Time for the British to adopt the Euro

My guess is that the right-hand left-hand controversy will be referred
to Brussels for a decision. The result will be a compromise, wherein
everyone drives down the middle.

Nah, I think everyone will be allowed to drive as they please. They
already practice that system in Italy, once more the avantgarde in
Europe. :-)

R

wrote:

Dear Group,

Why do the British persist with this outdated currency ?

It is time the British joined the real world and adopted the Euro.


The issue is not one of sentimentality, the question is whether the
citizens of the UK should relinquish control of their economy to the
European Central Bank and its financial policies.
If you look at the economic stagnation and unemployment figures in
countries like France and Germany over the past few years, during a
period when the Euro increased in value by 50%, you can't help wondering
if there might be some connection.

T.

"Mike O'Sullivan" wrote in message
...
Ross Lyn wrote:

It will take a lot to overcome the opposition by major car manufacturers
and other similar multi-nationals who look on the UK as Treasure Island.
Once the punters can see at a glance what the comparable price for a car
will cost on Mainland Europe.

This assumes that there is a uniform price for goods in mainland Europe.
However, there is just as much variation in prices between countries as
there is between Europe and the U.K.

And IME little advantage is taken of it. I know of many people
who travel to NL on German holidays simply because the shops
are open on that day, but I know of few who actually make the
trip on a regular basis with a shopping list of cheaper items to buy.

"Tom Peel" wrote in message
...
wrote:

countries like France and Germany over the past few years, during a
period when the Euro increased in value by 50%, you can't help wondering
if there might be some connection.

In Germany's case, might it have something to do with the lasting effects of
subsuming that dynamic vibrant ecconomy to the east a few years ago?

"Ralph" wrote in message ...

Nah, I think everyone will be allowed to drive as they please. They
already practice that system in Italy, once more the avantgarde in
Europe. :-)


In Malta, apparantly, they drive in the shade :-)

On Sun, 20 Mar 2005 11:37:50 +0100, "Sjoerd"
wrote:


"Tom Peel" schreef in bericht
...
The issue is not one of sentimentality, the question is whether the
citizens of the UK should relinquish control of their economy to the
European Central Bank and its financial policies.
If you look at the economic stagnation and unemployment figures in
countries like France and Germany over the past few years, during a
period when the Euro increased in value by 50%, you can't help wondering
if there might be some connection.

The problems of the German and French economies have very little to do with
the ECB's policies, but are almost entirely the result of domestic economic
and social policies that protect the interests of those that have jobs at
the expense of the interests of those that do not have jobs yet.

Yet, you would surely agree that they would have very different
interest rates that say Ireland if they weren't forced to have the
same by the Euro?

So whilst the root causes may lie elsewhere, the inability to
stimulate the economy (by either lower interest rates or government
spending) to smooth over the pain that such transition of the policies
would have, is why no government has yet managed to bring change in
any of those policy areas.

Jim.

"Keith W" wrote in message
...

So lets get this straight you advocate the following changeover strategy
for driving on the right

Quote
cars and motor bikes for
the first six months then a three month period to include lories and heavy
vehicles finally finishing up with public transport
/Quote

Dont reckon on a career in public planning

I was merely indulging in a whimsical "Most Likely Outcome" if the
changeover from driving on the left to driving on the right were to be
effected by the same people who gave us Metrication and Decimalisation by
instalments many years ago but I don't expect you would remember that.

"d_jay_double" wrote in message
oups.com...

Keith W wrote:
"Ross Lyn" wrote in message
...
There's a reason for the steering wheel to be on the offside as
you'd
know if you had ever actually driven a car.


Ho Ho Ho, very droll keith.

What I really meant without, spelling it out in detail, - I'm
typing this
slowly incase you can't read fast - is if you change from right
hand
drive to left hand drive, it implies that you also change from
driving on
the left side of the road to driving on the right side of the road.

That is what they do in the rest of Main Land Europe as you might
find out
if you ever drive abroad.



So lets get this straight you advocate the following changeover
strategy
for driving on the right

Quote
cars and motor bikes for
the first six months then a three month period to include lories and
heavy
vehicles finally finishing up with public transport
/Quote

Dont reckon on a career in public planning

Keith
Its a VERY old joke Keith - he wasn't serious. And back on the
euro/pound debate, I would welcome a switch - i travel all over europe
and GB is the only place where i still end up with foreign change in my
pocket, useless anywhere else in europe. And i run a european business,
and the UK screws all my accounting up. forza euro, i say.


The OP was putting forward the proposition that
business was AGAINST adoption the Euro

Keith

"Mike O'Sullivan" wrote in message
...
Biffa Bacon (mobile) wrote:
"chancellor of the duchy of besses o' th' barn"
wrote in message
news:1gtnv50.wxg53n1mc87tvN%this_address_is_for_sp ...
wrote:
Dear Group,
Why do the British persist with this outdated currency ?
It is time the British joined the real world and adopted the Euro.
Stop trolling.
Might be trolling, but I must admit I do agree, after spending a lot of
time working in France/Germany/Belgium/Holland coming back to the UK and
using the good ol pund does seem slightly archaic.
Do you also find the US dollar archaic when you travel to the US?

Never been there, no plans to either, so can't tell !

Cheerz - Brownz

"Tom Peel" wrote in message
...

Politicians here are blaming unemployment on high loan costs compared to
countries like the UK. They omit to mention that the increase in loan
costs compared with the UK is primarily due to the high Euro exchange
rate. The ECB could make a major contribution to ease this by reducing
interest rates- but it doesn't. I am not opposed to the Euro as such,
but I believe the ECB's policy of maintaining a high exchange rate is
damaging to the economy.



The Sick Man Of Europe. Article published in "The Economist" 3rd June 1999 -
a couple of years prior to the introduction of the Euro!!!

The biggest economy in the euro area, Germany's, is in a bad way. And its
ills are a main cause of the euro's own weakness

THE social-market economy devised in Germany after the second world war,
with its careful blend of market capitalism, strong labour protection and a
generous welfare state, served the country well for several decades. But it
is now coming under pressure as never before. As economic growth stalls yet
again, the country is being branded the sick man (or even the Japan) of
Europe. This is inevitably casting a cloud over Europe's single currency,
the euro, for Germany accounts for a full third of the euro countries'
output. When Germany sneezes, its neighbours feel a chill-and nervous
markets are likely to sell the euro. Thus the biggest economic problem for
Europe today is how to revive the German economy.

The numbers certainly tell a bleak story. German GDP shrank by 0.2% in the
fourth quarter of 1998, against growth of 0.5% for the rest of the euro
area. The figures for the first quarter of this year, which will be
published next week, are not expected to provide much cheer. A few
forecasters-albeit in the minority-think that the economy may have shrunk
for a second quarter in a row, which would put Germany technically in
recession. Any growth that is recorded is sure to be small. The government
has scaled down its forecast of GDP growth for this year to 1.5%. Even that
may be optimistic; several private-sector economists' forecasts go as low as
1%.

Next year may bring better news, as exports at last pick up again, helped by
the weaker euro. But few expect a stellar performance. Rather, Germany seems
likely to persist with more of the sub-par growth that has characterised its
economy in recent years. On average, indeed, German growth has lagged that
of the rest of the euro-11 countries by almost one percentage point a year
since 1995.




German consumers have remained surprisingly resilient amid this overall
gloom. Not so its companies. They are still reeling from a showdown over tax
with the pugnacious former finance minister, Oskar Lafontaine. The latest
survey of business conditions shows that businessmen are at their gloomiest
since mid-1996 about the current business climate, although there are signs
that they expect things to improve slightly later this year. The red-green
coalition government led by Gerhard Schröder since last October has
"encouraged the suspicions of a corporate sector predisposed to fear the
worst," says Alison Cottrell, chief international economist at PaineWebber
in London. The dark picture painted by Hans Eichel, Mr Lafontaine's
replacement, to justify fiscal belt-tightening has further unsettled
industrial bosses. And a lack of corporate confidence has been one of the
main factors that has kept unemployment so high.

Mr Schröder came to power with job creation at the top of his agenda, but
the new government has so far noticeably failed to get people back to work.
Unemployment remains stubbornly high at 4m, or 10.7% of the workforce,
seasonally adjusted. This may be lower than in, say, France, but it is
nevertheless embarrassing in a country that still likes to think of itself
as an economic powerhouse. So is the fact that new jobs are not being
created anywhere near as fast as in other, comparable countries.

Germany can hardly claim that its malaise is a rich-world commonplace. The
American economy is still booming, for now. Closer to home, Italy may be in
a pretty bad state, but France and several smaller European countries are
growing quite comfortably. In the early 1990s, France struggled while the
Germans enjoyed a short-lived post-unification boom. Since 1997 the opposite
has been true.

Some of the blame for this can be laid at the door of a tight macroeconomic
policy. For much of the 1990s, the Bundesbank kept interest rates high in
response to pressures from German unification and from an expansion in the
budget deficit. In the run-up to the euro's launch, German monetary policy
was constrained by the need for most European countries to converge on a
single euro-wide interest rate; and fiscal policy has been kept in check by
the need to comply with the single-currency countries' "growth and stability
pact". These constraints still bind: left to itself, Germany might respond
to its latest bout of weakness with lower interest rates and a bigger budget
deficit, but it no longer has these options.

Germany's weakness has, indeed, come at an especially awkward time for the
euro. The new currency's almost uninterrupted slide against the dollar since
its introduction in January owes much to gloom over the German economy. The
country's exporters may be breathing a sigh of relief after repeated bouts
of D-mark appreciation in the 1990s, but central bankers are not amused.
This week, Otmar Issing, the European Central Bank's chief economist, who
was formerly in the same position at the German Bundesbank, pinned much of
the blame for the sagging euro on German policymakers, who have failed to
tackle their overly generous welfare net. The ECB's president, Wim
Duisenberg, has said that Germany's problems are not cyclical but the result
of too little basic reform to social security, the labour market and so on.
Mr Duisenberg also said this week that he was inclined to "play down" the
short-term fall in the euro.



Shocks and spanners
Some argue that Germany's ugly recent statistics can be blamed as much on a
series of one-off shocks as on the economy's structural faults. Once these
have passed, the optimists go on to argue, growth should start to take off
again.

The first and biggest shock was the unification of East and West Germany in
1990. This was always going to hit the much bigger and richer western part
of the country hard, especially after the less productive easterners won
over-generous wage rises. Much of the early, tax-driven investment in the
east went, in effect, down a black hole. The pain continues. The level of
subsidy to the east, which accounts for roughly 5% of overall German GDP,
has barely fallen since 1990. The rejoining of Germany led to a series of
mini-booms and busts, exacerbated by further wage rises at the first hint of
recovery and a sharp appreciation of the D-mark, which stung exporters.

A second spanner in the works was the economic crisis in emerging markets.
Germany sends more of its GDP abroad than any other big European country
(around 30%), with roughly a quarter of that going to emerging economies-and
so has suffered more than most. The collapse of Asian markets hit basic
producer goods especially hard; along with capital goods, these make up as
much as four-fifths of Germany's exports. Many German exports, such as
chemicals and aluminium, were already suffering from global overcapacity
before the crisis hit Thailand in mid-1997. The meltdown in Russia, formerly
another big export market, has not helped either. It is striking how far
Germany's share of world exports has fallen since the early 1990s.

Nor did last year's interest-rate convergence in the run-up to monetary
union do much to bolster Germany. As interest rates in other euro-area
countries fell towards German levels, their economies received a boost that
has increased the gap between their performance and Germany's. The slowdown
in Britain, which is one of Germany's biggest export markets, has made
matters worse as well.

Yet much as these temporary problems may have hurt the German economy, they
are not the root cause of its ills. Nor would it be fair to lay the blame
entirely on macroeconomic mistakes in the 1990s. In the longer run, the main
factors tugging down German (and indeed European) economic performance do
indeed remain structural and microeconomic: a byzantine and inefficient tax
system, a bloated welfare system and excessive labour costs.

The tax issue has already come to the fore in Germany in the recent showdown
between business and government. Mr Lafontaine infuriated company bosses by
threatening to close some DM7 billion-worth ($3.7 billion) of tax loopholes,
without shaving much off corporate tax rates, which run as high as 60%. Some
of the biggest insurers and utilities even threatened to move their
headquarters abroad unless the government made firm promises to lower their
tax bills.

Businessmen have been equally incensed by the government's treatment of
fringe workers. Low-paid, part-time jobs (so-called "DM630 jobs") have long
been exempt from tax and social-security contributions. Many economists
think that the government's plans to end this exemption, drawn up by the
labour minister, Walter Riester, will destroy many of the 6m such jobs, just
when the government should be encouraging workplace flexibility. The German
Chamber of Commerce reckons that over 500,000 jobs may be at risk. Some
service industries, such as cleaning and catering, fear losing up to a fifth
of their workers.




Yet another planned reform, to raise the levy on small consultancies and
their clients, is equally controversial. Businessmen complain that it will
discourage the formation of innovative new companies. Such is the opposition
to these measures-from employers, workers and some regional governments-that
they may yet have to be scrapped or amended.

The appointment of the business-friendly Mr Eichel has calmed some corporate
nerves, not least because he has pledged to cut corporate taxes. But the
fear lingers that the ruling Social Democrats remain bent on redistributing
income at the expense of big business, which explains the continued sag in
corporate confidence. This fear is hitting investment. "What we have is
uncertainty. We are investing less in our German sites until we are sure
which way things are going," says Franz Nawratil, chairman of
Hewlett-Packard's European operations.



Hire and fire
Another big reason not to invest is the cost of hiring and firing workers.
Holger Schmieding, senior European economist at Merrill Lynch, thinks that
Germany has got itself caught in a vicious circle. The welfare state is
largely financed by payroll taxes, half of which are paid by employers and
half by individual workers. As welfare costs have swollen, non-wage labour
costs have shot up too, from 36% of gross wages in 1990 to a painful 42%
last year. This encourages companies to shed workers, reducing payments into
the welfare system while ratcheting up the benefits that must flow out.

Mr Schmieding thinks that Germany's high costs relative to what it produces
help to explain why unemployment has risen from cycle to cycle since the
1960s. German workers may be productive, but not enough to justify costs
that are running at 50% above levels in any other G7 country. Getting rid of
workers is costly too. Severance pay is typically a month's salary per year
worked, plus generous retirement pay-offs for older workers. "The jobs
market doesn't really deserve to be called a market," says one disgruntled
company manager.

This has not, however, stopped many German companies from shedding workers
by the thousand, at home and abroad, as they restructure in response to
globalisation. This has created an irony: corporate Germany has gone from
strength to strength even as the economy, beleaguered by high costs and
rigidities, has faltered. Companies such as DaimlerChrysler and Hoechst have
set the pace of change in their industries. Even sleeping giants such as
Siemens are shaking themselves up.

Why has such industrial success not fed through to the economy at large? One
answer is the way in which German firms have learnt to deal with their
country's rigidities: by shifting operations abroad. Last year they invested
some DM150 billion in other countries (by contrast, Germany attracted a mere
DM35 billion in foreign direct investment). Many big companies now make more
than half their profits abroad. But smaller firms that make up the backbone
of Germany's famous Mittelstand have also been packing up and moving abroad,
especially into lower-cost and more flexible countries to Germany's east.
Some 20,000 such firms have invested in Central and Eastern Europe, largely
to escape steep wage bills at home.

Thomas Mayer, an economist with Goldman Sachs, thinks that euro-area
countries, and Germany in particular, are now stuck in what he calls a
"restructuring trap". Since Germany's last recession, in 1993, its companies
have greatly increased their return on capital as they have shed
unproductive workers and subsidiaries or moved to low-cost locations. The
same thing happened a few years ago in America (and before that, in
Britain). In both these countries, slimmed-down companies soon started to
create new jobs. In Germany, however, firms have been reluctant to rehire
because of the soaring non-wage costs of labour. "The framework is not there
to encourage the replacement of jobs lost in restructuring," Mr Mayer says.
"It is only the enduring strength of the export sector that has stopped
things getting really bad."

Mr Mayer thinks that the eastern part of Germany, where economic growth is
even lower than in the west, is in a different kind of trap. Political
compromises have prevented the kind of creative destruction that might have
led to robust growth. Instead, the east has become a "colony of pensioners",
consuming with the help of subsidies but not producing enough that others
want. Large parts of the eastern economy have become so addicted to
subsidies that he fears they may become a German version of Italy's poor
south, the Mezzogiorno, whose economy depends on handouts from Rome and
Brussels, and has been plagued by low growth.




In search of flexibility
To be sure, there are some rays of hope. The strength of opposition to the
DM630-job changes shows how important part-time work has become to many
Germans, often supplementing full-time work. "It has shown that there was
more flexibility than many people realised," says Ulrich Beckmann, an
economist with Deutsche Bank.

Red tape is slowly being unravelled too. Yet Germany is still smothered in
regulations that crimp markets. Many prices are still regulated, and
consumers remain "protected" in bizarre ways: shops can be fined for
discounting or making three-for-the-price-of-two offers if these are deemed
to send confusing signals to consumers.

But other constraints are being lifted. Shopping hours are getting longer.
In the eastern state of Saxony, for instance, high-street stores will soon
be allowed to open on Sunday afternoons. Banks may soon be able to open on
Saturdays. Progress will come only gradually, however. "We got 90 minutes
extra shopping after a decade's debate, or nine minutes a year. Call it the
German way," sighs Ulrich Ramm, chief economist at Commerzbank.

There are also signs of new flexibility in the one-size-fits-all system of
collective bargaining. The concept of Mitbestimmung-or seeking consensus
between managers and workers-remains a powerful force, and worker
representatives still have half the seats on firms' supervisory boards. But
the number of wage deals being negotiated at company level, rather than
regionally or nationally, has doubled since the early 1990s. Around 10% of
the western workforce has wriggled out of old-style collective-bargaining
arrangements; in the east the figure is over 50%. This has allowed many
companies to adjust to their own market conditions.




Mr Beckmann argues that Germany's unions became more accommodating after
seeing how hefty pay increases cut short economic recovery in 1995. They
accepted three years of scant pay rises that have helped to reverse a
previous rise in unit labour costs. The question now is whether they can
maintain the restraint that economists reckon Germany needs to stay
competitive.

The omens are bad. IG Metall, the largest union, recently won its 3m members
a pay rise of roughly 3.5%, way above inflation, after its boss had called
for "an end to modesty". Commerzbank forecasts a 2.5% rise in unit labour
costs this year and a smaller rise in 2000. The only silver lining is that
the wage deals will boost flagging demand in the short term: real consumer
spending should grow by 3% this year. Retailers are starting to emerge from
the hole in which they have spent most of the past few years.

In any case, none of this cheer will last long unless Mr Schröder's
government enacts some radical structural reforms. Slashing the top rates
for corporate and income tax could bring substantial benefits at little
cost. Germans would spend less time seeking tax shelters or ploughing money
into tax-driven investments that make little sense-whether east German
property or Asian shipping.

Many economists also argue that the state could actually make money out of a
cut in capital-gains tax, as the current high rates discourage banks from
selling industrial stakes they want to unload. The main barrier is politics:
this government, like the last one, worries that such reforms will be
unpopular if they are widely perceived as a handout for the rich at the
expense of the average citizen.

The other big challenge for the government is to defuse Germany's welfare
timebomb. That will necessitate cutting benefits and encouraging private
provision for pensions and healthcare, as the workforce declines and the
number of pensioners grows. This is the only way to bring down payroll taxes
for good-and thus to reduce the tax on jobs-without running an ever widening
budget deficit.

The government could also do the economy a favour by speeding up
privatisation and further deregulating the underdeveloped services sector.
The federal government has been slow to fulfil its sell-off pledges, while
most of the regional states have clung to their banks and utilities-one
reason that more than half of all German spending is done by the public
sector. Putting state-owned companies on the block would bring extra money
to cash-strapped budgets as well as improving efficiency. Deregulating
services would have a similar effect. Professional services, such as legal
and tax advice, are still highly cartelised: for instance, tax advisers
agree a common price list through their guild, and may not undercut one
another.

Unfortunately, progress in most of these areas is likely to be agonisingly
slow-indeed, it could even go into reverse. The Schröder government has
already backtracked on the efforts to cut pension entitlements that were
made by its predecessor. Its Alliance for Jobs, a roundtable involving
ministers, employers and unionists, has achieved little. Its health-care
reforms have become bogged down by battles with various interest groups.

It is, perhaps, not surprising that market-friendly politicians, including
one or two in the government, now complain of Germany being a blockierte
Gesellschaft (blocked society). Unblocking it will take determination.
Without that, Germany is unlikely soon to shed its title as the sick man of
Europe. Germans must find it more galling since it was coined in the last
century by the Russian tsar, Nicholas I, to describe Ottoman Turkey-a once
dynamic polity that failed.