UK Economic Policy Post author By Philip Lane Post date February 15, 2011 Philip Stephens argues that UK would have been better off to have joined the euro: article here. Ben Broadbent provides an analysis of the current UK economic situation here. Categories In Economic Performance Tags UK euro 2 Comments on UK Economic Policy ← Sindo Editorial Does Not Speak For Us → Imbalances in the Euro Area 2 replies on “UK Economic Policy” “Since the financial crash, Germany and France have fared better in the single currency than has Britain outside. ” Er, yes, of course they have – because they didn’t go bonkers about property ownership and have mountains of mortgage debt as a result. Is it a surprise that the UK’s much larger financial sector would result in a bigger effect of a financial crisis? “Britain’s 2 per cent inflation target has been all but abandoned. Prices in Britain are rising twice as fast as in the eurozone” Yes, because the UK’s central bank has decided that since the bigger risk for Western economies is deflation, it would rather run a slightly higher inflation rate for a while to counter this risk. How would Ireland for example like a bit of 3 or 4% inflation for a while? Try Googling “debt deflation” “I concede that the case that Britain would have been better off in the euro is not conclusive” Very big of you Phillip, keep going, you will get there in the end. “Mr King has been heard to argue that had Britain been in the eurozone, interest rates would have been lower. The credit boom and subsequent bust would have been correspondingly worse.” Quite. And as for the idea that that was likely to have been countered by credit controls, really? in the prevailing economic orthodoxy of the last decade? Come off it, how did that work out in Ireland for example? Devaluationists often assume all markets operate like world commodity markets and increased exports arrive like manna from heaven. Davy economist, Conall MacCoille, has an interesting analysis here as to why a greater recent fall in sterling than the aftermath of the exit from the ERM, has had such little apparent impact on export performance: http://www.finfacts.ie/irishfinancenews/article_1021429.shtml Comments are closed.