Tony Blair: Speechwriter claims he ‘incandescent with rage’ at Labour
Today marks 20 years since the inception of the euro currency. To date, it has been introduced in 19 countries and is used on a daily basis by around 341 million people, making it the second most-used currency worldwide. The euro has allowed for easier trading on the continent, but has also led to controversy, not least the debt crisis more than a decade ago.
At one point it looked like the UK would join its neighbours in the single currency.
In 1990, then-Prime Minister John Major entered Britain into the European Exchange Rate Mechanism (ERM), a prerequisite for adopting the euro.
The UK spent over £6billion trying to keep the pound sterling within the narrow limits prescribed by the ERM, but was forced to exit the programme within two years.
It crashed out in September 1992 on a day dubbed “Black Wednesday”.
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Tony Blair in the BBC documentary ‘Blair & Brown: The New Labour Revolution’
Gordon Brown in the BBC documentary
The UK then secured an opt-out of the euro in the Maastricht Treaty.
One of the major sticking points during Tony Blair’s premiership was his belief that the UK should join the euro, contrasting with the opinion of his Chancellor of the Exchequer Gordon Brown, who was steadfast against the move.
Mr Blair, who is receiving a knighthood in the Queen’s New Year Honours, declared “five economic tests” that must be passed before the Government could recommend the UK join the euro and promised to hold a referendum on membership if those tests were met.
In an assessment by the Treasury in 1997 and another published by Mr Brown six years later it was decided that the UK did not meet these five tests.
Alastair Campbell was Tony Blair’s Chief Press Secretary
Eventually, the whole idea was abandoned.
Many commentators have claimed the UK had a lucky escape, as the eurozone has struggled with such divergent economies within its currency.
The sovereign debt crisis of 2009 saw a stop of foreign capital into countries with substantial deficits, dependent on foreign lending.
This was worsened by the inability of these states to resort to devaluation, which they would be able to do if they were in charge of their own currency.
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Charlie Whelan was press secretary to Gordon Brown
Many critics argued that this highlighted the difficulty of having a single currency without fiscal union between countries that use it.
In the end, a huge bail-out package was implemented and cracks began to show in the bloc, as many in countries like Germany felt put-upon by what they perceived as economically irresponsible governments in countries like Greece, whom they were forced to bail out, while many in Greece were resentful at the harsh conditions put on that bail-out.
Tensions within the EU hit boiling point and the repercussions were felt for years after, with unemployment in Greece and Spain reaching 27 percent.
Despite the benefit of hindsight, in a new BBC documentary series “Blair & Brown: The New Labour Revolution”, Mr Blair stood by his belief that the UK should have joined the euro.
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The documentary, which charts the meteoric rise and legacy left by New Labour under the stewardship of Mr Blair and Mr Brown in the Nineties and Noughties, saw staggering interviews with the two men themselves.
Reflecting on his position, Mr Blair said: “With the euro, I have no doubt at all that was Britain’s clear destiny.
“All round the world regions are coming together, so for me Britain at the heart of Europe was essential and the euro fitted into that.”
Mr Brown said: “Look, we have a difficulty over the euro and that was a policy difference.
“I agree with Tony ‒ there were huge political advantages for Britain actually being part of the euro.
“But there were also economic drawbacks.
“Our economic cycle was different to that of Europe, the financial services industry was quite unique.
“My fear was we would have a recession as soon as we went into the European euro arrangement.”