Could Northern Ireland join the Euro?

The good news today is that Northern Ireland is the fourth best performing regional economy in the UK. We noted earlier that the regional economies of the UK are slowly diverging on a north south axis. But here’s one blogger who imagines a case could be put for Northern Ireland to stay politically within the UK and still join the Euro (as a majority of its Small to Medium Enterprise or SMEs would like).

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  • nitpicker

    what is SME? One thing I cannot abide is the use of TLA’s* in a piece without an explanation upfront of what each letter means. Very bad practice.

    *Three Letter Abbreviations

  • seabhac siulach

    I would welcome the six counties joining the euro, but what would this do to the idea of a unified UK, if one needed to change currency when crossing to Britain? It is hardly something, either, to be welcomed by Unionists (is it?), as it would inevitably tie the six counties more closely to the Southern economy. If you get rid of currency differences North and South of the border, aren’t you in effect removing the border in a way?
    Good news for the six county economy, always nice to hear good economic news…

  • Maybe I’m wrong but I’d imagine that support for sterling amongst the public is at its heighest in NI due to the strong will to hold onto everything British amongst Unionist communities.
    While the Euro is not an Irish currency as such it most certainly isn’t an English/British one and losing Sterling in Ireland would be seen by the likes of the DUP and UUP as a huge blow to their link to the mainland… I suppose it all comes back to the harmonisation of the North/South economies which this would go some way to doing (if NI and the RoI are both linked to the same EU economic limitations, have the same currency and as a result end up with the same prices etc.)

  • nmc

    Small – Medium Enterprise

  • seabhac siulach

    ‘…continued high levels of public expenditure in Northern Ireland was helping to keep the local economy in the top rankings.’

    Although, this doesn’t sound so good…not very healthy in the long run…

  • Mick Fealty

    Nit picker:

    You’re right. Not my usual style. Fixed now. Thanks nmc.

  • SME: small and medium enterprises.

    Euro: the six counties cannot join as they are a region less important than Manchester. They have no control over monetary policy or interest rates and so they and their subsidized economy are irrelevant until the 26 cos does a friendly takeover. This is staight economics friends: only countries that control monetary policy and interest rates can surrender them to Brussels. The 6 cos is currently an unwelcome appendage to Britain. The solution is easy: Irish unification and a one way ticket for those who want to leave.

  • boshank

    agree with taigs…apart from the last sentence.

  • CS Parnell

    Come on you Shinners, aren’t you going to tell us that you are in favour of an all-Ireland currency but don’t like the one that is on offer?

    A bit like their views on the republic, of course.

    The reality is that the best hop for Northern Ireland is for the UK to join the euro, so making the home market the 250 million + consumers of the euro area. NI joining while the rest of the UK stays out will simply replicate some of the current problems.

    If you were a cute unionist you’d be arguing hard for this too – after all it makes Nationalists feel more at home without threatening the political fundamentals (a bit like Trimble’s argument on the GFA).

    As a Nationalist, of course, I’d welcome it without thinking that it had actaully convinced a single unionist to become a Nationalist.

  • mnob

    taigs, can you see the irony in your discourse ?

    You need to have fiscal control in order to surrender it to another even bigger, less caring master hmmmm…….

  • mnob

    oh and ss … NI has the fastest *private* sector growth of the regions, and the lowest public sector growth, so things are at least moving in the right direction.

  • seabhac siulach

    mnob:

    “…NI has the fastest *private* sector growth of the regions, and the lowest public sector growth, so things are at least moving in the right direction.”

    Good for the 6 counties…as this is not mentioned in the UTV webpage, I will have to take your word for it, though…

  • mnob: I addressed the issue raised, not the rights and very many wrongs of Brussels. As the EU widens, the 6 cos will get even less relevant than it already is.

  • Mark

    Hopefully England will be rid of Northern Ireland at the nearest oppertunity, and Scotland and Wales too.

    You can all go fulfil your ‘destiny’ and each be weak little irrelevant “regions” of the Soviet Union reincarnate, the EUSSR dictatorship.

    Enjoy!

  • smcgiff

    ‘and the lowest public sector growth, so things are at least moving in the right direction.’

    I’m assuming growth is in percentage terms. A very significant increase in public sector jobs could still mean lower % growth than another region that had a modest increase in public sector jobs, but with a lower base to begin with. Welcome all the same, but it’s negative growth you need!

  • smcgiff

    ‘Enjoy!’

    You still sulking, Mark!

  • I wouldn’t be happy with Northern Ireland joining the Euro (at least not without the UK). It would be a disaster, 95% of my monetary dealings are with the UK and I don’t fancy having to make extra calculations for the exchange rates.

    Of course there’s also the fact that it would remove the ability to hold bank accounts with the likes of smile, cahoot etc and probably tie more people into the local banks… eugh.

    It sounds completely unworkable.

  • smcgiff

    ‘It sounds completely unworkable.’

    That’s cause it would be.

  • kensei

    “Come on you Shinners, aren’t you going to tell us that you are in favour of an all-Ireland currency but don’t like the one that is on offer?

    A bit like their views on the republic, of course.”

    No. I like the Euro. The crux is that actually, all the business here would love the Republic’s economic policy but are run by people who are too attached tot he Union to come out for the one measure that would ensure it.

    Basically, you can’t have your cake and eat it. What the Union? Be content that economic policy is run for someone else’s interests, then.

    “The reality is that the best hop for Northern Ireland is for the UK to join the euro, so making the home market the 250 million + consumers of the euro area. NI joining while the rest of the UK stays out will simply replicate some of the current problems. ”

    Wrong. The fact that NI is in the UK is irrelevant in terms of trade in the modern EU. Check the calender, it’s 2006, not 1906.

    “If you were a cute unionist you’d be arguing hard for this too – after all it makes Nationalists feel more at home without threatening the political fundamentals (a bit like Trimble’s argument on the GFA).”

    Of course it strengthens a UI. You keep replicating the ROI’s economy, finally you find they are totally converged and rather than engage in a fight to the bottom that benefits no one the next step is obvious.

  • cok

    Beano, there are major moves afoot to introduce full competition in the banking industry, so before long we could bank with anyone we liked. But in general you’re right. This is a total non-starter.

    Joining the Euro has very little to do with trade and a lot to do with monetary policy. And while you could imagine the UK having a different set of interest rates to the rest of the UK, it’s hard to imagine two money supply policies, two sets of borrowing requirements and whatever else is needed being run by one state. The huge number of monetary policy instruments that Eurozone countries work under are listed here.

    For one thing, non-Eurozone finance ministers don’t have voting rights in council over Euro-related issues. Under this idea, I presume Gordon Brown (or whoever) would having been given a right to vote, would enthusiastically look after the interests of the Eurozone, including NI and would leave his quite different sterling-zone interests at the door?

  • lib2016

    Just one more reason for a UI – not the most important and only one of many but they are starting to add up.

    And then we’ve got the counter arguments so ably put by Mark. They’re themmuns and us’re usuns.

    The sooner we get European government the better, and I believe that the breakup of Britain will bring that prospect closer. England is for it’s own inscrutable reasons sidelining itself in Europe but neither us nor the Scots need Westminster.

    Both the Irish and the Scots are capable of self rule and direct engagement with Brussels where the real power lies. What is the point of Westminster? Or Stormont?

  • Brian Boru

    I would welcome the Six Counties joining the Euro as a step towards eroding the border but doubt it will happen.

  • Brian Boru

    “You can all go fulfil your ‘destiny’ and each be weak little irrelevant “regions” of the Soviet Union reincarnate, the EUSSR dictatorship.”

    Mark I think you’ll find the EU doesn’t have Gulags, a KGB, and hasn’t slaughtered 20 million people. 🙂

  • MikeW

    Taig

    “Euro: the six counties cannot join as they are a region less important than Manchester. They have no control over monetary policy or interest rates …. only countries that control monetary policy and interest rates can surrender them to Brussels.”

    Actually, there is nothing in there that actually prevents the North from adopting the Euro. Brussels may not recognise it, but it would not be the first time an nation has dropped its own currency in favour of the Euro or USD. Might admittedly be the first region to do so though.

  • Justin

    It would increase tourism in the 6 in my view. I know lots of people who simply avoid going north because of the pitiful exchange rate of the U.S. dollar to the Pound. It’s certainly not Britains fault, but it does discourge people from going there because you’re able to get more “bang for the buck” EVERYWHERE else except the UK.

  • Kain

    “…it would not be the first time an nation has dropped its own currency in favour of the Euro or USD. Might admittedly be the first region to do so though.”

    Actually Montenegro switched currencies to the euro long before it gained independence.

  • Mick Fealty

    A question: does Dublin still control its own interest rates and money supply? Are these matters not now largely in the hands of the European Central Bank?

    Also, did anyone get the bit about NI being the 4th best performing regional economy in the UK? Arguably this indicates a kind of residual economic health, rather than a full on crisis. As one blogger I spoke to earlier today pointed out, the Chinese state did not vote to abolish itself or make itself smaller. It simply invested in making the private sector larger.

  • Keith M

    There is a case for broadening acceptance of the Euro in N.I. without actually making it the oficial currency. The exchange rate has been quite stable for over two years. Any permanant change would require a referendum.

    However there are precedents; Montenegro, Kososo, Monaco, Andorra, San Marino all use the Euro, without ever being members of the EU.

    I just wonder why parties thart campaigned so hard against the Euro (like SF) would think?

  • Michael

    Its the economy stupid!
    Anyone who ties nationailty to interest rates will ultimately lose!
    The pound….halved in value when the US took control of Persian oil in 1945.
    The pound that Henry Kissenger wiped out so the UK would have to go to the IMF cos the UK wouldn’t give the US acess to supply Israel during the Yom Kipur war from Cyprus (then allowed the Turks to invade/take over half of Cyprus to not rely on the Brits further more!
    The pound that George Soros annililated for fun in 1992 and 1 million lost their homes cos interest rates got to 15%.

  • slug

    The UK has had a bad experience with fixed exchange rate schemes.

    The Gold Standard in the 1930s was at an exchange rate where the country wasn’t competitive and the lack of ability to devalue meant it was hard to stimulate the economy.

    The ERM in 1990-1992 was also entered at too high a rate.

    Since 1992 we have enjoyed success with an independent central bank (independent since 1997) setting the rates.

    I would not want Britain to join the Euro until it is seen whether probelms arise because interest rates are set for the whole EU.

    This particular problem hasn’t been too severe but has resulted in inflation in the Republic; inflation that erodes competitiveness when you have fixed exchange rates.

  • English

    It will happen in the future anyway!

  • kensei

    “A question: does Dublin still control its own interest rates and money supply? Are these matters not now largely in the hands of the European Central Bank?”

    This is true, and in many senses having complete control over your money supply is as important as control over taxation. However, there are considerable advantages set against that, not least the stability of the currency. The biggest one is that the republic relies so much on FDI and using the same currency as the rest of Europe is undoubtedly helpful to those businesses.

    “Also, did anyone get the bit about NI being the 4th best performing regional economy in the UK? Arguably this indicates a kind of residual economic health, rather than a full on crisis.”

    Aye. And I could be very successful selling a load of tenner’s for a fiver. Repeat after me: over 70% of the economy reliant in the public sector.

    “As one blogger I spoke to earlier today pointed out, the Chinese state did not vote to abolish itself or make itself smaller. It simply invested in making the private sector larger. ”

    That’s very public sector thinking. China had several advantages, such as starting from such a low base, having a huge market and cheap labour. We have none of those things.A nd as much as the leftie in me hates it, our public sector needs scaled back a little. Over 70% is simply insane.

  • Exuup

    why adopt the euro to help with trade with a minnow of a population of 5 mill down south, when it would screw trade with the rest of the Uk, some 60 mil.

    Those arguing about the problems with the £/Euro between North and South conviently forget the east west dimension, youd be swapping a mole hillfor a mountain

  • Montenegro, Kososo, Monaco, Andorra, San Marino all use the Euro, without ever being members of the EU. Doesthe smuggling paradise of Montegro use it officially or is it just pegged to it the way some Baltic countries were? Andorra is also a pimple country and a smuggler’s paradise and San Marino is integrated into the Italian economy. This is what the 6 cos aspires to.
    Exuup: The minnow country to the South has broken its economic dependence on Britain, something Spongerland should look at.

    Mick: The Communist Party still call the political shots in China and have no qualms about shooting people. Is that what you suggest? A DUP led UDI with many getting the McIlveen treatment?

    The solution lies in ceding West of the Bann, Newry aand MOurne and more to the South and the euro and breaking the economic back of the Bible buckle so there is no money left to buy drugs from Loyalists.

  • exuup

    The minnow country to the South has broken its economic dependence on Britain, something Spongerland should look at-
    taigs i think you ll find the south relies heavily on trade iwith britain for its existence

  • Mick F
    The Chinese state did not vote to abolish itself… Taiwan?

  • kensei

    “taigs i think you ll find the south relies heavily on trade iwith britain for its existence”

    18% I believe. Significant, but not what it used ot be.

  • Brian Boru

    “A question: does Dublin still control its own interest rates and money supply? Are these matters not now largely in the hands of the European Central Bank?”

    This is true, but the Southern economy hasn’t been harmed by it one iota. Strict monetarists would have expected a crash by now because of inflationary pressures in 2000 when inflation was 7% and interest-rates were low, but inflation eventually returned to 2.5%. There are other ways of controlling inflation other than interest-rates e.g. encouraging greater competition, rooting out cartels/restrictive practices etc.

    “why adopt the euro to help with trade with a minnow of a population of 5 mill down south, when it would screw trade with the rest of the Uk, some 60 mil.”

    Well around 300 million use the Euro as their national currency so it’s hardly just about trading with an economy of 4 million now is it. I think US multinationals like the idea of exporting to a single market in a single currency.

  • Animus

    People in Derry may be surprised to learn that the Euro isn’t currently the main currency.

    I like the Euro in principle, but in theory I like the strong pound when I travel abroad. I don’t think the examples of Montenegro and Kosovo are useful – they relied on the Deutschmark when their own currency was too soft to use outside of their own areas. Pound sterling does not carry the same difficulties, if it did, we would all be clamouring to join the Euro.

  • Sean

    I do not think that Spongerland (Excellent name!) could survive with the Euro base rates. People would insanely borrow particular with John Sucker (neé Bull) picking it up on subvention.

  • 4 quick points:

    1. Fixed exchange rates are a nonsense.

    2. 2 currencies will not be allowed to exist within 1 UK state

    3. Economic prosperity depends on low tax free market economies, not half-baked currency schemes.

    4. Isn’t it pathetic the way republicans carry their bigotry even into economic discussions?

  • For some reason, “bigotry” has been blanked out above. It’s not that rude.

  • Greenflag

    “taigs i think you ll find the south relies heavily on trade with britain for its existence”

    18% I believe. Significant, but not what it used to be. ‘

    That’s right K . As late as the 1960’s it was almost 90% . Earlier still in the 19th century when Ireland was part of the richest nation on earth and enjoyed the benefits of British rule such as the great famine, mass emigration and net negative capital inflows into the economy we were 100% dependant on Britain.

    But those were the good old days ? The Irish Republic is Britains 3rd or 4th biggest export market and over 1,000,000 people in the UK are dependant on the Irish market for their livelihood .

    Yea , right 🙁

  • m

    Mick,

    “Also, did anyone get the bit about NI being the 4th best performing regional economy in the UK? Arguably this indicates a kind of residual economic health, rather than a full on crisis.”

    Even UTV’s brief piece gives the reason for this claim – disproportionate reliance on the public sector, something we read about just the other week when it was revealed that the taxpayer funds three quarters of the north’s economy, a luxury not afforded to other areas and certainly not needed by the areas in 1,2 & 3.

    I don’t think it indicates economic health but the opposite. (I’m not arguing for normal levels of public sector funding, just pointing out we aren’t performing like a successful economy while some one is paying for us to live like we are)

  • Brian Boru

    “1. Fixed exchange rates are a nonsense.”

    The currency chaos of 1992 would seem to disprove that. It showed that speculators could wreak havoc on exchange-rates. We still had floating exchange-rates then. The ERM was different from EMU in that central-banks were supposed to intervene on the foreign-exchange markets to prop up a currency or try to depress its value to keep within a certain range vis a vis other currencies. Another aspect of the ERM was that govts (in the UK case) and central-banks were supposed to also use the interest-rate weapon to stabilise currencies. Raising interest-rates is intended in this situation to prompt greater buying of your currency. Hence, when the UK £ was falling through the floor in 1992, Major ordered staggering interest-rate increases, which failed. The Bank of England wasted billions propping up (unsuccessfully) the Pound.

    Sounds to me like a perfect argument for a single currency. It is the ultimate guarantee that that will never happen again to the countries of the Eurozone. No longer can chaos be caused by the Franc or Deutschmark being sent soaring/plunging by greedy speculators. When a currency gets too strong, it can hurt exporters by making it more expensive to buy imports from that country. When a currency is too weak, while helping exports by making them cheaper in foreign currencies, inflation can result because conversely, imports into the country become more expensive. The Euro means that for the countries in EMU, this nightmare of 1992 will never happen again. It might happen to Britain though.

    We also have been able to keep interest-rates at a moderate level unlike the ERM experience for Britain. Many also enjoy being able to travel abroad without the laborium having to switch currencies. But the British are entitled to take their view. However, as many would be gladly shot of NI, they would probably not object to the Euro being introduced in NI as a step towards an economically UI.

  • CS Parnell

    kensei,

    I know you’re not old enough to remember this but North and South had, de facto, the same currency for the first 50 post-partition years. I’m afraid it didn’t being us any closer to the 32 county republic.

    And I think you’ll find Gerry has a less sanguine view of the euro than yourself.

    I’d be in favour of NI being in the Euro, but I think the only realistic way that will happen in the next 30 – 50 years is if the UK joins.

  • kensei

    “I know you’re not old enough to remember this but North and South had, de facto, the same currency for the first 50 post-partition years. I’m afraid it didn’t being us any closer to the 32 county republic.”

    We weren’t living in the same globalised world then and the situation in general is more different, with potentially more converged economies. Plus the 40+% of people now vote for Nationalist parties.

    “And I think you’ll find Gerry has a less sanguine view of the euro than yourself.”

    I am aware of that. He’s still wrong though.

    “I’d be in favour of NI being in the Euro, but I think the only realistic way that will happen in the next 30 – 50 years is if the UK joins.”

    Heh. In 30-50 years we’ll be in the 32 county republic.

  • The 26 cos has diversified well since joining the then EEC. It has thrived though there have been many unseen losers. Brtian is probably best to keep its own currency and monetary policy as logn as it wants; evidence De Gaulle was in part right to keep them out. Though the French vision of a united Europe might not come to pass, yet the EU has made irreversible changes to sovereign states.
    Spongerland is not one of those sovereign states and, as the eastern countreies clamber for more gravy, Spongerland, with its attacks on hard working Poles and Filippinas should get less.

    The economic beliefs of Sinn Fein are, like those of the UUP, SDLP and DUP outmoded. No one should really listen when Gerry expounds on cigarete tax, petrol tax, beer tax or other matters of economics. He has nothing to add.