Euromoney
Sir: What, apropos the proposed European Monetary System (EMS), is a 'useful union, i
to Nicholas Davenport (28 October) s to Ferdinand Mount, in the same issue, a sinister' Franco-German plot with which Britain, as the probable loser in any event, Should have no truck. What could be fairer? 'The prime objection to the scheme;, wrote Mr Mount, 'is. .. that it won't work', quoting — as did Mr Davenport (and the five leading German economic research institutes, in their joint autumn report) — the Wide differences in inflation rates between the EEC member states. Well, of course, it ‘von't if those (and other) differences persist for any length of time. But since the participants should do all they can to reduce — and keep —such differences to the absolute minimum by consistently running a tidy ship, rather than (as some have been prone to do) allow them to be swept under the carpet by periodic adjustments of their exchange rates, Mr Mount's pessimism Is a _reflection on their own determination, or lack of it, rather than on the merits of the scheme itself. For him to argue, moreover, that the British government has nothing to gain by joining if it manages to 'keep the pound riding serenely high', and everything to lose if it doesn't, is both to ignore those merits — Which he in fact doesn't altogether — and to Deg the very question at issue. What guarantee in the light of experience have we that the Government will indeed manage to do So? And even (and especially) if happily it uues, have we not incomparably more to
Pin than lose from membership of a club
which, within a small but to us the most ItnPortant part of the field, puts continuing
currency stability first and foremost? And Might not the example thus set prove infec
tious, so that others whose currency instability puts a spoke in our wheel will eventually follow it to equal advantage? Mr Davenport, fully recognising the difficulties to be overcome, did well to recall that the Bretton Woods system 'with all its faults served the western world well for a very long time'. That system was, of course, largely fostered by Britain. The more is the pity that Britain so far has shown herself so lukewarm towards its European offspring. But how much more still if, following the advice of some Little Englanders, she now left the baby to be nurtured, for their own ultimate benefit, by others while leaving herself out in the cold. That, not some continental trickery, is the choice Britain faces.
W. Grey 12 Arden Road, Finchley, London N3
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