Times Are Achanging For The Pound

How times change! The traditional UK exchange rate problem used to be a weak currency, most spectacularly evidenced in the eviction of the pound from the exchange rate mechanism of the then European monetary system, about eight years back. Now it is the strength of the currency in terms of the euro _ the pound has appreciated against the mark by 50 per cent since late 95, and by 18 per cent against the euro since the latter's birth. Again, the Wilsonian Labour Party always had to frame its European integration policy with one eye on the left. Now, both the labour unions and the Confederation of British Industry are lobbying for a quick, positive decision about joining the euro, and campaigning to influence public opinion on the subject. Blair is sitting on the fence. Across the channel, the French, of all people, are voicing concern about the euro's weakness, and calling for steps to strengthen the currency. Times, clearly, are achanging.

 

The unions and the CBI are hoping that an announcement to join the euro will help weaken the currency. It is unthinkable that UK would join except at a significantly lower exchange rate than today's, which is around 60p to a euro. And, the strength is clearly hurting manufacturing industry. Consider some recent developments:

l Jobs in manufacturing industry have fallen by more than a quarter million in the last three years, i.e., since Labour came to power.

l A part of the reason for BMW's decision to close the Rover plant (and Ford's Dagenham plant) is surely the exchange rate.

l A British shipyard recently lost a