Thursday, October 26, 2006

Euro a waste of time says French think tank

From The Business.

The launch of the single market and the euro have failed to boost trade, jobs and economic growth in the European Union, according to a devastating report from an official French think-tank.

Yes, you read that right. Both the single market and the euro have failed.

After a painstaking analysis, the report finds that, contrary to decades of thinking across Europe, "economic integration has stagnated and no longer promotes growth. The euro’s creation has not produced the knock-on benefits expected…Financial and credit markets remain segmented".

It gets worse for the Europhiles.

Europhiles who were convinced the launch of the euro would force European governments to reform their failing, high tax and high regulation welfare states have been proved wrong, the report says. In an argument so radical that it has yet to be made by British eurosceptics, the French study argues that the single currency actually had the opposite effect.

Thank Christ we didn't sign up to that, then. Believe it or not, there are still idiots out there who believe in all this EU guff.

The report states that "no sudden burst in the trade of goods and services has been observed since the Single Act entered into effect in 1993, nor since the euro was introduced in 1999." This, they say, is in stark contrast with what happened in North America "after the Nafta agreement was signed in 1989", when trade exploded.

British Europhiles have been telling us for years - well since 1993 of the great boost in trade and services we got from the single market. It was an outright lie. If we got out of the EU and joined NAFTA we might actually see some benefit. If we'd done it in 1989 we'd be well ahead of the game by now. But no - we continue to manacle ourselves to the sclerotic EU with their early 20th century ideas and socialist tendencies.

The much-vaunted harmonisation of prices across the euro zone has also failed to materialise, the report states. "The price convergence that EU monetary union was supposed to bring also did not occur, and convergence even came to a standstill in 1999... "

1999 is when the euro was launched. No boost in trade and services, a barrier to price convergence - has the single market or the euro done any good. Well yes, it has ....

Economist Narcissa Balta observes in her contribution to the report that "the actual experience of the euro is the opposite of that predicted by [monetary union] theory. There is a [minor] positive impact of the euro on exports from non-member countries to the euro zone (but not in the other direction). It’s as if the euro has worked as a one-way valve".

So the euro has been a benefit to non-members but not to those in the euro-zone. Fan-flippin-tastic.

The report concludes: "The situation we describe is perilous: the inability of the EU to revive the economy turns investment away from the continent; persistent under-employment and anaemic growth undermine social provision and the combination of agonising economic problems, poorly-managed enlargement and a manifest exhaustion with community procedures all threaten to trigger a vicious circle which will unravel the acquis communautaire."

So the single market hasn't boosted trade or services, the euro has proved a disaster, the EU turns investment away from Europe and enlargement is threatening a vicious circle. There is no longer any argument for staying in the EU. Bear in mind that this isn't coming from some British Eurosceptic group - this is a group chaired by the French Prime Minister, Dominique de Villepin. It is the equivalent, as The Business points out, of the Number 10 Policy Unit.

Its members include 40 of France’s best-known economists from both the public and the private sectors, the Insee (the equivalent of Britain’s Office for National Statistics), the Banque de France and at various ministries.

So that's like The Treasury, CBI, ONS, Bank Of England and various other government departments saying this. The Emperor is finally exposed as stark bollock naked.

It really is time to get out - before that "vicious circle" drags us down too.

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