Sterling proposal
I HAVE a splendid new policy for him, or, if he is too choosy, for the new shadow chan- cellor, Michael Portillo. I urge him to revive the sterling area. Britain is now the world's fourth biggest economy, having charged up the league tables because its competitors' efforts are measured in euros. It is absurd to suggest that we are too puny to run our cur- rency and need to huddle together with oth- ers for warmth and strength. Others, though, might want to huddle together with us. We could offer them refugee status. The euro area, as all can see, is struggling to resolve its inherent contradictions. The cur- rency's weakness reflects them, and they may yet prove too much for the currency, as they have proved for every previous attempt at European monetary union. The Germans must ask what they have to show for the sur- render of the mark and the Bundesbank, their two most respected institutions. The Irish are now stuck with soaring inflation and ill-fitting interest rates, set by Mr Duisenberg's bank. One size of policy does not fit all. As part of a broader settlement we might let them back into our area. We should be selective, and I should draw the line (for example) at admitting Greece. The euro area has no such scruples. No wonder it is in trouble.
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