Adopting the Euro

The call by Alex Salmond for a rethink about joining the Euro seems a merry jape that no-one should take too seriously, were it not for the fact that Mr Salmond himself seems to think that it is a clever idea whose time has come.

He is absolutely right about the need for business to be ready and willing to accept the Euro, as they do in Turkey, where it is a de facto unofficial currency. Anyone who has travelled abroad knows that there are (rare) occasions when you just cannot get the local currency and you would do anything to be able to use the extra £ notes that you took along with you.

Of course, the rate you get for using the foreign notes abroad is always painfully poor, and after that experience you never make the same mistake again. The answer would be to have a network of places throughout the country where the Euro (or Dollar) could easily be exchanged at a reasonable rate, hence smoothing the process.

A hell of a lot easier than expecting Mrs MacLeod in the B&B in Uig to know how many Euros to charge for a packed lunch.

You could call these places "Banks".

But back to the big issue, rather than the trivial rubbish. This stinks of yet another idea to grab a headline, but that has not been thought through - and I thought Labour had the monopoly on this.

In his mind, the argument must go something like this....

• Scotland is being held back by the purse-strings being held by London
• Think what we could do if we had control of our own economy
• Let's get that control back, and hand it over to the European Central Bank

Which poses a number of key questions that need to be answered before we all dance merrily to the Euro jig......

• If our economy is being strangled because Westminister doesn't understand Scotland, what guarantee is there that the ECB will even register our existence?
• If the same economic policies don't work across the UK, how the hell will the same policies work across a Eurozone stretching from Cyprus to Ness?*
• Ireland - down the pan or what?
• Any idea what rate we should join at?
• Wouldn't it be better to be in charge of our own destiny?

* Actually it stretches from Mayotte to Saint-Pierre-et-Miquelon.

The joining rate itself is the killer question: today the rate is about parity, and let's start from there. If we join at £/€1.50 (which is where it was in 2007) then holiday-makers to the Costas and exporters will be happy, but tourism businesses and importers are stuffed.

Join at £/€0.50 and the tourists will flock here, but the sale of Harris Tweed to Europe will cease as it is priced out of the market.

This idea - like the Fuel Duty Regulator - is great for headlines, but trying to get any answers about specifics is nigh impossible. Yet, specifics are what is needed. As a matter of deliberate policy, Ireland joined at a deliberately low rate and grew a high-skill manufacturing base very quickly; but now it is suffering as the impact of that artificial stimulus is now destroying the very growth that it prompted.

And Ireland now lacks the economic tools to correct the situation.

A final thought -- if the Eurozone is that good, than why have the Norwegians not joined?