European Currency Threat to British Independence Warns Panel

By Patrick Goodenough | July 7, 2008 | 8:07 PM EDT

London ( - An independent panel of experts commissioned by the Conservative Party leader, William Hague, has come out strongly in support of Britain retaining the pound sterling, rather than join the single European currency.

Not only does surrendering the national currency carry economic risks, said commission chairman Sir John Nott, it would also lead inevitably to closer political union, "which I believe is overwhelmingly opposed by the British people."

The report is a major boost for keep-the-pound advocates engaged in one of the most important political debates in the country today, between camps dubbed "europhiles" and "euroskeptics."

But Hague himself seems reluctant to capitalize on it - and on recent surveys showing that more Britons are opposed to joining the European currency, the euro, than ever before.

While he welcomed the finding, the Conservative leader stopped short of ruling out ever scrapping the pound in favor of the euro. The party's policy remains that it is opposed to joining the euro at the next general election, while keeping the option open for the future.

"I don't say never," said Hague of the possibility of ever endorsing dropping the pound. "I don't need to rule it out for ever."

At the same time, he called the commission's findings a "devastating" blow to the anti-pound campaign.

The Nott Commission chairman, a banker and former Conservative minister of trade and industry, did not attack the euro itself, saying British companies exporting to Europe would have to deal with it.

But he and the panelists agreed that exchanging the pound for the euro would lead to closer integration of Britain into the European Union, a relinquishing of both economic and political independence.

While the panel was loaded with "euroskeptics," not all came into the six-month commission with the same views on the advantages or otherwise of keeping the pound.

One commission member, financial correspondent Neil Collins, said Thursday "the case for joining the euro never looked remotely convincing ... the real disappointment is the refusal of the europhiles even to join the debate."

Hague, too, noted that scrap-the-pound proponents did not make clear their arguments in favor of joining the euro, "because they are not confident of their case and know the people of Britain oppose it."

Two major campaigns on either side of the debate are the pro-euro "Britain in Europe" lobby, and the pound-backing "Business for Sterling."

Chaired by British Airways chairman Lord Marshall, Britain in Europe was set up in March to convince Britons why the country should join the euro. But it took a serious blow in European Parliament elections in June, when Britain's Conservatives, running on an anti-euro platform, roundly thrashed Tony Blair's ruling Labor party. Smaller parties opposed to joining a single European currency also did well.

In a statement sent to Thursday, Business for Sterling said it enjoys the backing of a cross-section of large and small businesses and industry.

Although it supports keeping the pound, it is not opposed to the single monetary union in itself. Its members "wish the euro well for the countries which have chosen to participate," but believes that the benefits in joining for Britain would be outweighed by the disadvantages.

Business for Sterling noted that its rival, Britain in Europe, had since the June elections "watered down" its message, removing almost all references on its website to the euro, while highlighting its support for mere membership of the EU.

Addressing Conservatives in London's financial district shortly after those elections, Hague suggested Britain's financial success could be jeopardized "if we join the eurozone and link our economy to economies with higher taxes, less labor market flexibility and more government interference."

For the third consecutive month, a regular survey carried out in August found that more than 60 per cent of Britons opposed joining the euro. Support had dropped to a new low of 24 per cent, down from 36 per cent when the euro was launched in the rest of the European Union last February.

Patrick Goodenough
Patrick Goodenough
Spencer Journalism Fellow