Euro folly

I cannot believe that Malta has signed up to Monetary Union. How can grown and supposedly intelligent men support this folly?

Monetary Union only works in the US because they share a common language, common education standards and a common culture. This gives a great flexibility that means that when the economy gets tough in Pittsburgh they can "bottle up and go" to LA, Seattle, Miami or wherever the economy is in better shape.

In Europe we have no such inherent flexibility.

Control of interest rates is the most potent control there is over a country's economy, balancing inflation against growth and unemployment. Other controls such as public spending and taxation are much blunter instruments and require a greater time to act.

In the EU we have Ireland with 4.5 per cent inflation requiring an interest rate of greater than five per cent and at the other extreme Germany and Italy with deflation, requiring interest rates of near zero.

We have a moribund European Central Bank (it cannot be anything else as whatever it does will be wrong for someone) and the Stability and Control Pact is not working.

Monetary Union was always an experiment and was always going to fail however well the politicians talked it up. Staying out of the euro has been a great success for the UK. I am sure it will be Malta's folly.

John Maynard Keynes will be turning in his grave.