Upon the start of the New Year, my (easy) prediction is that the first economic milestone we’ll see is the Pound at parity with Euro, probably sometime next week. There are some Euro enthusiasts that think that Sterling’s sharp decline against the Euro (to its lowest level since the Euro’s emergence exactly 10 years ago) is a vindication of their views. I think absolutely not.
Although there is no doubt that the economic backdrop leading to Sterlings sharp decline is particularly bad, the fact that we are alone amongst major European economies in enjoying an independent currency means that our economy can emerge out of this nasty recession far quicker than had we joined Euro. With Euro membership, we would not have avoided the recession, but would have had our arms tied behind our backs in dealing with it.
So, on the tenth anniversary of the Euro, Slovakia has decided to join the Euro, but here’s to another 10 years (and beyond) of the Pound staying independent.