A bright future for the euro

I refer to the letter by Anthony Bonello (The Sunday Times, August 18) on the warning on the euro by the economists Milton Friedman and Sir Alan Walters who prophesised the early demise of the euro.

Both Friedman and Walters are rather discredited and would find little support to their theories in Britain today. During the Thatcher era, they played a prominent role in Mrs Thatcher's economic policies and were the advocates of a free market economy, which they believed to be self-regulating and needed no state intervention.

While it is undeniable that the initial Thatcher policies, such as reduction of subsidies to an overweening State, reigning back trade union power and liberalisation of the economy proved effective; her unbending principles and determination not to allow the state to play a role caused considerable damage in the end.

The cutback in spending and serious lack of investment in core public services resulted in a rundown National Health Service, an inadequate transport system and a university education that demands that most students should be in debt by thousands of pounds after they qualify.

The long-term effects of these policies are being felt to the present day. The British Government has been obliged to send NHS patients for treatment abroad to other European countries. The cost of modernisation of a neglected transport system will now run into billions of pounds and will take years to complete. University education may become the preserve of the elite, unless subsidies are reintroduced.

To the negative aspect of Thacherism must be added the inequality brought about by the free market credo in a society that was made to believe, perhaps unwittingly, that the main purpose of life is to make money.

In a discussion broadcast on British television during the Thatcher period, a Dutch government minister was asked whether the European Social Contract should be replaced by the Thatcherite one which was less burdensome on the State, the minister's reply was blunt: "We do not wish to go back to Dickens' times." Incidentally, Blair reintroduced the minimum wage two years ago.

The incessant interference by Ian Walters in the running of the British economy provoked the resignation of Sir Nigel Lawson, Chancellor of the Exchequer in the Thatcher government. Lawson gave Mrs Thatcher an ultimatum: "either him or me". It was the beginning of the end of the Thatcher era.

The poor state of public services in Britain today was caused by dogmatic economic policies that have no place in today's economics, where the State is expected to work hand in hand with the private sector.

If the predictions of Friedman and Walters are as bad as their policies, the euro is assured of a bright and sturdy future well into the next century.