International Papers

Happy Birthday, Euro

The Jan. 1 first anniversary of the introduction of euro coins and notes in 12 European nations was something of an anticlimax. The Independent’s Paris correspondent portrayed a mood of grudging acceptance rather than enthusiasm: “[T]he passage to the euro in 2002 has passed off with remarkable dullness. It has not produced the nationalistic revulsion, the rioting in the streets, forecast on the wilder shores of euroscepticdom. Nor has it (so far) generated the warm sense of euro-citizenship and re-attachment to the European ideal predicted by the more visionary pan-Europeans.” The Financial Times praised the logistical triumph of last January’s launch but noted that although the euro had reduced the chances of exchange rate crises, “the strains of managing the economy of such a diverse group of countries became painfully apparent following the arrival of notes and coins when Germany, Portugal and later France fell foul of the restrictions of the eurozone’s growth and stability pact.”

Germans are the biggest euro-haters. According to the Frankfurter Allgemeine Zeitung, the Society for the German Language dubbed “Teuro”—a combination of “euro” and “teuer,” the German word for expensive—the official word of 2002, after consumers became convinced that some retailers used the currency changeover to cover up price hikes. One year in, “two-thirds of all Germans are unhappy with the euro, compared to a euro-zone average of less than 40 percent, according to a recent survey by the EU Commission.” (The president of the European Commission, Romano Prodi, told France’s Le Monde that the euro wasn’t to blame for the price increases; rather, it was a problem of governments’ failure to “control” unscrupulous businesses.) When the German ambassador to Britain said the euro had been “an absolute success” for his country, Britain’s Sun said the diplomat must be “potty.” It thundered:

The euro has crucified Germany and driven the former powerhouse economy to the edge of despair. The awful woes of Germany exemplify all that is wrong with the concept of a single currency. The Germans need lower taxes and lower interest rates to stimulate their stagnant economy. Instead, because of the inflexible euro rules, they may have to raise taxes and cut spending. As for slashing interest rates, they are stuck with the “one size fits all” common rate.

In his New Year message, British Prime Minister Tony Blair said whether or not to join the euro is “the single most important decision that faces this political generation.” Still, the consensus in Britain is that although Blair is committed to the common currency, he doesn’t believe he can win a referendum on the subject before the next election, expected in 2005. Britain’s fellow euro holdouts, Sweden and Denmark, both recently announced their intention to vote on joining the single currency, and the Financial Times reported that the Danish prime minister yesterday “warned that exclusion from the eurozone reduced a country’s influence and authority in Europe.”

Jan. 1, 2003, also marked the 30th anniversary of Britain joining the organization now known as the European Union. The Independent noted that Britain is now “economically entwined” with Europe and physically linked to France via the Channel Tunnel. “In all sorts of ways the UK is more open to continental influence—from our drinking habits to our working practices, which have been moulded by Europe’s social and environmental standards.” Other European nations had been working together for decades before Britain joined the union, an experience the Independent compared with the current euro debate:

The very process of trying to catch up with arrangements that have been made without us has lost this country years and billions. … Waiting and seeing sounds attractive, but it has its own price. By the time French, German and Italian businesses start reaping the economies of scale in a single market of 400 million people using a single currency, British companies will be a long way behind.