The Euro debate - 'Why we should join'

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SIGNING up to the euro would have a hugely beneficial impact on this country's economy, leading to more jobs being created, lower taxes and less expensive goods.

So says Paul Andrews, who argues that joining the single currency would also do a great deal to alleviate the financial problems of farmers suffering in the wake of the foot and mouth disease crisis.

Firstly, Mr Andrews says, after joining the single currency, Britain would become part of a closed economy - the Eurozone - where companies can benefit from a huge 'internal' home market where there is no exchange rate risk.

Being within this closed economy would mean more trade, Mr Andrews argues, and, therefore, more jobs. Since the inauguration of the euro in 1998, he says, France has increased trade with other EU states by 3.4pc of GDP and Germany by 4.8pc of GDP, while UK trade with other EU states has declined by 0.4pc of GDP.

"Companies will want to set up in this country," claims Mr Andrews, "so that they can have the benefit of the trading advantages of the Eurozone, and companies already here will be less likely to want to move from the UK into the Eurozone, as happened last year in the case of Massey Ferguson (with the loss of 1,000 jobs) and Rowntrees, which has begun shifting production of Kit-Kat chocolate bars from York to Hamburg."

Mr Andrews explains that the UK is known in international business circles as "Treasure Island", because, on average, goods cost 12.5pc more in the UK than in the Eurozone.

"Because we will be able to compare prices across the Eurozone," he says, "there will be price transparency and prices will fall, and we will cease to be known as 'Treasure Island' by international business."

Mr Andrews adds that because we will be producing more and trading more, taxes will fall.

"Because there will be more money from the expected growth of trade, there will be a higher revenue from taxes, and we will be able to spend more on schools and hospitals. Perhaps this would result in hospitals like Malton Hospital ceasing to be at risk for the latest or any future round of cuts."

Benefits of joining the euro for farmers could be remarkable. Mr Andrews points out that, on January 20 this year, the National Farmers' Union voted by 57 to 11 that UK agriculture would be better off with monetary union.

Says Mr Andrews: "In my view, the main problem facing farmers at the moment is the fact that they are being unfairly exploited by superstores. Superstores seem to be able to buy food cheaper from abroad than they can home-grown produce. The reason for this is the overvaluation of the pound."

To explain this, he compares a British citizen earning £30,000 with a New Zealander earning NZ$30,000. They would have a very similar standard of living, but because the exchange rate is approximately £1 to three New Zealand dollars, a superstore can afford to buy New Zealand lamb, ship it half way around the world and still sell it cheaper than UK lamb.

"In order to compete," says Mr Andrews, "UK farmers have to accept payment of no more than the cost of buying and importing New Zealand lamb. The same applies to food which can be bought in bulk by superstores from the Eurozone, although the difference in exchange rates between the pound and the euro is not so dramatic. The result is that UK farming has become almost unprofitable."

He points out that as food is on average 9.5pc more expensive in the UK than in the Eurozone, "superstores not only fleece UK farmers, but they also fleece their UK customers.

"It follows that, if we join the single currency, prices will converge: ie farmers will get a better price for their produce, but superstore prices will actually have to come down."

In 2000, says Mr Andrews, British farmers were paying over 40pc more than their Spanish counterparts for combine harvesters and 25-30pc more for agrochemicals than French farmers.

He produced an NFU report which revealed that the total losses for UK agriculture from staying outside the single currency between 1998 and 2001 could be safely estimated to be well in excess of £1.7 billion - a yearly loss of over £560m.

Says Mr Andrews: "Think what farmers could have done with this money. Think of the tax revenue this money might have generated, and how that could have been applied to health or education, or even in overall tax reduction.

"Then ask yourself if it is really so unpatriotic to prefer to see farmers have that money than to have them go bust as a sacrifice for keeping a sovereign pound."

Mr Andrews says the Eurozone is a success. Visitors to Germany, for example, would be hard-pressed to conclude that Germany is in a crisis. Brand new Mercedes, Audis and BMWs rocket along the autobahns, high-speed trains whisk people around and arrive on time; clean modern hospitals treat patients promptly and well-funded schools crank out world-beating engineers. With the euro, the UK could be just as prosperous, he says.

Mr Andrews believes that many people object to the euro on "emotive" grounds associated with national pride rather than examining the benefits it could bring.

Seeking to quell the fears of those who worry about a loss of our national identity, Mr Andrews argues that there is "absolutely no possibility" of monetary union inexorably leading to a European superstate.

Mr Andrews points out that for that to happen, every member state would have to vote in favour of such an idea - a veto by one country would scupper such plans. And he identifies Tony Blair and Jacques Chirac as two European leaders who would not allow a superstate scenario to occur.

Updated: 08:56 Wednesday, March 12, 2003