LORD Adair Turner, chairman of the Financial Services Authority, yesterday admitted he “was wrong” to argue Britain should have joined the euro.
Turner, a former director general of the Confederation of British Industry, argued in a 2002 paper that “joining the euro would increase our incomes and our standard of living.”
“At each stage the opponents of the euro have forecast disasters which have never happened and always looked unlikely,” said the paper, which he co-authored. “The eurosceptics constantly underestimated the competence of the Europeans and their ability to organise things properly.”
But now he recognises that a disaster has happened and the UK would be in a worse position had it joined.
“The bit I failed to realise is the issue of Eurozone banks,” Turner, pictured, told the Observer. “The thing that has gone wrong is the way we’ve encouraged Italian banks to hold to Italian debt, and so on. I wish I’d been clever enough to think of that in advance.”
His opponent, economist Patrick Minford, told City A.M. “Turner was very enthusiastic at the time. He was a typical pro-European, arguing in political terms and pooh-poohing economic risks. It does him credit that he changed his mind.”
“We did a lot of modelling before hand that showed the UK is more similar economically to the US than to Europe and so monetary freedom was a great benefit.”
“The experience in Ireland can be seen as a microcosm of what may have happened had the UK joined – they completely lost control on the economic upswing and downswing. The UK’s bust was not on the same scale.”
William Hague, now foreign secretary, campaigned against joining.
“I always thought that the idea you could have monetary union among many very different economies without further economic and fiscal integration was extremely unlikely to work and would have some very damaging consequences,” he told City A.M.
“If we had gone in it would not only have been a catastrophe for Britain but with the deficit Gordon Brown built up it would also have been a catastrophe for the Euro.”
Ken Clarke, now Justice Secretary, wanted to join the euro. He declined to comment, but in July refused to rule out British membership in future.
Ed Balls, Labour’s shadow chancellor was a key adviser to then-chancellor Gordon Brown. He devised the “five economic tests” which Britain would have to meet to join the euro, thus keeping Britain out. “I do not believe for a moment that Britain could have sustained being a member of the euro” in the crisis, he said.