THE UK was shielded from the worst of the financial crisis in 2008 by the decision not to join the Eurozone, a German economist has said, adding that membership of the euro would have made matters “much worse”.
The single European currency was established by the 1992 Maastricht treaty, and was introduced in non-physical form on January 1, 1999, with notes and coins following three years later. It is currently used by 19 of the EU’s 28 member states who together form the Eurozone – but Britain negotiated an opt-out, and in 2007 then-Chancellor Gordon Brown ruled out membership for the foreseeable future.
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Without a currency of its own and without the possibility of devaluation, the crisis for the United Kingdom would have been much worse
Clements Fuest, President of the Ifo Institute for Economic Research and director of the Center for Economic Studies at the University of Munich, said Mr Brown’s decision had been a wise one.
Mr Fuest told Express.co.uk: “One can only speculate about how the Eurozone would have developed with Britain as a member.
“In the financial crisis, the British government had to use very large sums to support the banks. Besides, the pound has devalued a lot.
Boris Johnson has had a lucky escape with the UK not being in the Eurozone, said Mr Fuest (Image: GETTY)
Ifo’s Clemens Fuest (Image: GETTY)
“Without a currency of its own and without the possibility of devaluation, the crisis for the United Kingdom would have been much worse.
“In that sense, it was certainly good that the country was not in the euro.”
Georgy Matolcsy, Governor of the Hungarian Central Bank, last month described the Eurozone as a “trap” and a “fruitless dream” and claiming that member states were more prosperous before joining.
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Former Chancellor Gordon Brown (Image: GETTY)
Mr Matolcsy added: “We now have a European Germany, not a German Europe, and the euro was unable to prevent the emergence of another strong German power.
“But the Germans also fell into the trap of the ‘too good to be true’ euro.
“We need to work out how to free ourselves from this trap. Europeans must give up their risky fantasies of creating a power that rivals the US.
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German Chancellor Angela Merkel (Image: GETTY)
The financial crisis of 2008 caused enormous disruption (Image: GETTY)
“Members of the Eurozone should be allowed to leave the currency zone in the coming decades, and those remaining should build a more sustainable global currency.
“Let’s celebrate the 30th anniversary in 2022 of the Maastricht treaty that spawned the euro by rewriting the pact.”
A breakdown of European currencies (Image: Daily Express)
Mr Fuest admitted: “There is no doubt that the Eurozone is in need of reform.”
However, he added: “There is little to suggest that the Eurozone should develop into a state with a large central budget.
“This will not happen in the foreseeable future.
Georgy Matolcsy has said the Eurozone was in trouble (Image: GETTY)
“It is also questionable if that is necessary.
“More important and realistic is the further development of the European Banking and Capital Markets Union.”
(Additional reporting by Monika Pallenberg)
