⁽¹⁰⁾ Much of this is industrial. For example, in August 2000, Honda announced it would move production of some of its cars from Japan to Britain, from where they would be re-exported to Japan.⁽¹¹⁾

• Of the jobs exported from this country, most are basic assembly line functions. The "intelligent" jobs are staying. These are likely to increase over time rather than decrease. According to Jane Richardson, Chief Executive of Electronics Scotland, a survey of 100 companies had revealed that none expected a static labour force over the next two years, but anticipated an increase in employee numbers of between five percent and 50 per cent. No company had said the euro was a particular problem, she added.⁽¹²⁾

• Keeping on the subject of the jobs that are exported from this country, many do not go to Euroland, but to Eastern Europe or the Far East. In October 2000, for example, Panasonic announced it would move production from Wales to the Czech Republic, where labour costs are only one sixth as high.⁽¹³⁾ In October 2000, OKI threatened to move production from Scotland, to Thailand. At the same time, Sony announced a move from Wales to Slovakia - though also to Spain.⁽¹⁴⁾

• Jobs are also being exported from Euroland. Early in 2000, Philips announced plans to move its picture tube production from Holland to the Czech Republic.⁽¹⁵⁾ In 1999, Volkswagen invested heavily in the Czech and Slovak Republics.⁽¹⁶⁾ And, according to a recent study, one in five German companies has plans to relocate - with Britain being their favourite location.⁽¹⁷⁾

• By the phrase "sterling's volatility", Mr Clarke really means the weakness of the Euro, which has lost more than a quarter of its value in the past two years - he seems to accept that the Pound is not high against the dollar. Joining the Euro would not end this problem, but set it in concrete. According to the Maastricht Treaty, any country that wants to join the Euro must spend two years on probation in the Exchange Rate Mechanism.⁽¹⁸⁾ Indeed, the European Commission has invited Britain to rejoin.⁽¹⁹⁾ However, there is no chance of a sterling devaluation before rejoining. According to Wim Duisenberg, President of the European Bank, there is "no question of the UK using euro entry to get the pound down".⁽²⁰⁾ Therefore entry to the Euro at any time in the foreseeable future must entail re-entry to the ERM at the same kind of overvalued rate as we faced in 1990 - and that led to 100,000 business bankruptcies, a doubling of unemployment, and more than a million homes pushed into negative equity⁽²¹⁾ - followed by a structural overvaluation foorever.

• Since leaving the ERM, Britain has created more jobs than all the Euroland countries combined. In September 2000, Tony Blair said: "Our economy is now the fourth largest in the world. It is at its strongest for decades, unemployment is at a 25 year low, long-term unemployment is halved, there is record inward investment, long-term interest rates are, for the first time in my adult life, below those of Germany. There is significant extra investment now going into schools and hospitals, police and transport to build our country for the future".⁽²²⁾

On a similar point, Mr Clarke likes to dwell on the three million British jobs that allegedly depend on our trade with the European Union, implying that our not joining the Euro will somehow endanger these. Early in February 2001, BBC Radio Four broadcast a discussion programme in which Neil Kinnock and Fritz Bolkestein, both European Commissioners, insisted that even British withdrawal would not endanger our trade with the European Union.⁽²³⁾

Finally on this point, the NIESR estimates that while there are 3.2 million British workers employed on exports to the European Union, there are 3.7 million European jobs involved in trade with us.⁽²⁴⁾

The Cost of Conversion to the Euro, and Whether These Are Justified by the Benefits of Joining

There are no reliable figures on the conversion costs to the Euro, as no large modern economy has ever tried economic and monetary union with its neighbours, and the main costs of the present experiment are still in the future. However, the cost will be more than the "tens of millions of pounds" claimed by Tony Blair in the House of Commons in late 2000.⁽²⁵⁾ It will be necessary to call in old notes and coins, and manufacture and issue new ones - and to make the changes within a few weeks - and to alter or replace every machine in the country that deals with cash. A still bigger expense will be changing IT systems from sterling to euro to cover accounting, invoicing and personnel. In addition, training programmes would have to be set up to familiarise staff with the currency changes while marketing costs would increase as customers were made aware of changes to prices and services

In 2000, the House of Commons Trade and Industry Select Committee took evidence on the possible costs of conversion. Martin O'Neill, the Chairman of the Committee - a Labour backbencher and committed Europhile - accepted a "good ballpark figure" of £32 billion final cost to the economy.⁽²⁶⁾

This figure was taken from a report made by the accountancy firm Chantry Vellacott for Business for Sterling. Unlike the NIESR report commissioned by Britain in Europe, this was not rejected by its authors. According to Maurice Fitzpatrick of Chantry Vellacott, writing in a newspaper letter:

Our estimate that it would cost UK business about £32 billion to convert to using the euro was calculated with reference to various existing surveys of potential euro conversion costs for various sectors of the economy.

As you might expect from a bunch of prudent accountants, we tended to err on the prudent side, and the eventual figure may well be higher.⁽²⁷⁾

Moreover, the Federation of Small Businesses believe the costs of the euro changeover would fall disproportionately on its members as only major international corporations would gain with lower transaction costs.⁽²⁹⁾

On the experience of the Euroland economies, the House of Commons Trade and Industry Select Committee heard that the cost so far to the German economy had been £6.2 billion, and to the Dutch economy £1.3 billion⁽³⁰⁾. But these are only estimates.

According to The European Foundation Intelligence Digest, Issue No. 112 26th January - 8th February 2001, Le Monde has published the following article on Euro conversion costs:

The cost on businesses and public administration in Germany of converting to the euro has been estimated at 20 billion euros ($21.5 billion). In France, the only clear estimates are for the costs which the Post Office and the banking sector will incur: the figure is 1 billion francs (£100 million) for the former and 11.3 billion francs (£1.13 bn) for the latter. The total cost to the banking sector rises to 30 billion francs (£3bn) if one includes the costs incurred when financial markets transferred to the euro at the beginning of 1999. There will, of course, be the cost of physically changing coins and notes, between 15th December 2001 and 1st January 2002, work which will take time but which produces no value added. Of the total 11.3 billion, banks estimate that over half will be spent on the double circulation of currencies and between a fifth and a quarter each on preparation and transport. It is more difficult to estimate the cost on businesses, however. Medef, the French industry association, says it cannot give a figure, although for companies which sell directly to consumers, it is estimated that an entire day's training will be necessary for all members of staff. The change-over of computer systems and even the decisions about what new prices to apply will also cost money: it will cost SNCF, for instance, 250 million francs to transfer to euro prices with two decimal points. But nobody in France seems to mind these massive expenses: as Philippe Wahl, the director general of the Caisse nationale des Caisses d'épargne says, "It will cost tens of billions of francs but we are not here to complain. It's our responsibility." [Le Monde, 7th February 2001]

• Greater stability of trade and investment flows through the European Union;
• The elimination of currency conversion costs within the European Union;
• Price transparency for consumers within the European Union

The Cost of Admitting the Former Communist Countries of Central and Eastern Europe

The Nice Conference settled nothing with regard to the admission of East European and other countries to the European Union. This being said, there are some estimates of the costs.

Six nations - the Czech Republic, Poland, Hungary, Slovenia, Estonia and Cyprus - hope to join the European Union within the next few years. They will add 66 million to a combined present population of 380 million. The first five would add only £3 billion to the European Union's annual income.⁽³²⁾ Adding Slovakia, the Baltic States and Bulgaria to the list of new members will not greatly increase income, but will increase population. The average income per head of all ten together would only amount to 15 per cent of the European Union average.⁽³³⁾

Moreover, these are still largely agricultural countries. Taking them in would increase the amount of land devoted to farming by about 50 per cent. Employment in the sector would double.⁽³⁴⁾

The French and other member states have consistently blocked reform of the Common Agricultural Policy and the regional aid programmes. If enlargement is to happen, it is unlikely to involve serious discrimination against new members. They will be required to accept the 80,000 pages of European union law, and are already insisting on equal treatment. Speaking in July 200, the Hungarian foreign minister, Janos Martonyi, said:

I foresee difficult and serious problems ahead. The Hungarian public and the Hungarian government insist on equal treatment in the EU.⁽³⁵⁾

All this would mean a vast annual transfer of funds from Western to Eastern Europe. According to a report produced in mid 2000 by the Brussels-based think tank the Centre for European Studies, the annual cost in farming subsidies and regional aid could reach £24 billion⁽³⁷⁾. The European Commission, still more alarmingly, has estimated that, with the European Union enlarged to 21 members - nearly all of these from Eastern Europe - regional aid alone would cost around £28.5 billion a year.⁽³⁸⁾

The Vetoes Surrendered At the Nice Conference in December 2000, and Their Significance

Conservatives Against a Federal Europe count 43 items of qualified majority voting extension, though it depends how these are counted - EUobserver (see below) counts 43. If so, that makes the following total for the European treaties;

• 38 in the Treaty of Rome
• 37 in the Single European Act
• 41 at Maastricht
• 19 at Amsterdam
• 43/34 at Nice

Even though the British vetoed article 42 - social benefits - and article 93 - tax provisions - qualified majority is still introduced in 34 different areas and three clauses on enhanced co-operation. This is a reduction from before Nice, where some 49 areas were on the table. Some of the areas on the list include certain dates that state when to introduce Qualified majority voting.

The list is as follows:

• Article 67 - Justice and Home affairs: 12 different areas have gone to Qualified majority voting and they are: 62.2.a) checks on persons at external borders, 62.2.b) certain rules related to visa, 62.3) conditions for freedom to travel for nationals of third countries 63.1.a,b,c,d) measures related to asylum, 63.2.a) temporary protection of refugees 63.3.b) illegal immigration and residence, 65.a,b,c) judicial cooperation in civil matters, 66) co-operation between the relevant departments of the administrations.

• Article 100 § 1 - Financial aid offered to member states by the Community under certain conditions
• Article 111 § 4 - External representation of the European Monetary Union at for example G7 meetings
• Article 123 § 4 - Measures regarding the introduction of the euro
• Article 133 § 5 - Trade, commercial policy on among others intellectual rights
• Article 137 - Minimum requirements in the field of representation and collective defence of the interests of workers and employers, including co-determination
• Article 157 - Industry
• Article 159 - Social and economic cohesion outside the Structural Funds
• Article 161 - Structural and Cohesion funds
• Article 181 - Economic, financial and technical cooperation with third countries
• Article 187 - Association of the overseas countries and territories
• Article 190 § 5 - Statute for the members of the European Parliament
• Article 191 - Statute on political parties on a European level
• Article 223 - Internal rules of the European Court of Justice
• Article 224 - Rules of Procedure of the Court of First Instance
• Article 228 - Internal rules if the Court of Auditors
• Article 270 - Financial control
• Some articles regarding nominations of EU institutions and organs have also been changed and they are:
• Article 23 - Special representatives of the Common Foreign and Security Policy
• Article 207 - The secretary general and the secretary general adjoint of the Council
• Article 214 - The president of the Commission
• Article 247 § 3 - Members of the Court of Auditors
• Article 259 - The social and economic committee
• Article 263 - The regional committee

Of these surrendered vetoes, perhaps the three most important are;

• Article 100 § 1. This will allow for massive transfers from Britain to fund the insolvent European pension schemes. See section 8 below.
• Article 157. This allows the European Union to set up a Common Industrial Policy. Bearing in mind what has happened to agriculture, this is rather ominous.
• Article 191. This allows for the licensing of political parties, and therefore for the banning of parties that have aims and objectives disapproved by the European Union.

Mr Clarke claims that

No Government or European institution is even arguing in favour of harmonising rates of personal or corporate taxation.

The economic logic is compelling. The absence of tax co-ordination is a gaping hole in the single market - a barrier to further integration in all areas from financial services to the free movement of people. Harmonisation would put companies on an equal footing and ensure the smooth functioning of the euro-zone.⁽³⁹⁾

The best solution is that you have a direct contribution of every citizen to the European Union.... Like everyone pays their local and national taxes, you should have a direct financing system for the EU.⁽⁴⁰⁾

Also, there have been calls for further integration that amount to tax harmonisation. See, for example, Romano Prodi's nomination speech to the European Parliament in April 1999:

The single market was the theme of the Eighties, the single currency was the theme of the Nineties, we must now face the difficult task of moving towards a single economy and a single political unity.⁽⁴¹⁾

Again, see Mario Monti, Commissioner for Competition. Speaking in November 2000, he said:

Some countries are intellectually and politically scared about any step away from unanimity in tax matters but they should consider that a number of day to day nuisances to consumers' lives in Europe do derive from the system being unable to deliver a more harmonious tax regime.⁽⁴³⁾

Most recently, the Irish Government has been "advised" by the European Commission to reverse its income and other tax cuts on the grounds that they are inflationary. In January this year, Pedro Solbes, the Economic and Monetary Affairs Commissioner, invoked Article 99 of the European Union treaties, claiming this gives Brussels authority to "enforce economic policy co-ordination" among member states to protect the common interest. According to Ambrose Evans-Pritchard,

The move will require the backing of EU finance ministers, but EU sources say the commission would not have gone ahead without prior approval from France, Italy and Germany.⁽⁴⁵⁾

Mr Solbes said member states could not be allowed to pursue whatever tax and spending policies they wanted once they joined the Euro:

The balance of monetary and fiscal policy is a crucial point in a monetary union.... If you are a member of the union, you have to pursue policies that are consistent and coherent with the rest of that union.⁽⁴⁶⁾

According to Chris Huhne, Liberal Democrat MEP for South East England, and a member of the European Parliament's Economic and Monetary Affairs Committee,

There is [no] basis in the treaties to extend tax harmonisation beyond indirect taxes to, say, income tax: a new treaty would have to be ratified by every national parliament.⁽⁴⁸⁾

Nor is it true with regard to member states still outside the Euro. According to The Financial Times:

Despite the lack of legislative development, the European tax system is emerging, shaped not by politicians, but by the courts. The European Court of Justice has consistently ruled that even in the absence of tax harmonisation, and despite the fact that taxation is a matter for member states, tax can only be levied in accordance with European law. The court is playing a significant role in levelling the playing field for multinational groups. Not only have domestic laws of member states been ruled ineffective. Tax treaties, which create illegal inequality, are under attack. Developing a tax system that reflects European objectives by litigation is hardly an easy way to go, but until the legislative process can deliver results, tax payers have little choice.⁽⁴⁹⁾

Although, as Community law stands at present, direct taxation does not as such fall within the purview of the Community, the powers retained by the Member States must nevertheless be exercised consistently with Community law.⁽⁵⁰⁾

To his previous claim, Mr Clarke adds:

Most Governments and national Parliaments would block such a proposal [tax harmonisation] if it was ever raised in future.

Bear also in mind that European politicians have no doubt in their minds about the true direction of the European Union. According to Joschka Fischer, the German Foreign Minister,

The top priority [is] to turn the EU into a single political state.⁽⁵¹⁾

Also, see this article reproduced in The European Foundation Intelligence Digest, Issue No. 112, 26th January-8th February 2001:

Chirac calls for European "constitution"

Scuppering lazy commentary about a breakdown in Franco-German relations, the French president, Jacques Chirac, has said in a long interview with an Alsatian newspaper that he wants to see a European constitution - the very thing the German government has been calling for for months. Speaking of the "profound accord between French and Germans "on European matters, Mr. Chirac re-emphasised the position he first laid out in his Reichstag speech last year, namely that he wants to see the treaties simplified, competences clearly explained between European and national levels, and the Charter of Fundamental Rights, all consolidated into one document. "All this requires a re-foundation which should culminate in the elaboration of a Constitution," said the president. Addressing the journalists interviewing him, he said, "You have just remarked that the Nice declaration on the future of the Union includes the bulk of the proposals I made to the Bundestag. Well, in fact it was principally the Germans who originated this declaration. This shows how far the inspiration for it was common to both countries. " Mr. Chirac called for a "large democratic debate " between all sectors of society "in order to mobilise all of our citizens ". In other words, the purpose of the "democratic debate " is to co-opt the voters into supporting European governments' proposals for less democracy. One assumes that if the "debate " leads to a rejection of these plans, it will be ignored and Europe will sail calmly onwards towards its new treaty revision (and Constitution) in 2004. [Dernières Nouvelles d 'Alsace, 5th February 2001]

What is Happening in the Irish Republic

Ireland enjoyed exceptionally strong economic growth in the 1990s to the extent that its GDP per head increased from 68 per cent of the European Union average in the 1980s to 115 per cent at present. The Irish economy grew at an annual average rate of 8.8 per cent in the period 1995-1999 as compared with a rate of 2.2 per cent for the EU as a whole. In terms of GNP, the growth rate of the Irish economy over this period was somewhat less, though still impressive at an average of 7.9 per cent each year.

This strong economic growth has been accompanied by a fall in the rate of unemployment to 4.7 per cent in March 2000 as compared with 16.3 per cent in 1988. The labour force has also increased by 29 per cent over the ten year period 1980-99, representing an additional 380,000 people, to bring the total labour force to 1,688,000. The General Government Balance has also been in surplus since 1997, with an expected surplus of 1.6 per cent of GDP in 2000. As a result, the ratio of General Government Debt to GDP has declined sharply from 74 per cent in 1996 to 52 per cent in 1999 and is forecast to fall further to a level of 45 per cent of GDP at end 2000.

The current account of the balance of payments has been in surplus since 1991. Over the five year period 1996-99 the surplus averaged about 2 per cent of GNP, with 0.4 per cent in 1999.⁽⁵²⁾

Ireland is now the largest exporter of computer software in the world, resulting from vast American investment, and two-thirds of the computers sold in Europe are made in the Republic. Repayments cut the national debt from 75 per cent of GDP in 1996 to a new low of 39pc in 2000.⁽⁵⁴⁾ Indeed, it is seriously forecast by moody's, the international credit rating agency, that the whole of the Irish national debt will have been paid off by 2010.⁽⁵⁵⁾

This is a most remarkable performance, but it owes nothing worthwhile to membership of the Euro. The boom is underpinned by other factors. According to Dermot O'Brien, chief economist with NCB stockbrokers, Ireland's labour force is increasing by 2.5 per cent a year, while much of Europe experiences static or negative growth. The numbers available for work have been augmented by increased female participation rates and an historic reversal of trends in emigration, with more people returning to Ireland than leaving, attracted by the improved job prospects.⁽⁵⁶⁾

Moreover, all through the 1990s - ever since the end of the structural crisis in 1987 - the Irish Government has been implementing a supply side revolution. The top rate of Irish corporation tax is now 24 per cent, the lowest in the Euro-zone. Ireland also has the smallest tax burden.⁽⁵⁷⁾

Anyone who claims that Irish success is a product of the Euro is answered by John Bruton, a former Prime Minister:

How important [is the Euro to Irish growth]? I don't know. I'd say it's very much at the margin and I wouldn't exaggerate it.

I do not believe that our membership of the euro or our intention to join had a whole lot to do with Intel or any other multinational coming over here.... I have no doubt that without participation in the euro, we would have grown strongly.

If there had been no euro at all, we'd have seen much of this boom. Seventy to 80 per cent of the boom is not euro-related.⁽⁵⁸⁾

Retail price inflation is now at a 16-year high of close to 7 per cent, by far the highest in Europe.⁽⁶¹⁾ This is caused partly by credit growth and partly by the cost-push effect of higher import prices because of the weak Euro.

Labour shortages look like driving wages up by 10 per cent this year. There is widespread unrest among government workers, many of whom are looking for wage rises of around 20 per cent.⁽⁶²⁾ In December 2000, school teachers struck for higher pay.

Irish growth seems to be running into an inflationary boom , but there are no means of checking it. Outside the Eurozone, the Irish central bank would by now have sharply raised interest rates, thereby choking off some of the rapid growth in consumer lending, and raising the international value of the Irish Pound to cut the growth of import prices. But inside the Euro, Irish interest and exchange rates are set by the European Central Bank in Frankfurt, which is far more concerned about the larger continental economies.

According to Maurice O'Connell, Governor of the Irish Central Bank:

There was little to do to force banks not to lend so much.... [T]he Central Bank had no powers to raise interest rates to address Irish inflation. This rested with the European Central Bank and... current interest rates in the euro zone did not suit the Republic.⁽⁶³⁾

In the longer term, given Ireland has no policy to counter inflation, the answer is one summed up by Dr John Bradley of the Economic and Social Research Council: "Cross our fingers and sit it out."⁽⁶⁴⁾

The Irish Government has tried to massage the inflation figures by cutting indirect tax rates - but, as said, has been "advised" by the European Commission to reverse these tax cuts. In any event, they are very short term.

The dilemma has sparked a growing political disenchantment with membership of the single currency across Ireland's political class. Two unthinkable questions are now being posed. First, should Ireland remain in the Eurozone? And second, if the answer is no, how could it get out without a financial and constitutional crisis?

Professor Rodney Thorn, an economist at University College, Dublin, says: "I don't see any economic benefits." Ireland should think the unthinkable and leave the "uro, he believes. Anthony Coughlan, an Economics lecturer at Trinity College Dublin, concurs. "Recent events" he says, "have led to a breach in Irish elite opinion".⁽⁶⁵⁾

There is also growing questioning in the press of the wisdom of continued membership. According to Kevin Myers, writing in The Irish Times:

How is it possible that, barring the lone voice of Anthony Coughlan, we sleepwalked into membership of the euro? Soon the euro will be about as valuable as a 1973 zloty or a 1921 German mark, and our economy is going to be buffeted, if not pushed into deep recession, by a storm not of our making. The economic failures which are causing the euro to behave like an anvil in thin air are not our failures; and the financial adjustments that will follow to correct the damage to this bizarrely worthless currency will punish us in order to satisfy largely German concerns.⁽⁶⁶⁾

The first point to make is that the British Government measures a budget deficit in terms of Public Sector Borrowing Requirement (PSBR). This measurement is not accepted by any main international body. In most European countries, the key budget deficit measure is central government alone, and not the whole public sector. Governments there tend to work on the principle of a General Government Financial Deficit (GGFD). Among much else, this excludes the financial surplus or deficit of public corporations. Therefore, to say that other members states have balanced budgets may not mean what we in Britain take it to mean. The figures can be more easily massaged.⁽⁶⁷⁾

Even so, many European governments do not balance their budgets.

• In 2000, the German Government predicted a deficit of one percent of GDP. This was then raised to 1.5 per cent. In November 2000, the German Central Bank announced that this higher figure was likely to be an underestimate.⁽⁶⁸⁾

• In France, the budget deficit for 2000 was around 1.5 per cent of GDP.⁽⁶⁹⁾

• In Italy, the 2000 budget deficit was also around 1.5 per cent of GDP.⁽⁷⁰⁾

• In Austria, the 2000 budget deficit was 1.4 per cent of GDP.⁽⁷¹⁾

• Taken as a whole, the Euroland economies ran a combined budget deficit in 2000 of around one per cent of GDP.⁽⁷²⁾

Moreover, these deficits are happening at what is probably the height of a boom - when economic orthodoxy requires governments to run surpluses to offset any deficits in time of recession - this is called "counter-cyclical policy".. The German economy appears at the moment to be sliding back into recession.⁽⁷⁴⁾ As this is the largest Euroland economy, and its performance is crucial to that of the other economies, the present deficits may be expected to grow during the next few years.

Turning to the longer term prospects of budget stability in continental Europe, these seem bleak at present. Most European countries pay old age pensions from current taxation. Ageing populations in these countries are expected to place heavy pressure on budgets over the next few generations. This is a problem that affects the Euroland economies far more than the United Kingdom:

According to the Organisation for Economic Cooperation and Development and the International Monetary Fund:

• Italy will be spending 20 percent of GDP on public pensions by 2030 - compared, for example, with total US. public spending of just more than 30 percent of GDP. The Italian national debt will have more than doubled from 1995 to 234 per cent of GDP. In Germany, it will have reached 216 per cent of GDP and in France, 165 per cent.⁽⁷⁵⁾

• Britain will be spending just 5.5 per cent of GDP on public pensions by 2030, and has more private pension funds invested than Germany, France and Italy combined.⁽⁷⁶⁾

Returning to the subject of tax harmonisation, this becomes a nonsense if pension funding were to require income taxes rising by 55 per cent in one economy and falling by 5 per cent in another.

Certainly, the Maastricht Treaty's 3 per cent limit on budget deficits, which we are all supposed to be converging on, looks downright very unlikely over the long term.

The Various Tax and Social Security Cost Burdens in the European Union Countries

Over the past 25 years government spending has been rising faster than national output in most of Europe. By contrast, in Britain, government spending has been roughly stable relative to what we produce. According to the OECD, taxes in 2000 were under 40 per cent of British GDP, whereas in Euroland, they were over 46 per cent of GDP.⁽⁷⁸⁾

The Euroland governments are not taking sufficient measures to trim their excessive welfare budgets. As a result, the gap in taxes between Britain and the rest of Europe will widen.

If past trends continue, tax harmonisation would become costly for us. A decade from now, the rise in taxes would not be a sixth, but might be a third. If this fell entirely on income tax, the standard rate of income tax would have to double.

Moreover, according to Professor Tim Congden, the big difference between Britain and the rest of Europe today is not in income tax. Instead, the area of taxation where Britain has an advantage over the rest of Europe is in social security contributions. These amount to 6 per cent of GDP compared with 12 per cent in the rest of the European Union.⁽⁷⁹⁾

Whether Prosperity and Productivity Are Greater in the Euroland Countries Than in the United Kingdom

In his article, Mr Clarke says:

Britain is behind most other European countries in terms of productivity and prosperity. We are a long way down the Eu league table in terms of GDP per head. For the past three years, we have been below the euro-zone average in terms of growth.

As for the statements about productivity and prosperity, these have been true for over a generation. British growth - and therefore productivity per head, bearring in mind relatively stable populations in all the above countries - has trailed that of most other developed countries for a long time. This being said, there was a considerable improvement in relative performance after 1980. Indeed, if we were to discount the depth of the Thatcher and Major recessions, the relative improvement might be still more marked.

Why British performance has improved over the past 20 years can perhaps be ascribed to the supply side reforms begun by Margaret Thatcher, and continued by both John Major and Tony Blair - continuations in which Mr Clarke played a modest part. It might have been more natural for Mr Clarke to dwell on this achievement, rather than to cry the country down. Even so, he has correctly said that our growth rate is lower. Why it is lower is harder to explain.

One possibility is suggested by the law of diminishing returns. This says that as one factor of production is applied in greater quantities to fixed amounts of the other two, so average production per unit of that factor will eventually decrease.

In France, only 59 per cent of the population of working age is in employment. In Britain, the figure is 71 per cent.⁽⁸⁰⁾ In general, British labour market participation is higher than in the Euroland economies. This will mean worse productivity per worker, as less skilled marginal workers take their place in the workforce, and capital and land are stretched more thinly. Part of this difference can be attributed to cultural factors - Britain is a "Protestant" economy, with higher levels of labour market participation than the "Catholic" economies of France, Spain, Italy and parts of Germany.⁽⁸¹⁾ But part is due to much higher levels of unemployment in the Euroland economies - see next section.

The OECD tends to agree. It is less interested in lower productivity in Britain than in low labour market participation rates in Europe:

The problem of labour under-utilisation in the euro area is concentrated in much lower participation and employment rates of young and old workers of both genders and, to a lesser extent, of prime-age female workers.... Part of the overall productivity gains would then stem from the difficulty for the lower-skilled unemployed to price themselves into a job, a problem often accentuated by generous benefit schemes that lower the incentives to re-enter the labour market.⁽⁸²⁾

[People] - among them British unions - point to figures showing that despite claims about structural problems, productivity in Germany remains markedly higher than in Britain.... The answer to this is pretty simple, however: Germany suffers from massive structural unemployment. Keeping a huge pool of unskilled workers out of jobs, consigning them to the soulless wasteland of welfare, helps push productivity higher.⁽⁸³⁾

the performance of euro-zone countries is not superior to British performance, whatever euro enthusiasts say. The main effect of their more centralised system of wage bargaining and greater labour market regulation has been a higher rate of unemployment and non-participation in the labour force.⁽⁸⁴⁾

According to Mr Clarke,

in the last year the single currency countries have created 3 million new jobs.

It is worth noting that unemployment has been falling in almost every developed country over the past few years. However, there are additional reasons for the Euroland recovery that Mr Clarke does not mention. During the past two years, the Euroland economies have faced a devaluation of around a quarter against the Dollar, and nominal interest rates of between three and 4.5 per cent - and real interest rates somewhat lower. Faced with this almost classically Keynesian injection of demand, plus mass unemployment, it would be astonishing if there had not been a big fall in unemployment rates.

Granted, some of the improvement does come from labour market deregulation in the British and American style. But there is hard evidence that much of the improvement is due to short term demand management policies of the sort that led the British economy into such problems during the 1960s and 70s. Underlying this is a worryingly high "non-accelerating inflation rate of unemployment" or NAIRU - which is what economists call the rate of unemployment consistent with a stable rate of inflation. Consider:

• In France, despite an unemployment rate of nearly 10 per cent, there are labour shortages across the whole economy: "Employers are having to use television advertisements to try to fill jobs, and not just for computer workers" says one French economic policymaker. "Even butchers are in short supply."⁽⁸⁶⁾ This indicates a boom that will not reduce unemployment in the short term, but only raise the price level.

• Of the 400,000 new French jobs created in the past year, 250,000 are temporary youth jobs in the public sector.⁽⁸⁷⁾ At the same time, the working week has been cut to 35 hours, and 100,000 workers in the public sector have been granted full civil service benefits.⁽⁸⁸⁾ This is further evidence of labour market rigidities concealed by an expansionary monetary and fiscal policy.

• In Italy, an effect of euro entry has been to end the competitive advantage of frequent lira devaluations that periodically boosted the export performance of Italian industry. between 1996, when the Italian authorities began to peg the lira to Europe's main currencies in preparation for euro entry, and 1999, the trade surplus more than halved from 4.4 per cent to 2 per cent of GDP.⁽⁸⁹⁾ According to Mr Galli of Confindustria, the trade surplus shrank because Italian employers failed to cut costs in response to the more competitive environment. Partly thanks to the collective bargaining power of the trade unions, unit labour costs remained high (rising 12.6 per cent in Italy between 1996 and 1999, compared with just 2.9 per cent in the Euro-region.) The improvements in Italian unemployment and trade performance since then can be ascribed almost in whole to cheap money and the weak Euro.

Notes

1. Sources: Robert Shrimsley, "Euro failure cost 56,000 jobs", The Financial Times, London (USA edition), 10^th November 2000; "Euro fear 'kills 35,000 jobs', The Journal, Newcastle, 10^th November 2000; Robert Miller, "Await Euro wisdom from Chairman Ken", The Express, London, 18^th November 2000.
2. Nick Milligan, "Letter to the Editor", The Journal, Newcastle, 15^th January 2001.
3. Collis Gretton, "Letter to the Editor", The Birmingham Post, Birmingham, 29^th December 2000. Mr Gretton seems to indicate that the 81,000 job losses fell in the car industry. But this figure is so unlikely that we can safely correct his careless grammar.
4. Sources: Andrew Grice, "Eight million jobs 'would be lost if Britain quit EU'", The Independent, London, 18^th February 2000; Anthony Bevins, "8 million jobs in jeopardy", The Express, London, 18^th February 2000.
5. Andrew Pierce, "Pro-euro group 'acted like Goebbels' to distort figures", The Times, London, 19^th February 2000.
6. Sources: Gary Duncan, "Blair's strange Euro battlefield", The Scotsman, Edinburgh, 23^rd February 2000; Paul Eastham, "EU jobs myth exposed", The Daily Mail, London, 19^th February 2000.
7. Andrew Wilson, "Currency not solely to blame for job losses", The Herald, Glasgow, 26^th October 2000.
8. Ed Crooks, "Euro-zone trade surpluses and other mysteries", The Financial Times, London, 26^th October 2000.
9. Tony Tucker, "Hollow arguments on strong pound", The Scotsman, Edinburgh, 25^th September 2000.
10. Feature article, "Why we attract investment - and the Eurozone is losing it", The Derby Evening Telegraph, Derby, 13^th June 2000.
11. Jonathan Watts, "Honda to sell UK cars to Japan", The Guardian, London, 14^th August 2000.
12. Andrew Wilson, "Currency not solely to blame for job losses", The Herald, Glasgow, 26^th October 2000.
13. Jim Pickard, "Panasonic job cuts add to fears for Wales", The Financial Times, London, 25^th October 2000.
14. Alf Young, "There will be a high price to pay for staying outside the euro", The Sunday Herald, Glasgow, 22^nd October 2000.
15. Robert Anderson, "Foreign investors eye ventures in the Czech Republic", The Financial Times, London, 19^th April 2000.
16. Robert Anderson, "Skoda drives VW's success story", The Financial Times, London, 1^st March 1999.
17. Feature article, "Why we attract investment - and the Eurozone is losing it", The Derby Evening Telegraph, Derby, 13^th June 2000. See also News article, "Inward investors scorn euro scare", The Times, London, 25^th January 2000.
18. Natalia Churikova, "'Inflation risk' as euro-zone expands", The Financial Times, London (USA edition), 31^st January 2001.
19. John Murray Brown and Peter Norman, "Brussels demand Ireland rein in expansionary monetary policies", The Financial Times, London, 25^th January 2001.
20. News article, "Inward investors scorn euro scare", The Times, London, 25^th January 2000.
21. Tony Tucker, "Hollow arguments on strong pound", The Scotsman, Edinburgh, 25^th September 2000.
22. Tony Tucker, "Hollow arguments on strong pound", The Scotsman, Edinburgh, 25^th September 2000.
23. Christopher Booker, "BBC charade on Europe", The Sunday Telegraph, London, 4^th February 2001.
24. April 2000 National Institute of Economic and Social Research (http://www.niesr.ac.uk)
25. Gary Duncan, "Hidden costs of e-day could run into billions", The Financial Times, London, 17^th November 2000.
26. Brian Groom and Robert Shrimsley, "Euro switch 'could cost Pounds 30bn", The Financial Times (London), 17^th November 2000.
27. "Letters to the Editor", The Daily Telegraph (London), 18^th November 2000.
28. News Article, "On a hiding to nothing over cost of converting to euro", The Daily Telegraph (London), 17^th November 2000.
29. David Hughes, "£36bn bill to ditch sterling", The Daily mail, London, 16^th November 2000.
30. Robert Miller, "Await Euro wisdom from Chairman Ken", The Express, London, 18^th November 2000.
31. Dylan Gibbons (of the European Movement), "Letters to the Editor", The Birmingham Post, 16^th September 2000.
32. Julian Coman, "International: Growth of EU could cost £24bn in farm aid", The Sunday Telegraph, London, 16^th July 2000.
33. Sarah Hogg, "European expansion will require radical reform", The Independent, London, 9^th October 2000. See also Alain Anderton, Economics, Causeway Press, Lancashire, 2000, p.678.
34. Sarah Hogg, "European expansion will require radical reform", The Independent, London, 9^th October 2000.
35. Julian Coman, " International: Growth of EU could cost pounds 24bn in farm aid", The Sunday Telegraph, London, 16^th July 2000.
36. Peter Norman and Stefan Wagstyl, "More room and the inn", The Financial Times, London, 13^th October 2000.
37. Julian Coman, " International: Growth of EU could cost pounds 24bn in farm aid", The Sunday Telegraph, London, 16^th July 2000.
38. Peter Norman, "Enlarged EU 'could face wider rich-poor gulf'", The Financial Times, London, 1^st February 2001.
39. Emma Tucker, "Lack of co-ordination a bar to further integration", The Financial Times, London, 26^th February 1999.
40. Gareth Harding, "Premier calls for Euro-tax", The European Voice, Brussels, Volume 7 Number 5, 1 February 2001 - available on the Internet at http://www.european-voice.com/cgi-bin/article.pl?article=2
41. Joy Copley, "Eurosceptics' anger erupts as Prodi calls for full union", The Scotsman, Edinburgh, 14^th April 1999.
42. Philip Webster and Martin Fletcher, "Britain will resist all threats to its tax veto", The Times, London, 17^th November 2000.
43. Mark Milner and Andrew Osborn, "Nobody's fool, Monti", The Guardian, London, 11^th November 2000.
44. George Jones, "EU fuel threat attacked", The Daily Telegraph, London, 10^th October 2000.
45. Ambrose Evans-Pritchard, "Brussels tells Irish to toe line on EMU", The Daily Telegraph, London, 25^th January 2001.
46. Ambrose Evans-Pritchard, "Brussels tells Irish to toe line on EMU", The Daily Telegraph, London, 25^th January 2001.
47. Tony Barber, "ECB rate rises blamed for German slowdown", The Financial Times, London, 4^th January 2001.
48. Chris Huhne, "Touch of paranoia over taxes", The Evening Standard, London, 24^th May 2000.
49. Peter Norman, "Development of euro tax regime", The Financial Times, London, 10^th December 1999.
50. In ICI v Colmer (now ECJ Case C-264/96), cited by Christopher Arkell, European Journal, London, October 1998.
51. Reported in The Times, London, 26^th November 1998 - quoted: Peter Martin, "Letters to the Editor", The Times, London, 28^th October 2000.
52. All figures obtained from the web site of The National Treasury Management Agency, which is the asset and liability management arm of the Irish Government - precise url: http://www.ntma.ie/SectionIntros/irishEcon.htm. The NTMA avoids the usual claim of a 10 per cent rate of growth. This is a misleading claim, as international companies use transfer prices to take their profits in Ireland, which has a low rate of corporation tax. But, even at 6 or 8 per cent, the growth rate is the highest in Europe.
53. Source: Medium Term Review 1999-2005, of the Irish Economic and Social Research Institute. Table obtained from the web site of The National Treasury Management Agency, http://www.ntma.ie/
54. Feature article, "Living alongside an economic miracle", The Belfast Telegraph, Belfast, 3^rd January 2001.
55. John Murray Brown, "Inflation is darkening cloud", The Financial Times, London, 22^nd September 2000.
56. All quotes: John Murray Brown, "Inflation is darkening cloud", The Financial Times, London, 22^nd September 2000.
57. Tony Barber, "On the loose", The Financial Times, London, 29^th September 2000.
58. Lea Paterson, "Business may be booming, but the Irish have a tiger by the tail", The Financial Times, London, 2^nd December 2000.
59. Brendan Keenan, "Why Ireland's budget ignited Brussels clash", Sunday Business, London, 28^th January 2001.
60. Lea Paterson, "Business may be booming, but the Irish have a tiger by the tail", The Financial Times, London, 2^nd December 2000.
61. Lea Paterson, "Business may be booming, but the Irish have a tiger by the tail", The Financial Times, London, 2^nd December 2000.
62. Brendan Keenan, "Why Ireland's budget ignited Brussels clash", Sunday Business, London, 28^th January 2001.
63. Jamie Smyth, "Wage-price spiral biggest danger, says O'Connell", The Irish Times, Dublin, 20^th July 2000.
64. Michael Fry , "When will the luck of the Irish economy run out?", The Scotsman, Edinburgh, 13^th October 2000.
65. All quotes: Bill Jamieson, "Celtic tiger could tear holes in Euro project", The Scotsman, Edinburgh, 30^th August 2000.
66. Kevin Myers "An Irishman's Diary", The Irish Times, Dublin, 28^th April 2000.
67. On this point, see John Hawksworth, "Alternatives to the PSBR: Implications for Public Corporations", Public Finance Foundation Review, London, November 1995.
68. Jonathan Fenby, "Germany and France risk deficit overshoot", Sunday Business, London, 26^th November 2000.
69. Jonathan Fenby, "Germany and France risk deficit overshoot", Sunday Business, London, 26^th November 2000; David Walker, "French without tears", The Guardian, London, 7^th December 2000.
70. Peter Norman, "Commission to seek greater co-ordination in euro-zone", The Financial Times, London, 25^th January 2001.
71. Peter Norman, "Commission to seek greater co-ordination in euro-zone", The Financial Times, London, 25^th January 2001.
72. Tony Barber, "World news: Europe", The Financial Times, London, 14^th September 2000.
73. Source: World Bank - cited: Alain Anderton, Economics, Causeway Press, Lancashire, 2000, p.160.
74. Lea Paterson, "Pressure on euro over German growth fears", The Times, London, 22^nd November 2000.
75. Alan Wheatley, "Europe's pension time bomb ticks ominously away", The Financial Times, London, 15^th February 1999.
76. Feature article, "why we attract investment - and the eurozone is losing it", The Derby Evening Telegraph, Derby, 3^rd July 2000.
77. Janet Bush, "Pitfalls of pension parity", The Sunday Telegraph, London, 16^th April 2000.
78. Janet Bush, "Pitfalls of pension parity", The Sunday Telegraph, London, 16^th April 2000.
79. Janet Bush, "Pitfalls of pension parity", The Sunday Telegraph, London, 16^th April 2000.
80. Martin Wolf, "OECD's favourable marks for the economy", The Financial Times, London, 12^th June 2000.
81. Christopher Johnson, "UK Economic boasts have a very hollow ring", The Independent, London, 29^th August 2000.
82. Source: Samuel Brittan, "Productivity is not the answer", The Financial Times, London, 27^th April 2000.
83. Gary Duncan, "Struggle to face Euro facts", The Scotsman, Edinburgh, 1^st December 1999.
84. Source: Samuel Brittan, "Productivity is not the answer", The Financial Times, London, 27^th April 2000.
85. Source: OECD - Quoted, Christopher Johnson, "The discrepancy of employment figures has never been greater ", The Independent, London, 11^th January 2001
86. Stewart Fleming, "French jobs machine turns out a problem for the politicians", The Evening Standard, London. 10^th October 2000.
87. Robert Graham, "France: banking, finance and investment", The Financial Times, London, 10^th November 2000.
88. Robert Graham, "How France's party may soon be over", The Financial Times, London, 7^th July 2000.
89. James Blitz, "The end of la dolce vita", The Financial Times, London, 12^th October 1999.
90. Tony Barber, "ECB rate rises blamed for German slowdown", The Financial Times, London, 4^th January 2001.