A good inside account of why it didn't happen:
mainlymacro.blogspot.lu/2013/07/how-knowledge-transmission-should-work.htmlFor what its worth i can't quite get myself to subscribe to that point of view, and interpret it more as a political decision, in the long run at least. It should indeed be correct from most political viewpoints at large in the UK, but looking at it from a macro only perspective with abstraction made of political economy the odds look less clearcut. And its a chance to speculate on the duldroms.
It seems safe to bet that a British Euro in itself would not have sufficiently reined in banking deregulation to prevent the Northern Rock or the Bear Stearns blowouts, or indeed to keep Hank Paulson from shooting the sheriff. The one advanced economy that suffered the steepest initial downturn was the British one, which should have advanced the roller-coaster ride of the Euro pretty much to the aftermath of the Lehman wind down.
It would have made for spectacular television, the cursing in both the English and the German outlets would have been unspeakable, then everybody would have gone to bed a few times, and found out that this was still the same brave old world upon waking up, and that something needed to be done about it. That should have meant a Brown and Merkel headbang so ferocious that the then French president would not have dared to venture anywhere near. Only the Gods would know the outcome of that one for sure.
One apparently plausible scenario is that at the end of the day the Germans would not bave been able to stage a rerun of what Kohl told Major after Black Wednesday, mainly because individual currency members can put the ECB consensus of the moment under pressure, and the British side would have used its leeway to effect. More memorable telly. The election of Obama should then have helped in swaying the balance towards stronger stimuli in Europe, with Brits successfully lobbying the new administration to offer persuasive argument. In the end there would have been compromise and current account balances of both sides would have diverged considerably less than in the real deal. (please see the links below for the actual situation)
ec.europa.eu/eurostat/documents/2995521/7771119/2-20122016-AP-EN.pdfwww.fxstreet.com/news/united-kingdom-current-account-came-in-at-2549b-above-expectations-2745b-in-3q-201612230932Overall there would have been more stimuli in the Euro19, less of it in the Isles, but no Osborne double-dip, and a steadier course that would have resulted in a roughly similar GDP with slightly better economic fundamentals as of June 23rd 2016. A more favourable take on stimuli and fiscal measures in the EU should also have lead to a different timeline for the Greek crisis. Still socio-economic policy differences among the EU countries would have subsisted, for instance on wages.
touchstoneblog.org.uk/2016/07/uk-real-wages-decline-10-severe-oecd-equal-greece/One wild card is if there would by now be a more formal agreement on the long-term monetary flows issue with the Euro zone than the current off the cuff arangement born out of the Greek story, which seems to work similarly to the mostly unwritten British constitution. For instance a kind of European
Clearing Union similar as proposed by Keynes at Bretton-Woods. Another one is if there would have been more or less actual economic policy, both on a national and EU level, the latter perhaps resembling a European Coal and Steel Community 2.0 type High Authority and resource pooling, preferably with some parliamentary oversight.
Both indyrefs would still have had the same result, and Sterling would mean Stirling now
Which allows me to leap to the actual situation, where the Sterling exchange rate has been steadily docking onto the Dollar over the last months, with the question being if the UK will be able to resorb their current account deficit or will the Fed eventually be asked for a bailout, leading to a situation similar to the Scottish Punt within the Sterling zone?
The latest IMF prediction has the current account balance moving from -157.3 to -112.3 billion Dollars in 2017, how would that happen with the next money tree already marked for timber and the trade deficit widening since June? Of note that a
substantial revision of the stats has taken place since, "due to a processing error in how the ONS factored in trade in gold".
Rabobank have offered a guess at what successful negotiations of the kind favoured earlier by
Richard Allen might mean for next year.
economics.rabobank.com/publications/2016/november/global-economy-trump-era/
