Monday, 10 October 2011

Nick Clegg on the Euro

Here's Nick Clegg in January 2009 advocating that Britain should join the Euro:
Mr Clegg says he is not pushing for immediate entry and admits that the past housing bubble might have been even worse had Britain been tied to eurozone interest rates.
But he says the “page has been turned” in economic policymaking, highlighting the need for an “anchor” against the “incredibly vulnerable exposure to international financial markets”. Refusing to discuss the euro is a “failure of political leadership”, he says.
and here he is being interviewed at his party conference recently:
"I think, clearly, with the benefit of hindsight, you can say [joining the Euro] would have been a huge, huge error,"
"I don't think anyone could have predicted at the time the euro was created that the rules which were supposed to be in place to ensure that everybody looked after their own financial affairs properly would be so spectacularly ignored and broken.
"I think history will judge the then French and German governments very, very unkindly who, some years ago, basically signalled that the rules could be relaxed because that then sent a signal out to everybody else - oh well, we don't need to keep our house in order.
I don't think it would have been very difficult to predict in 2009 that the rules would be ignored. Here's an official EU report from 2006.  Table A.2.1 shows that Belgium (1995-2007), Germany (2002-2007), Greece (1997-2007), France (2003-2007), Italy (1995-2007), Austria (1995-2007), Portugal (2005-2007) were all in breach of the 60% limit imposed by the Stability and Growth Pact on debt to GDP ratio, and that Greece and Italy were the worst offenders, having had a ratio over 100% ever since 1995.

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