First Blair government opts to join €

[slon]

Accepted that most think it wuld have been a bad idea but prompted by KC "A more interesting question might be what would have happened if he had"

Would we have had lurched from boom too bust as the performance of the UK economy is not alligned to the dynamics of the Eurozone?
Would it have benefitted our manufacturing sector to the detriment of the service sector?
How would the ecomomy of the UK be today?

[Strontium Dog]

I think I'm right in saying that the UK would have joined the eurozone at an exchange rate of 73p to the euro? And we are now at a rate of 88p to the euro.

So if we had joined the euro, my wages would be worth about 20% more than they are now. Makes the 1% public sector pay cap look like small beans.

[Crimson King]

I do wonder (and I think there was some discussion at the time) what impact having another (to broad brush it) strong Northern European economy in the eurozone would have had on the difficulties Greece went through a couple of years ago

[myth11]

If we had joined we would be in the fiscal compact which would mean making far harder cuts to public sector spending.

[slon]

There is also the topic of how our membership of the € would have affected the Eurozone itself ..... but would it have made any difference?
As I see it the problems of the piigs was about internal housekeeping and the ability to borrow at more preferential rates than ever before.
They all racked up government (and personal) debt beyond ability to service when the inevitable slow down in growth happened. With the UK as a Eurozone member access to cheap finance might have been even easier for them, the crunch more painful?

[slon]

Jul 3, 2017 13:53:49 GMT myth11 said:

If we had joined we would be in the fiscal compact which would mean making far harder cuts to public sector spending.

I don't see that .... control of public spending remained with the sovereign governments.

[myth11]

Jul 4, 2017 10:21:42 GMT slon said:

Jul 3, 2017 13:53:49 GMT myth11 said:

If we had joined we would be in the fiscal compact which would mean making far harder cuts to public sector spending.

I don't see that .... control of public spending remained with the sovereign governments.

you should read it if want a good sleep.
Member states bound by the Fiscal Compact have to transpose into national legal order the provisions of the Fiscal Compact with the main provisions been
1. 3% max deficit
2. 60% debt 
3. 0.5 structural deficit for those breaking rule 2.
The uk broke all 3 by a lot and is still breaking them by fair bit.

[slon]

Jul 4, 2017 17:19:34 GMT myth11 said:

Jul 4, 2017 10:21:42 GMT slon said:

I don't see that .... control of public spending remained with the sovereign governments.

you should read it if want a good sleep.
Member states bound by the Fiscal Compact have to transpose into national legal order the provisions of the Fiscal Compact with the main provisions been
1. 3% max deficit
2. 60% debt 
3. 0.5 structural deficit for those breaking rule 2.
The uk broke all 3 by a lot and is still breaking them by fair bit.

Well, yes the Eurozone has rules regarding debt and long term deficits for very good reasons, but by necessity there is flexibility. I guess most Eurozone countries were in violation of these rules following the financial crash, and some are still trying to claw back from the problems.
To claim that the UK would have been forced to be more prudent as regards public spending prior to 2007 if we had been part of the Eurozone is pure fiction (but it is a nice thought).
To claim that the UK would have had to make deeper spending cuts post 2007 if we had been a Eurozone member is doubtful .... it would have reduced flexibility in the short term measures of printing money and allowing the currency to devalue, but longer term the George Osborne austerity package would have been well within the remit.