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Has the single currency proved its worth?

15 January 2019

4:22 PM

15 January 2019

4:22 PM

Against a background of drooping eurozone growth (the consensus forecast is 1.6 per cent this year) I met no one in France who was celebrating the 20th birthday of the euro, despite European Commission president Jean-Claude Juncker’s imaginative toast to it as ‘a symbol of unity, sovereignty and stability [that] has delivered prosperity and protection for our citizens’. The French associate the euro with the inflation that is stoking unrest, but only the very old feel nostalgic for the franc (and they tend to mean the pre-1960 ‘old franc’, of which there were 100 to the new one).

In summary, southern Europeans, especially Greeks, regard the euro as an instrument of German hegemony, while for Beneluxers like Juncker, it’s clearly more efficient than the tinpot currencies they had before. The Irish regret gambling with it in their ‘Celtic tiger’ days but still see it as a symbol of progress. The Germans regard it as a cost of cementing the European project but hanker for the deutsche mark which was such a focus of national pride.


The broader truth is that all but the most radical EU fringe regard the euro as a fact of life and no one expects it to fall apart any time soon, even if it might not last forever. Does that mean — contrary to the tub-thumpings of Brexiteers — that the single currency has conclusively proved its worth? As a blunt instrument of Juncker’s ‘unity’, maybe: as an engine of prosperity, no.

Forgotten are the golden rewards predicted before the euro’s 1999 launch. But an old notebook tells me precisely how EU commissioner for economic and financial affairs Yves Thibault de Silguy replied in January 1998 when I asked him what the new currency’s economic impact would be: ‘1 per cent extra growth and several hundred thousand jobs.’ Though we can never know what the counterfactual might have been, no one has subsequently claimed anything like such gains for the euro to compensate for pain caused in other ways.

This piece first appeared in Martin Vander Weyer’s ‘Any Other Business’ column. 


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