Dismal economics
Sir: Alan Watkins (Diary, 29 June) thinks that a Labour government would probably run into a sterling crisis after a couple cif years. I have no comment on that, but he also suggests that joining the single Euro- pean currency would prevent this.
The conditions that would have produced a sterling crisis boil down to uncompetitive- ness of our goods and services, though the effect would be amplified by the reaction of financial markets.
Adopting the single currency would do nothing to prevent a slide into uncompeti-
tiveness. It would, however, make painful deflationary adjustments unavoidable and consequences like cuts in government spending and higher interest rates would run counter to what Labour are hoping to do for the economy.
So, if the present Labour leaders are wary about the Euro-currency perhaps, they have a good point. It has seemed strange to me that many on the Left seem to have undergone a headlong conversion to the benefits of Europe which has left them blind to this problem. This is not meant as a pariy political or • Eurosceptical point, and if my brush with the dismal science of economics some decades ago has failed me in this instance, I should be glad if someone who knows about these things could explain exactly how.
Bob Foxcroft
Mickleden,
Morvern Hill,
Oban, Argyll
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