Democrat November-December 1998 (Number 33)
Manufacturing matters in EMU debate
by Doug Nicholls
General Secretary of Community and Youth Workers Union
The CYWU won unanimous support for a composite
resolution at the 1998 TUC Congress to debate EMU
Manufacturing, engineering, construction, and science all need to be central to the political stage and national strategic investment. Britain's future depends upon the health of our wealth creating base in manufacturing. We need as diverse a manufacturing base as possible with high tech, innovation and wide international markets.
We need to be able to trade fairly and equitably throughout the world. Balanced manufacturing production and investment will help secure independence and minimise import penetration. We will need to be able to control the flow of capital to secure investment in domestic industries more fully.
The strength of manufacturing must also be measured against the essential requirement of full employment. Similarly our public services rely on the power of manufacturing. Our culture and communities are wrapped up with the question.
All of these principles seem easy, obvious. But they are precisely what we are not getting as the economy is prepared for the carving knife of EMU, as the economy slumps.
High interest rates, a high pound, a monetary policy committee uninterested in the real economy, low public spending and wage restraint, are all essential features of the post Maastricht economy. Monetarism, a deceptive word for privatisation and favouring of financial speculation over and above industrial investment, for low public spending and suppressed wages. It is enshrined in the European Treaties signing up to a single currency is expressed as an "irrevocable" step for a nation. Key to the success of monetarism is use of the simple mechanism of control of interest rates.
In recent months trade unionists have lobbied the government and independent Bank of England to lower interest rates. If we were to enter a single currency in Europe, control of interest rates would be handed to the European Central Bank in Frankfurt. The ECB President has already made it plain the bank will operate in the interests of Germany and France. If convincing Eddie George is hard, imagine how difficult it will be to get Mr Duizenberg to listen to seven million trade unionised workers in Britain. Not only would we lose control over interest rates, we would lose power over exchange controls, and just for good measure 80% of the Bank of England's reserves would go to Frankfurt too.
In fact all Westminster would be left with would be limited fiscal powers to raise and spend f333 billion tax revenue framed within the convergence criteria. This is why the question of national sovereignty is critical in this debate.
We are encouraged to see Europe as a strong high growth area capable of taking on multi-nationals and two other trading blocs - a myth. The EU is a slow growth area of the world, lagging behind most international measures of growth rate. We are encouraged to believe our economy is dependent on European trade - also a myth - if you consider trade includes investment, services and goods.
Britain is unique within Europe for its economic interrelationship with countries throughout the world, particularly the US. Given former relationships with commonwealth countries we have far more scope than most other EU countries for extending our trade across the world.
In a recent poll 70% of Directors of British companies said it would be incorrect to enter EMU until after one full business cycle, estimated to take 10 to 15 years. Take this concern for profit levels, with trade union concern for ensuring all economic policies are developed with the aim of full employment in mind, and we have every right to express serious concerns about prospects of an economy already being shaped for EMU. The EU has no budget to deal with unemployment and has merely asked governments to give evidence of their plans to deal with the tragic 20 million unemployed throughout the EU.