Congress for Democracy


The Congress for Democracy is the most broad based umbrella group opposing entry into the single currency. It represents a unique unity of purpose crossing all shades of political opinion. The Congress asked me to write a short pamphlet on the trade union case against the euro. I was pleased to do this as my own union, having debated the issue thoroughly, is opposed to the single currency and has mandated national officers to put our position in public debate. The union for which I work is not affiliated to any political party or organisation, so our views as a union seek to be very objective on such matters.

In discussing the issue with many trade unionists debate has always led to a consideration of factors relating to economic and political preparation for the single currency within the European Union (EU). Debate also comes to the point of asking what is the alternative to entering the single currency and what are we for? I have sought to sketch some points relating to these wider debates in the full recognition that these go beyond the scope of the Congress for Democracy itself and I am grateful for their recognition that these matters have to be tackled in trade union discussion.

I provide at the end a short reading list of the most accessible, accurate and concise works related to the euro. I also indicate some of the regular publications providing real information about the EU plans for a single currency and its military aspirations and some of the publications of trade unionists in Europe who are opposed to the euro. A key website is also indicated that will lead readers on to the full range of informed opinion about the issues from all those within Europe opposing the singe currency.

It has been surprising to me to note that the normally extensive internationalist work of the British trade unions has not in recent years reached out to those trade unionists in Europe fighting the job losses and public service cuts and manufacturing decline that have followed the Maastricht and Amsterdam Treaties. I write therefore in the hope that in tackling this question trade unions can restore their internationalist concerns.

If you would like to make any points about this pamphlet please do not hesitate to email me direct on [email protected]

Doug Nicholls,
General Secretary.
The Community and Youth Workers’ Union.


Multinational companies, malleable politicians and some union leaders, afraid the gravy train will leave without them, have formed an unholy alliance to tell us that "EMU is inevitable", in the hope that we will go along without a fight and forgetting the small matter of a referendum. In this pamphlet, some of the bright, shining lies in relation to Economic and Monetary Union (EMU) and the dangers for trade unionists of giving up on Britain are exposed. It is no good arguing on the one hand for British-made products, and on the other blessing the very single currency convergence criteria that prevent domestic production. Manufacturing production underpins the entire trade union movement and it is this that is most threatened by the single currency.

The overwhelming majority of British businesses and trade union members are, not surprisingly, opposed to Britain’s entry into the single currency. It is mainly the larger trans-national corporations that support the idea, together with a handful of trade union officials and mandarins artificially persuaded to campaign strongly on the issue over the coming two years. The European Commission (EC) and the European TUC (ETUC) and others have prioritised work to persuade British trade unions to support a "yes" vote in a referendum on the single currency.

This pamphlet has been written to encourage trade unionists opposed to the euro to hold firm and counter the lies being promoted about the single currency. It also seeks to persuade the undecided of the value of campaigning for an ability to trade freely on a world market and for the kind of full employment economy that the single currency will prohibit. We must be opposed to the single currency because we are for something much better.

If you summarise the main points of the policies of the trade union movement as a whole you find deep aspirations for: a full employment economy based on balanced industrial production across a range of sectors, investment in public services, free health and education services, publicly owned and accountable utilities and essential services, fairness at work, investment in public services and industrial infrastructure, science and technology.

Above all, the trade union movement has been identified with creating the maximum democratic accountability in the workplace and political spheres. Our history shows us continually at the forefront of the struggles to extend the franchise to the point where everyone of 18 and over, regardless of gender or wealth, can vote in General Elections for a Parliament of their choosing and local government responsive to local needs and national priorities.

None of these aspirations, particularly the democratic one, can be achieved under EMU. Within EMU our government and our Parliament become no more than a rate capped parish council bereft of powers. If it is difficult to lobby Westminster or Eddie George, the current Governor of the Bank of England, how much more difficult to lobby the unelected European Commissioners who run the EU and the unelected central bankers in the European Central Bank (ECB) who would control Britain’s economy if we entered? Another myth is espoused by some trade unionists to suggest that we can somehow make the ECB and Commissioners more accountable. This is impossible by virtue of the Treaties that enshrine their power in permanent instruments of government.

At the end of the second world war two visions competed for prominence in the future of Europe. One, reflecting precisely the line of the defeated Nazi generals and the stated position of the transnational companies and their political spokespeople in shady organisations like the Bilderberg group, planned for a single European state with one currency. It was quite clear by the 1950s that this position was directly fostered to counter the power of the trade union movement and the gains in public ownership and state run welfare provision.

Another vision, shared by most trade unionists throughout the continent at the time, looked forward to a Europe composed of peacefully co-existing independent nations. Now as then, trade unionists have to decide whether to side with the vision of transnational corporations, or with the more peaceful aspirations of working people and democratic forces.

To argue in favour of the single currency today is therefore to argue for one of the most cherished ideals of the global capitalist market. As Ernest Bevin the Labour politician once said, "The jungle doesn’t get any better because it gets bigger".

The development of a European superstate, as we have already seen in the Balkans, threatens peaceful co existence. A single European currency, dominated by the German economy, is being consciously established to form a powerful political and military bloc capable of expanding eastwards and of resisting the North Atlantic Free Trade Area (NAFTA) led by the dollar and ASEAN led by the yen. A Common Foreign and Security Policy in Europe with huge expenditure on European-wide military hardware and a centrally controlled European army are signs of gathering war clouds, not of a universal peace breaking out. It is vital therefore that trade unionists become more aware of the increasing militarisation of Europe that flows from the notion of single currency leading to single government.

A single European currency is the EU’s latest and greatest threat to our independence, to our ability to determine how we will live. Trade unions stand for empowerment and controlling our destiny. EMU takes away democratic control currently within the reach of our trade unions. Democracy is dependent upon an ability to control the monetary policies of a nation - the interest and exchange rates, and the fiscal policies - primarily how to raise and spend taxes. The two areas of government power are interdependent and basic to the question of electing MPs. The single currency takes these powers away. All that is left to play with are wages and levels of unemployment.

The EU is working hard to convince us that EMU is an inevitable force for good: it even uses our tax money to fund its propaganda offensive. What was presented in the 1960s and 1970s as no more than a ’Common Market’ has turned into a Frankenstein’s monster demanding our money with menaces. Trade unions need to wake up to the scale of the menace.


First, trade unionists should consider the four key accusations against those of us who oppose the single currency from within the trade union movement: that it is a ’right-wing position’; that Britain has somehow benefited from EU membership and should therefore go along with the move to a single currency; that monetary union will bring jobs and stability; and that we have no future outside the single currency.

1. Opposing EMU a ’right wing position’.

It is neither left wing nor right wing to oppose EMU, as the divisions within Labour and Tory ranks show. Sovereignty (national independence and self-determination) is important because it is so basic. Historically, it has been one of the great dynamics of economic development. No country run from outside will ever amount to anything. Countries should run their own affairs, especially those fortunate enough to have a highly skilled workforce, multilateral trading links and broad-based agriculture and manufacturing. The single currency represents a fundamental challenge to the ability of Britain to run its own affairs.

Conservative governments have consistently worked for British commitment to the EU. In 1979, the Thatcher government adopted the EU policy of lifting exchange controls, and so greatly reduced control over our economy. Mrs.Thatcher signed the Single European Act in 1986, which committed its signatories "to transform relations among their states into a European Union".

When John Major pushed Britain into the Exchange Rate Mechanism (ERM), only 12 Conservative MPs voted against. In 1992, John Major and Douglas Hurd signed the Maastricht Treaty, supposedly committing us to EMU and a single European government, then forced the Treaty through Parliament.

By contrast, the Labour Party has always been less committed to the EU. But in the 1980s, it weakened this stance. Labour leader Neil Kinnock backed the government’s disastrous decision to enter the forerunner of monetary union, the ERM. Then his successor, John Smith, praised its ’counter-inflationary discipline’. In 1994, the Labour Party said, "Labour supports progress towards economic and monetary union". In January 1995, Tony Blair said, "Pro-Europeans must be persuaders in the debate about Europe’s future".

However, this government has set five key tests that it believes must be met before entry into EMU. They are all important, but for trade unionists the test of the impact on employment levels must surely be the most central. Rather than help the government apply this test, some trade unionists are prepared to ignore it completely. In the eurozone unemployment is around 12% and shows no sign of falling. In Britain it is down to around 6% and falling. What level of mass unemployment will trade unionists in favour of the single currency consider acceptable to meet the test ?

2. The single currency as an extension of the EU project will guarantee industrial prosperity.

Much trade union opinion in favour of the single currency idea is based on the view that the build up to the single currency has favoured our economic base. A few facts need to be considered.

In the 16 years before we joined the European Economic Community (EEC) in 1973, our manufacturing output rose by 67 per cent. In the next 15 years after we joined, it rose by only 3 per cent. Industry by industry, import penetration destroyed jobs. A House of Commons Select Committee report of 1984 said, "It is quite obvious that EEC membership has not provided the benefits to our manufacturing industry which were promised".

  Import penetration   Jobs in the industry
  1970 1988   1970 1988
Motor vehicles 5% 53%   532,000 235,000
Mechanical engineering 20% 46%   1,200,000 705,000
Textiles 15% 52%   634,000 216,000
Clothing & footwear 13% 43%   440,000 249,000
Chemical industry 18% 42%   444,000 336,000
  Trade balance with EC   With rest of world
  1970 1989   1970 1989
(in � million)          
machine tools -10 -164   +55 -36
chemicals -58 -949   +299 +2861
aircraft +30 -82   +11 +428
telecommunications equipment +3 -851   +61 +719

Britain has always paid much more into the EU than we have got back. Colossal amounts are involved which could have been used to invest in our own economy. Britain is one of the few net contributors to the EU. In 1994/5 Britain paid just under �2.5 billion (net) to the EU and the contribution for 1995/96 was just under �3.5 billion (net). It has remained at about this level ever since. Britain contributes about 12% of the EU’s resources and receives about 8% of EU expenditure. In 1993 our contributions to the EU were calculated as amounting to �42 for every man, woman and child per annum. Moreover the EU’s budget has been increasing rapidly beyond inflation - about 11.7% a year - and so it has drawn proportionally more out of national exchequers at the time when they have been spending less on their own people. By the end of 1999 the EU has agreed to draw on about 1.27% of EU Gross National Product. The European Parliament alone cost �502.8 million to run in 1995. The best estimates show that to date since joining the EU we have paid in �30 billion net. The EU’s own Court of Auditors has estimated "conservatively" that 10% of the EU’s budget each year, about �5-6 billion, is lost to fraud. In this context, the effect of convergence criteria to meet the needs of a single currency do not look advantageous.

The ERM, EMU’s forerunner, was disastrous for Britain. Our two-year membership cost us �79 billion. Unemployment rose from 1.3 million in 1990 to 4 million in 1992 (on 1978’s statistical basis). From 1988 to 1992, national output fell by 0.3 per cent. The EU’s monetary committee admitted that the ERM did not stabilise prices or money and did not reduce inflation. Why should a single currency do any better across Europe in the long term ? All the signs are that it isn’t.

The Maastricht Treaty and the Amsterdam Treaty, which pave the way for a single currency, make an active industrial policy impossible. They outlaw full employment policies, effective welfare policies and intervention to promote leading national companies. The fundamental requirement of EMU is whole-scale privatisation.

In the trade unions we seek a high-skill, high-wage, high-productivity industrial base using the best education and training system, with advanced technologies and materials. You simply will not find the economic and political framework in any of the European Treaties to achieve this. It is a little known fact that the EU’s plans for Britain’s industrial base involve us mainly in pharmaceuticals and chemicals. Engineering and other basic industries are planned for concentration in Germany.

3. Entering the single currency would create jobs and economic stability.

EMU would install permanent deflation. To make EMU credible to the markets, the ECB will ultimately keep interest rates high, adding to deflation. This will flatten economic growth and add to unemployment. In any event, a single fixed interest rate means that the only economic tools left available to a ’government’ are wage cuts and unemployment. This bias towards deflation inevitably tends to depress growth. As John Maynard Keynes said, "Deflation does not reduce wages ’automatically’. It reduces them by causing unemployment". EMU means a perpetuation of the monetarism felt most sharply in Britain between 1979 and 1985. This is also why it is ridiculous to say that the euro will benefit manufacturing. Every public sector cut means less manufacturing and vice versa.

Trade unions have been very concerned about the high value of the pound and high interest rates, but have mistakenly seen the lower short term interest rate regime in Europe as a consequence of the single currency. It is not so, and the figures are misleading. The fact is long term interest rates have been lower in Britain for some time than the rest of the EU.

Interest rates in Europe as set by the Bank have had to be relatively low in some senses to attempt to tackle the mass unemployment there. Nevertheless low interest rates have not succeeded in curing mass unemployment or achieving major industrial investment. But the important interest rate that guarantees longer term industrial investment is, and has been for some considerable time, lower in Britain than in the rest of Europe. Long term interest rates (rates over a twenty year period) which manufacturers in particular use, are more advantageous in Britain outside the single currency area.

Similarly, trade unionists have misconstrued the real trading situation with the EU. By inflating the trading figures with the EU unnaturally, it has been argued that entry into the single currency is somehow logical.

Using official British government figures the following facts about Britain’s trade are incontrovertible. British exports to English speaking countries are growing nearly twice as fast as our exports to non English speaking countries. British exports to the EU are falling while those to countries outside the EU are rising. Above all, more British exports go outside the EU than to the EU and the proportion going outside is growing. Only 46% of British exports go to the EU and only 43% to the current single currency area. Exports, of course, include all visible and invisible trade, a fact that many trade unionists forget. It is interesting also to note that this figure of 46% was smaller in 1997 (when the euro came into being) than in 1992. Our exports to the euro countries represent in fact less than one fifth of our Gross Domestic Product (GDP). Put this another way: four fifths of the British economy is not tied up with euroland countries. Equally, only one fifth of investment in Britain comes from the EU and less than one fifth of British investment overseas goes to the EU. Furthermore, Britain has a trade surplus with every other continent except Europe. This includes, of course, the strong areas of the US and Japan. Remember also that only 11 of the 43 countries of Europe are within the euro and our trade with them is growing much faster than it is with those countries within.

There is also scaremongering in the trade unions about an inward investment strike if Britain stays outside the single currency. Again this is the opposite of the truth. Inward investment into Britain is now higher than ever and investment into Britain from non EU countries now represents over half of all inward investment into the whole of the EU area. And the trend is upwards still. The highest ever inward investment figures for Britain have just been achieved with major investors actually recognising the benefit of Britain outside the single currency. In 1999 there were 652 new major investments in Britain accounting for 120,000 jobs. Hardly a sign of panic by the world markets and manufacturing investors. EMU is also undeniably bad for all the other members of the EU which have already seen unemployment rise and public services diminish. The United Nations Conference on Trade Aid and Development (UNCTAD) predicted that EMU would increase EU unemployment to 15 per cent, putting another ten million people out of work. UNCTAD also predicted that EMU would cut economic growth to zero. The EU’s own Employment Committee agreed ! We cannot honestly say that the first months of the euro have suggested these predictions are wrong.

As Keynes said, "Whoever controls the currency, controls the government". Under a single currency, all Britain’s gold and currency reserves would be transferred physically to the ECB. This leaves nothing in reserve for a rainy day and again demonstrates how it will be wages and employment levels that will become the safety net for profits. Sadly, the process of transferring our reserves has already begun. The EC says that the new Bank’s governors "will not take instructions from national governments or community authorities". This removes all democratic control of these powers and this clause cannot be changed.

Gordon Brown said to Parliament that there was "no question of giving up our ability to make decisions on tax and spending". But Hans Tietmeyer, Chairman of the Bundesbank, made it quite clear: "A European currency will lead to member nations transferring their sovereignty over financial and wage policy, as well as in monetary affairs. It is an illusion to think that states can hold on to autonomy over taxation policy". Even the ETUC has argued for a complete harmonisation of all tax regimes. And remember Britain’s tax burden is less than in most countries in Europe and is based far less on indirect, VAT type taxation. Even if a British government wanted to reduce tax on fuel below 15%, for example, the EU would make this illegal.

A single currency would be a giant stride towards a single European state. German Chancellor Helmut Kohl made no bones about it when he said, "We want the political unification of Europe. If there is no monetary union, then there cannot be political union".The single currency poses the trade union with a political, not an economic question.

On the continent of Europe no one thinks that EMU is an economic matter. Everyone knows it is about the creation of one government for Europe.

4. We do not have a future outside the single currency.

Britain has all the wealth it needs for investment and growth and full employment. We are the fourth largest economy on the planet. We are one of the most productive of the 200 or so independent nations. We lead in many of the new and cutting edge industries whether it be e-commerce or biotechnology. The economy of London alone is bigger than that of oil-rich Saudi Arabia. British companies invest nearly two trillion pounds abroad. Direct investment in Britain by other countries is increasing. And importantly there is no real sign that these investors will leave us if we stay outside the euro. There has been a lot of confusion on this question since when a couple of large foreign-owned companies backing the euro project have sought to interfere on this question.

Rather than being cold, alone and impoverished, life outside the euro is clearly the most attractive proposition for trade unionists, maximising advantage and opportunity. If the EU is the only card game in town, give up gambling. Extreme risk taking is not within the spirit of the British trade unions. It is not difficult to sketch out a viable alternative.

Wealth produced in Britain could be used here, if we controlled the export of capital as we did prior to 1979.

A determined people and government could redirect the savings presently tied up, for example, in building societies and bank Deposits. We could change the rules governing the investment criteria of pension funds. A quarter of all Britain’s capital is in these funds, which are deferred wages, belonging to workers. We should use them to create a future and sustained industrial and infrastructure investment. We could change the rules applying to local authorities and enable them to borrow domestically in order to invest in programmes of rebuilding essential services. This would benefit both public sector and manufacturing based trade unions.

We could redirect profits into training and into modernising plant and machinery. The power of millions of people brought back into productive work would increases resources for education, health, transport and housing.

We could take up the lead given by clothing and textile workers and say make it and buy it in Britain.

We could improve conservation and recycling, saving precious resources. We could reclaim our waters for fishing, based on long-term conservation. Set-aside, a criminal non-use of good land, would end. Greater self-sufficiency in food would underpin a programme aimed at creating good health. Environmental protection can also be a net creator of jobs, as much of the trade union research has already revealed.

It doesn’t take long to suggest a simple action plan for trade unions if we had a government in charge long term that we elected. Without such a government there will be no chance.

I now consider some of these headline issues in more depth.

In Section One, I look in turn at the areas where trade unionists are likely to be hit hardest by the single currency: public services, wages and jobs, some case studies in manufacturing industry, and the urgent need for investment in manufacturing. Then, in Section Two, I examine the declared political aim of the single currency: a single state. In Section Three I consider how a single state in Europe is creating a more dangerous foreign policy environment. Section Four presents a positive way forward for Britain outside the euro and stresses that we have everything to gain and nothing to fear from such a future.



1 Public Services
We are told that there is a European model of charitable state activity and brilliant welfare systems. The truth is Europe is no longer a place which respects social provision through public services: the attacks on public services throughout the EU show that monetarism has now been adopted across the continent. This is what has caused the huge public demonstrations strikes and general strikes throughout Europe in the last few years, about which trade unionists in Britain have heard very little. Monetarist deflation means more taxes and lower public spending. Meeting the Maastricht Treaty’s criteria for EMU caused governments to make public spending cuts across the EU, increasing unemployment, reducing wages and worsening public services. Governments that adhere to the Maastricht Treaty must attack the public sector. The Major government cut public spending and increased taxation, cutting the rate of growth in real take-home pay and sharply reducing labour’s share of national income, to meet the convergence criteria. The 1994 and 1995 budgets took �15 billion off public spending. Gordon Brown has said that he will retain until 2001 the public spending squeeze that the Conservative government imposed. Consequently, according to the Local Government Association, local authorities faced a shortfall in their budgets of about one billion pounds in 1998-99. For public sector workers, this meant the loss of thousands of jobs. Entering the euro would mean lower social spending and benefits, more privatisation, more use of the Private Finance Initiative, and more deregulation. Also, Britain has the only National Health Service in the EU that is free at point of use. The Maastricht Treaty, ominously, calls for an EU policy on health. Will we opt out of our NHS ? The Private Finance Initiative (PFI), so opposed by so many trade unions, is of course a central pillar of the Amsterdam Treaty’s privatising goals. The EU is now for example trying to stop France from preventing the floating off of the electricity supply industry.

2 Wages and jobs
EMU would be Thatcherism on a European scale. It is designed to accelerate the free movement of capital. Its aim is to rid the EU members of industrial ’over-capacity’ by mass redundancies and closures. EMU itself would intensify this bias towards deflation. Entering the euro would mean lower wages, more labour flexibility (all in Delors’ 1992 plans) and deflation. Even the Governor of the Bank of England, Eddie George, says it will mean more lost jobs and lower growth. The Maastricht Treaty’s criteria for joining EMU are innately deflationary: those countries that do not meet them must deflate; those that do meet them need not reflate.

The Maastricht Treaty puts price stability before prosperity, rising living standards, economic growth or full employment. There is no EU-wide employment strategy: the EU Council in Florence in 1996 typically rejected plans to invest in transport and communications. Sir Nigel Wicks, Chair of the EU monetary committee, said "I would not regard monetary policy as an instrument for solving unemployment". The Treaty is embodied in the ECB, whose members are not accountable to national governments or parliaments. Instead they depend on the unaccountable secret power of private financial and banking institutions, particularly the International Monetary Fund and the World Bank. They would decide monetary policy for their own gains, not for the public interest of mobilising resources for production and employment. The Bank is bound by Treaty not to take instructions from elected national governments (in fact it is illegal for elected national governments to try to influence the Bank;: we could be fined for trying). The Bank is forbidden to lend to national or local governments either.

In the EU in the 1990s, unemployment and profits rose, while wages and investment fell. Despite the earnest piffle of the Social Charter, designed to create a sugar-coated propaganda pill for EMU, it cannot ultimately change the flavour of a single currency which is guided by the ’free market’ economics and the ’slash and burn’ industrial policy familiar in Britain throughout the eighties. Article 3a1 of the Maastricht Treaty says that members must adopt "an economic policy which is conducted in accordance with the principle of an open market economy with free competition". The EU’s 1988 Cecchini Report predicted that the single European Market would raise the EU’s gross domestic product by 7% and create five million new jobs. In fact, it accelerated decline and caused savage job cuts. The European Commission admitted in 1993, "The Single Market programme has done more for business than it has for workers". EMU is an extension of this.

Hans Tietmeyer, Chairman of the Bundesbank, said: "The single currency does not mean more stability but it means more flexibility in the European labour market". The Bank of England pointed out that when devaluations are forbidden, the only means of adjustment are wage cuts and mass emigration. The Bank’s 1989 Report said: "With the reduction of exchange rate variability, it is important for the wage system to become more responsive to considerations of competitiveness". Ending national borders makes it easier for employers to reduce wages by playing workers off against each other. If governments give up both monetary and fiscal policy controls, then all that is left is pressure on wages to control the economy.

The Bank also observed, "For EMU to be sustainable, the economies of countries forming the union must be similarly competitive or else some countries would be faced with the equivalent of a constant balance of payments deficit which, in EMU, would be reflected in terms of stagnation and unemployment". An internal European Commission paper leaked to the Financial Times on 16 August 1993 said that EMU would cause massive unemployment.

Some say that the Social Chapter will compensate for all of this. However, the Chapter does not cover small and medium-sized businesses. It does not protect pay, or the right to strike or most other forms of industrial action, or the right to belong to trade unions. It has done nothing for the 18 million unemployed in the EU. The EU’s overriding goal is profit. As Jacques Santer, then President of the European Commission, told the CBI in May 1995, "we must keep all our relative international costs as low as possible to maximise our competitiveness".

The EU wants to weaken independent trade unions. It wants to introduce Works Councils, to reduce our centuries-old traditions of representative collective bargaining, of industry, of national independence and national unity.

And some in the labour movement have argued that staying out of the euro would increase unemployment. The Amalgamated Engineering and Electrical Union (AEEU) in its document ’The case for the single currency’ asserted that staying outside the euro would jeopardise jobs because we would lose inward investment and we would lose access to Europe’s markets. In fact, if we remain outside the euro, investors would still want to invest here as all current evidence shows. But in any case, do we want our industrial future to depend on the decisions for profit made by outside investors? Outside the euro, we would still have access to European markets: our customers would still want to buy our goods. If joining the euro removes the last barriers to trade, how could staying outside it lose us access to EU markets? EU countries need our exports far more than we need theirs.

The AEEU argue that joining the euro will bring significant improvements by ending transaction costs, but every businessman knows that these costs are avoidable and therefore negligible. Several trade union research departments state that joining the euro would reduce interest rates, but we can reduce interest rates whenever we want. In fact, we can and should gain competitive advantages by cutting interest rates and by lowering the value of the pound against the euro.

The AEEU and others have recognised that the ECB is unaccountable and secretive, and call for reforming it so that it becomes more accountable and open. But unions have failed to recognise that the ECB’s status, however unsatisfactory, is written into the Maastricht Treaty, a Treaty that all the participating governments have accepted. It is too late to talk of reforming a Treaty after it has been signed! The ECB, which will run the single currency, has one purpose - that of achieving price stability rather than prosperity, full employment, or growth - which is also enshrined in the Treaty. Above all, union apologists for the single currency conveniently forget the stability of sterling on the world scene. Obviously the dollar is the benchmark currency for all world currencies. Against this, because of our enormous trading links with the United States (US), the pound has been one of the most stable currencies, while of course the euro has declined and proved highly volatile.

3 Some case studies in production.

Trade unions have not considered the effects of the proposed entry into the single currency in the round. Below are some outlines of staple productive areas of the economy which have been significantly effected by the long process of preparing for integrated economies in Europe and one currency. Central to this process has been the idea of concentrating areas of production, rather than enabling individual nations to have economies based on balanced and diverse economies. This explains why so many staple industries have been badly effected.

a Agriculture
Spending on the Common Agricultural Policy (CAP) rose from �19.4 billion to �30.2 billion, up by �10.8 billion, more than Britain’s entire education budget. The CAP is a nonsense, by which the EU pays farmers not to produce food, to keep food prices high. During the 1980s, EC food prices were on average 70% higher than those in the world market. The CAP costs every family every month as much as the poll tax ever did, an estimated �64 for a family of four. In 1995 alone, the EU spent �439 million on destroying food. The CAP gave 13 companies and landowners �500,000 each; 5000 big farmers got �50,000 each. That is a total of �256.5 million in subsidies just to these 5013. 80% of subsidies go to 20% of farmers. Between 1990 and 1994, over 300 abattoirs were closed down, destroying jobs and causing needless suffering to animals which had to be transported ever further for slaughter.

Sixteen per cent of our agricultural land has been ’set aside’. We now produce only 56% of the food and animal foodstuffs we need, compared with 62% ten years ago. Fifteen per cent of our orchards were grubbed up last year, in return for EU grants. We now import over 60% of the apples we eat. The EU obliges us to produce only 85% of the milk we need, while our farmers spray milk onto fields to avoid exceeding their quota.

A report from the Ministry of Agriculture, Fisheries and Food in 1995 detailed the CAP’s failings but concluded "most other EU governments appear strongly attached to the CAP in its present form". So it is impossible to reform the CAP, although all parliamentary parties endlessly pledge their intent to do so. The only way to improve our situation is to leave the CAP.

Properly led, Britain could make a surplus in agricultural production and make a great contribution to relieving starvation throughout the world.

b Shipbuilding and ship repair industry
The EEC offered various subsidies and an Intervention Fund to member countries if restructuring, i.e. closure, took place. As the nationalised industry fought for this, closure after closure occurred. Marine engineering, engine building and R & D all but disappeared. There were three categories of shipyards: 1. Merchant, which could get Intervention Funds; 2. Composite Naval and Merchant, that got limited funding; and 3. Naval, that got no funding. Once a yard declared itself either 1, 2 or 3 it could not change. Composite yards were Swan Hunter and Cammell Laird. We know what has happened from privatisation of what was left of the industry.

c Motor vehicle industry
In 1970 import penetration of Britain’s domestic market was only 5%; by 1990 it was 51%. As a result British output declined from 1.9 million vehicles to 1.29 million. In 1973 each Ford, Vauxhall or Peugeot Talbot car had an average British component content of 91%; by 1984 it was only 34%.

d Iron and steel
EEC restructuring made available cash to close the industry. Remember Corby, Consett, Shelton Bar? As with shipbuilding, buying into the EEC meant closure. Both the ferrous and non-ferrous founding industry followed the same EEC path - cash and closure.

Much of the trade union leadership rushed to Brussels for security and as a coward’s castle, blaming the EEC while blessing it. While industry was closed, regional trade unions and the Labour Party pursued inward Investment (e.g. Nissan) and the establishment of regional government.

e Fishing
Fish is a major part of our national diet. The fish stocks in the British waters of the North Sea (60% of the EU’s total) are a great food resource for the world. Fishing is the livelihood of thousands of British workers, and indirectly of thousands more. The EU’s Common Fisheries Policy (CFP) threatens all this. It aims to make all fish off Europe’s shores a ’common European resource’. All the EU’s various fishing fleets will be able to fish all of Europe’s fishing grounds, including our 12-mile coastal belt, by the end of 2002. This is theft of our property, our sovereign waters.

A meeting of fishermen in Plymouth in January 1995 issued a statement on the CFP: "This agreement represents the culmination of over a decade of systematic destruction of the fishing industry of this country. We no longer see any future for us within the framework of the Common Fisheries Policy. We therefore demand that this Government withdraw from the Common Fisheries Policy forthwith". They want to ensure "that the fish around our shores within our sovereign waters are managed and conserved in such a way that there will be a fishing industry in this country for generations to come".

Since we joined the EC, the amount of fish that British vessels have landed has fallen by 40%. Imports have more than doubled. Our quota is grossly inadequate, only 30% of the total EU fish catch. The government has agreed to Spanish vessels fishing the Irish Box, part of our sovereign waters, from January 1996. The European Court of Justice overruled the 1988 Merchant Shipping Act. (Now the Blair government is prepared to pay a fine of �80 million because we supposedly broke EU law by passing this Act!) By this Act, UK-registered vessels had to be at least 75% British-owned, to prevent the Spanish fishing fleet participating in the British quota. The British government servilely obeyed the Court. A government that allows foreign fishermen to fish its waters, while preventing British fishermen from doing so, is a government that has given up on Britain.

There is no international law to conserve fish stocks, largely because the EU refuses to agree to any proposals. For instance in July 1991 it failed to agree to a proposed ban on drift nets longer than 1.5 miles. The British Government, which had in 1989 supported a UN Resolution banning such nets, supinely followed the EC and refused to impose a ban. The EU has repeatedly breached international conservation decisions and it has backed the Spanish and Portuguese vessel owners who breach even the EU’s overgenerous unilateral quotas.

f Oil
A new conflict with the EU is approaching over the vast new oil deposits in the North Sea. The EU wants to ’communitarise’ 90% of North Sea oil. This squashes the Scottish National Party’s claim that it is Scotland’s oil; their EU friends would take it.

4 The urgent need for investment in Britain’s manufacturing industry

Entering the euro would prevent us from rebuilding Britain and modernising the industrial infrastructure. The Maastricht Treaty installs a permanent deflationary package. It keeps interest rates high, when we need long-term, low-interest funds for investment in manufacturing industry.

In 1971, Prime Minister Edward Heath told us that joining the Common Market would have ’positive and substantial’ effects on our balance of payments. What happened? In 1970, we had a �385 million surplus in trade in manufactured goods with EU countries. By 1990, we had a deficit of �8.5 billion. From 1973 to 1995, our accumulated trade deficit with the EU was �100 billion. By contrast, we had a trade surplus with every other continent: our accumulated trade surplus with the rest of the world came to �80 billion. Britain’s 1998 deficit in trade in manufactured goods was �21 billion, the worst ever.

Britain’s whole economy grew 3.1% a year from 1953 to 1973, when we joined the EEC, but only 1.8% a year from 1973 to 1995. Between 1979 and 1991, our unemployment averaged 2.3 million. Another 1.2 million wanted work but had despaired of finding it.

Before the Conservatives took us into the ERM, the single currency’s forerunner, they told us it would bring prosperity, lower interest rates, lower prices, a stable currency, higher wages and more jobs. Instead we got the worst slump for 60 years. National output fell, manufacturing output fell by 7% and manufacturing employment fell by 14%. Excessive interest rates made borrowing painful for companies, councils and homeowners. We had record numbers of bankruptcies and home repossessions. We were told at the time that this was a price worth paying, but now even some trade union leaders deny the scale of the tragedy.

The Treasury said that leaving the ERM would inevitably lead to higher interest rates, and that lower interest rates were possible only in the ERM. In 1978, the Callaghan government had rightly rejected entering the ERM, warning that it would "result in unnecessary deflation and unemployment". But in 1990, Neil Kinnock and the Shadow Cabinet backed John Major’s disastrous decision to enter the ERM. Even after we had been in the ERM for two disastrous years, John Smith said "the benefits of the ERM in terms of stability far outweigh its disadvantages". Now the same people who told us that the ERM would be good for us tell us that entering the euro would be good for us.

EMU would be bad for Europe, not just for Britain. EC members created an ERM in 1979. It slowed growth and raised unemployment across the EC. Under the ERM, EC members’ economies grew by only 1.7% a year; unemployment averaged 7% and inflation 7.8%. The ERM cost France 700,000 jobs and Italy one million jobs. It kept the poor countries poor; it did not help them to meet the Maastricht criteria. Spain’s experience of the ERM was catastrophic: 22% were unemployed. The ERM forced Denmark into recession: unemployment doubled to 12%, the budget was slashed, and investment, output and wages all fell. Ireland’s unemployment soared from 11% to 23%. During the 1990-92 slump, EC members did far worse than non-EC members.

In the same period, the rest of the world’s economies grew by an average 3.2%, so the EC’s slow growth was not due to world conditions. From 1990 to 1993, growth ceased altogether. After the ERM died in 1993 (in its earlier form), growth resumed: 2.9% in 1994, 2.4% in 1995.

The single currency directly damages investment prospects. It removes legal restraints on institutional investment in non-domestic assets. Fund managers, who typically invest over half their portfolios in home markets, since 1 January 1999 have been able to invest this proportion in the ten other countries in the eurozone. It is estimated that this could lose us $500 billion in equity investment, which would flow into continental European equities. This huge capital flight would inflict yet more damage on British industry.

Our economy is not ’converging’ with the other EU members’ economies. It is, and will remain, different: we have for instance a greater range of industries, a more efficient agriculture, a pre-eminent financial sector, oil and gas resources and uniquely fertile fishing waters. As John Smith told Parliament in January 1991, without convergence of the members’ economies, "monetary union ... would create unbearable strains within the Community, threatening fragmentation rather than integration". This is why the EU seeks to diminish the diversity of Britain’s manufacturing base.

If the government chose to join EMU, and if we let them, the EU would make us join at the pound’s present uncompetitive rate to suit them, not us, just as they did when Italy rejoined the ERM. The President of the ECB has said, "policy will be directed towards the French and German economies ... smaller fry with other needs come second ... ". Britain, despite its significant global advantages, is ’small fry’ in euroland.

A Bank of England report of November 1999 estimated that joining the euro could cost Britain �9 billion a year. Loss of sovereignty over interest rate decisions could mean losing the equivalent of more than one per cent of national income every year. It stated: "Monetary union requires one official interest rate. That may entail some countries setting their rate at a level that they would not otherwise have wanted". It also concluded that entering the euro would make the economy less, not more, stable.

A report from the Economic and Social Committee of the EC stated that: "In the light of the Commission’s analysis, a scenario could be imagined in which the euro exchange rate is initially fixed at a level quite different from that suggested by the fundamentals of the European economy in all its diversity. The European Central Bank could in fact be obliged to impose an excessively tight monetary policy and to raise interest rates in response to financial market scepticism as to the objective of price stability arising as the result of policies pursued by certain countries". Not surprisingly, on 4 November 1999, the Bank of England raised interest rates from 5.25 per cent to 5.5 per cent, and the ECB raised interest rates in the euro-zone for the first time in its history, from 2.5 per cent to 3 per cent. Bear in mind always, these are the short term rates known to us all for the effect on our mortgage repayments and loans. But in order to sustain a country, long term rates need to be low. In Britain they have been lower than the rest of Europe for some time.

Unemployment in the EU is still 18 million, which equals the entire populations of Denmark, Belgium and Ireland put together. Forty per cent of that number are young people less than 25 years old who have never had a job. The EU isn’t working, because monetarism is in command: the EU has no budget to deal with unemployment. It is not a full employment economy, nor is it on its way to full employment. The single currency would give it neither a budget nor a mechanism to solve the unemployment crisis.



So the economic case for EMU is not proven, far from it. What about the political case?

In 1979, the Thatcher government adopted the EU policy of lifting exchange controls on the flight of capital, so reducing our control over our economy. In 1983, Mrs.Thatcher signed the Solemn Declaration on European Union, which committed Britain to "a united Europe", to the "convergence of economic development" and to "progress towards Economic and Monetary Union". She signed the Single European Act in 1986, which committed its signatories "to transform relations ... among their states into a European Union". It also extended the practice of majority voting. By signing it, the Prime Minister accepted the principle of EMU. It was ’a giant stride along Europe’s road to full union’, as a leading member of the European Movement said. Mrs. Thatcher, as a lawyer, of course read the small print and knew what she was signing, however much she tries now to deny it. She guillotined it through Parliament. In 1989, she endorsed the Delors Committee’s recommendation of a single currency, when she could have vetoed it.

And certainly EMU would compromise Britain’s sovereignty. John Major, when Chancellor of the Exchequer, told the Treasury and Civil Service Committee on 25 July 1990, "the Delors package for Stage Three would involve transfer of sovereignty from the United Kingdom and from Parliament of a sort that neither the government nor Parliament would find themselves able to accept".

Under EMU, the ECB would control our new currency, the euro, so it would control the government. ECB control of the government would mean that the British people did not and could not control it. Within a single currency system, we could vote in a British general election (as we did in 1997) for a positive future of high growth, thriving industry and public services, but we would find that our vote made no difference. If we wanted to spend money on investing in industry, or to raise taxes for the richest, we could be fined under the EU’s deficit rules.

So in a single currency we would no longer be able to run our own affairs. Sovereignty and democracy are indivisible: if we threw away our sovereignty we would be throwing away the rights of every future generation to determine their own futures. We would be throwing away the right of every future government, whatever its form, to govern Britain in Britain’s interests.

The EU’s leaders want a single European state. The Bundesbank’s Annual Report of 1995 said, "As a monetary union represents a lasting commitment to integration which encroaches in the core area of national sovereignty, the EMU participants must also be prepared to take further steps towards a more comprehensive political union". Helmut Kohl said, "The Maastricht Treaty introduces a new and decisive stage in the process of European Union, which within a few years will lead to the creation of the United States of Europe". He also said, "We want the political unification of Europe. If there is no monetary union, then there cannot be political union, and vice-versa". The German Christian Democratic Union has consistently called for a single state in which the European Commission would "take on the features of a European Government". Oskar Fontaine, Germany’s ex-Finance Minister, said that "the United States of Europe has been the aim of the [German] Social Democratic Party all along".

Jacques Delors said, "Yes, we have to have transfers of sovereignty to achieve economic and monetary union". He told the Madrid Summit of 1990 that there would be an ’embryo European government’ within five years. The European Commission intends that no member nation should retain any independence. Delors said that in future 80% of the laws governing all economic, social and fiscal affairs would derive from the Commission. Nobody would have a veto on anything: no veto on the EU’s treaties, no veto on economic and monetary policy, no veto on foreign and defence policy. Britain would be left with only the ’right’ to be permanently outvoted and overruled.

In Romano Prodi’s first speech as President of the European Commission to the European Parliament in April 1999, he said, "We must now face the difficult task of moving towards a single economy, a single political unity". Wim Duisenberg, President of the ECB, said "the process of monetary union goes hand in hand, must go hand in hand, with political integration and ultimately political union. EMU is, and was always meant to be, a stepping stone on the way to a united Europe". Hans Tietmeyer said that "a country that merges its currency with that of another cannot be politically independent".

Gerhard Schroeder, the Chancellor of Germany, said, "The introduction of the euro is probably the most important integrating step since the beginning of the unification process ... it is certain that the times of individual nation states are definitely over ... the internal market and the common currency demand joint co-ordinating action ... to bury finally some erroneous ideas of national sovereignty ... national sovereignty in foreign and security policy will soon prove itself to be a product of the imagination". Germany’s Foreign Minister Joshka Fischer said "transforming the EU into a single state, with one army, one constitution and one foreign policy is the critical challenge of the age".

Karl Lamers, Kohl’s spokesman, said that "economic and monetary union is the central part of the project for European unification". The former Spanish Prime Minister Felipe Gonzalez said "the single currency is the greatest abandonment of sovereignty since the foundation of the European Community ... it is a decision of an essentially political character ... we need this united Europe ... we must never forget that the euro is an instrument for this project".

In 1972, Edward Heath told us that there was "no question of eroding any national sovereignty" and that "there will be no blueprint for a federal Europe". He also said that "there are some in this country who fear that in going into Europe, we shall in some way sacrifice independence and sovereignty. These fears I need hardly say are completely unjustified". In 1989, he admitted that "The aim was, and is ... ever closer political union. The means ... were and are economic". In 1990, Heath was asked if he had in mind in 1972 "a United States of Europe": he replied, "Of course, yes".

Romano Prodi said in November 1999, "Here in Brussels, a true European government has been born". He went on to say, "I have governmental powers, I have executive powers for which there is no other name in the world, whether you like it or not, than ’government’".

Some in the labour movement may like to believe that the EU is a barrier against global capital, but it is not: its growth is part of the globalising of capital. Some appear to think that the EU is, or could be, a hindrance to US imperialism, or that its currency could rival and overthrow the dollar. But the US state has always backed moves towards a single European state.

Further, it is worth noting that the EU seeks to make us ’converge’ with the other EU members politically as well as economically. The programme of devolution is driven by the EU’s demands not by popular request. In practice, devolution has moved power not to people but to politicians, and not even to a new lot! Proportional representation too is being imposed in order to make our polity converge with the rest of the EU. The drive towards state funded political parties will eventually remove the British trade unions from political influence.



Many trade unionists say: ’If not a single currency, then what ?’ The question is asked as if we are weak. As indicated already, Britain is the fourth largest economy in a world of 200 independent countries, with trading links throughout the world. We have little to fear of being outside one particular currency club in a low growth area of the world. The way forward involves common sense, internationalism and a commitment to peace. Here are some simple pointers reflecting existing trade union policies.

We want genuine internationalism between sovereign nations. We must assert our sovereignty, while of course respecting the sovereignty of all other nations. We want sensible and equitable dealings with all the other peoples of our world. The case against EMU is untainted by xenophobia, although it is routinely branded as xenophobic. But then, those who ran the British Empire described all national liberation movements as xenophobic and all those who opposed the expansion of the capitalist empire as "little Englanders.

Trade unionists have never supported the unfettered dominance of finance, the operations of speculators or of transnational companies within a free ’globalised’ market. Instead, we seek not to float Britain in the ’global’ market, but to reinforce the domestic economy and to maintain control over the levers of decision making in politics and economics. Trade unions could help a government redirect profits into training and into modernising plant and machinery, rebuild our transport, coal, oil and gas infrastructures. We could improve conservation, reclaim our waters for fishing and end the misuse of our agricultural land. Greater self-sufficiency in food could underpin a national programme of food consumption to improve health, starting with reintroducing a system of school meals and universal access to preventative health care.

Britain has one per cent of the world’s population and accounts for six per cent of all research and development. We are one of the world’s largest and most advanced industrial economies; we would still be so outside EMU; we would not become a Greater Guernsey. We have advanced technology, arts, science, engineering, telecommunication and medical knowledge. The capital produced in Britain could be used in Britain, if we stopped its export. British companies invest �35 billion abroad every year; a determined government and people could redirect this into modernising plant and machinery, setting up new industries and firms, rebuilding our transport and energy systems.

We could tackle the unemployment problem by consciously setting about to create five million decent jobs. The cost of creating a real job is �100,000, (less for some occupation areas) so five million new jobs will cost �500 billion. A three-year programme of investment, assuming 4% inflation, will cost �32,000 per worker in the first year, �33,000 in the second year, and �35,000 in the third. For this, we do not need to create new taxes, or to increase taxes, or to spend any extra money, or take out new loans, or undertake deficit spending. The state already takes far too much of workers’ money, and borrowing always implies higher taxes sooner or later, to pay the interest. We can do it just by shifting spending from unnecessary areas to these needed investments.


It is beyond belief that at this time in our history as a trade union movement we could on the one hand correctly condemn the Bank of England for its anti-growth obsession with fighting inflation by means of high interest rates and a high pound, while suggesting incorrectly on the other hand that we may be prepared to ultimately give over these fundamental levers of our economy to a European Central Bank, run by 21 unelected bankers who will meet under the terms of the Amsterdam Treaty ’in secret’ and who will be specifically forbidden from heeding any influence from their national Parliaments. This would be a hostile take-over indeed. If Eddie George is difficult to persuade beyond his one line job description now, how much more difficult to influence the ECB as a trade union movement in the future ?


There are many Labour Movement related works analysing the single currency. What follows is a short selection chosen with affordability and ease of access in mind.

World Wide Web
One key starting address is given and from here you will be able to navigate a startling array of solid argument about the single currency.

There is an alternative: Britain and its relationship with the EU.
Brian Burkitt, Mark Baimbridge and Philip Whyman, 1996, ISBN 0951964216, 111 pages, �3.50, the Campaign for an Independent Britain, 81 Ashmole Street, London SW8 1NF. A pow


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