EURO BATTLE - page 1Date added: 01/06/2001

Do we want the Euro or not?
Robert Chapman argues for its adoption

Would the euro benefit the economy? My hunch is that it would and there is potential for economic and monetary union to give rise to a healthy economy, which in turn would mean a healthy property market.

An integral part of this thought process is the likely impact on businesses and equally important occupiers.

Fundamentally, the euro means a single interest rate set at a supra-national level for all EMU members by the European Central Bank based in Frankfurt. Yes, we would lose our ability to set interest rates but it does seem there is a determination by the current administration to sustain a strict economic policy, the premise for which is low inflation. Granting independence to the Bank of England on interest control signalled a significant change in the operation of monetary policy towards convergence.

A "one size fits all" interest rate cannot reflect the economic situation in each member country. Indeed, it would cause a more pronounced economic cycle in the UK because it is less integrated - a greater proportion of our trade (40 per cent) is with non-EU countries - but in the longer term we would become more integrated. Low inflation should aid economic growth and investment and hence occupational demand for property from occupiers in Europe.

There is much talk about the detrimental effect of the Exchange Rate Mechanism in the early years. There were sustained speculative pressures upon certain currencies, resulting in Britain leaving the ERM in 1992. It is accepted that recession at the time did hurt companies but it is a weak argument to suggest this could occur again. Circumstances have changed substantially since then.