THE ECONOMY
A marketable idea for Mrs Thatcher
JOCK BRUCE-GARDYNE
Sir Leon Brittan, our eponymous senior man in Brussels, is a downy bird. His predecessor, Lord Cockfield, took a masochistic pleasure in saying things tailor- made to receive a swinging handbag in between the eyes. Sir Leon's instincts for self-preservation, refined and honed in the Battle of Westland, should enable him to enjoy a more peaceful — even possibly a longer — life in Brussels. Not that that would be difficult.
Even Sir Leon, though, faces some dilemmas. To survive in the Brussels gold- fish bowl he must display some Corn- munautaire coloration. But unfortunately every trace of that is calculated to land him in the dock in Downing Street. His response, it must be said, has been strikingly elegant. Now is the time, he announces loud and clear, for all good men (and women — well, he didn't actually say that, but we all know what he meant) to come to the aid of the European currency club. But before the thumbs go down, you know where, he adds a subtle rider. Joining sterling to the exchange rate mechanism (to give it its proper name) will throw the said exchange rate mechanism into such chaos that all the fancy plans for European monetary union will thereby be automatically, and ineluctably, postponed to the Greek kalends. And the corollary of this, of course, is that if we Brits were not to identify the present time as 'ripe', why then M. Delors — Sir Leon's chairman on the European Commission — would be free to achieve his heart's desire, i.e. a single Euro Central Bank and currency. Full marks, Brittan. Not least because he Is, in substantial measure, right. The real oddity about the campaign to link sterling to the deutschmark and its satellites has always been that our continental partners are so keen on it. For it must be true — as Sir Leon argues — that with the prepon- derant weight of the City as vastly the largest financial market in Europe, and hence the focus of massive capital move- ments in and out (and also, albeit to a lesser extent than in the past, with signifi- cant changes in the world oil price having precisely the opposite impact on sterling to their impact on the continental currencies), We would be as comfortable bedfellows as W. S. Gilbert's nightmare victim. Sir Leon must also surely be right that if the currency club were to be thrown into turmoil by the election of the pound to membership, with parity adjustments occurring perhaps once a month instead of once every two years or so, not even a French dirigiste such as M. Delors would continue to plan for a Euro central bank and currency just around the corner.
Alas, it is too Machiavellian by half. For one thing our Prime Minister is not re- motely likely to be converted. Were she to be persuaded (and I do not mean by the Foreign Office, who could not persuade her that Tuesday followed Monday) that unless she immediately gave clearance for the pound to join the club, then the club would pool its currencies without us tomor- row, she would undoubtedly reply, 'more fools they'. (And she might be right at that: the Euro-currency grid was, after all, dreamed up by the Germans to act as a dragging anchor on the deutschmark, so that German exporters were not priced out of their export markets by a soaring currency. Broadly speaking that is precise- ly how it has performed, which has been bully for the Germans, and rotten for their partners.) And for another thing there is in reality no prospect that M. Delors and Co. will persuade the French and Germans to pool their currencies, with or without Mrs T. For in another respect she must be right (and Sir Leon was far too clever to challenge her on this): a single currency and central bank would require a wholesale surrender of national sovereignty over monetary and fiscal policy. There is no likelihood of either Paris or Bonn accepting this — not least because they have fundamentally conflicting purposes in mind. The Keyne- sian, Socialist French dream of a European `Are you absolutely sure it's a penguin?' central bank which would depreciate its currency on the orders of the politicians in pursuit of `growth'; whereas the monetar- ist, Conservative Germans dream of a bank which, regardless of the politicians, would put the value of the currency above all else.
So Sir Leon has been very clever. He has won brownie points in Brussels by 'coming out' as a currency groupie; and he has won brownie points in Downing Street by rub- bishing the early prospect of currency union.
All this, however, somewhat scares the City of London. Mr Heath tells them that if we don't stir our stumps and join the club, then they will lose their places on the `tombstones' of the giant ecu loans of future years, with all the juicy commissions that go with them. Mr Heath does not seem to be aware that London was, and is, the home of the Euro-dollar market, even though we have (so far as is known) never joined the dollar bloc. Nevertheless the City is indeed scared stiff of 'missing the `bus', and many heads there nod in unison with Mr Heath.
So our Prime Minister should not over- look the fact that it was not the Foreign Office, or some Brit 'gone native' like Sir Leon, or a Chancellor trying to do his own thing, who hitch-hiked us into the Com- munity in the first place. It was the City of London, and for that self-same reason, that thought it was in danger of being shelved. That could happen again, whether No 10 approved or not. Therefore I would like to offer a modest suggestion to our Prime Minister. I suggest that she should turn on M. Delors, Sir Leon and the rest of them, and say, 'OK, I'll go along with it. The lot. Euro-bank, Euro-currency, you name it. But on one condition. At the same time we make English the sole official language of the single market.' That would be even more brilliant — if I may venture to say so — than Sir Leon's elegant formula. For everyone (even the French) knows that English is indeed the only conceivable Community language; and everyone — including the French knows that the present Bedlam, with its attendant trains of interpreters, is both absurd and ruinous.
Only our Prime Minister would, I fear, never make the offer. And the French would never accept it if she did.
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