We have all seen the first disturbing signs that we might be on the brink of a slowdown. Retail sales are disappointing, interest rates remain where they are because of concerns about the future, and many believe that the stock market exhibits the classic symptoms of the top of the bull market.
I have no wish to cry wolf; I certainly have no wish to depress anyone. We have enjoyed an amazing recovery since that day we left ERM. Almost from that very moment our economy grew to become the envy of our European partners. Our unemployment declined as theirs increased. Our inflation has remained lower, at least by our standards, and our industrial climate has remained good, with the numbers of days lost to strikes becoming almost too small to count.
There is an old adage with which we are familiar: if it ain't broke, don't fix it. I would have thought that masterly inaction by the government would have been the best policy. After all, the Bank of England takes the blame for the increases in interest rates, and the government modestly takes credit for the strong economy.
Now we know the strength of the pound will make life difficult four our exporters but easier for the rest of us. Our holidays will cost less, our imports are cheaper and even our manufacturers find the reduced cost of imported materials and supplies a blessing. This week, however, I fear is the week of the euro. This week [April 26 to May 2], those concerned will meet, chaired by our prime minister to fix the euro and all who trade in her - a euro that includes Italy, a euro that includes the borrowings of Belgium, a euro that includes the social economics of France, a euro that even is said to contain the future hopes of Greece. This euro simply cannot be a strong euro. This sort of euro cannot become a haven for funds. This euro will only encourage a flight into dollars and into the pound, and, I fear, all of us will have to get used to a strong pound.
Then, again, think just for a moment of poor Ireland. In the middle of a boom with the economy doing better than ever before, the Irish monetary authorities should be thinking now of raising their interest rates to engineer a soft landing next year. Instead, they are faced with the nightmare of rates crashing down to 3 per cent or so after Christmas, as they have to live with the circumstances that will suit France or Germany. And you know, we could get out of the foolish experiment of ERM when the time came; they cannot. think of the desperation of their government. If a government cannot set its own monetary policy, then all they are left with are swingeing tax increases or rampant inflation - and nothing else. What democratically elected government wants to be faced with that choice, especially when the resulting tax increase is purely artificial and promises to be about as popular as the poll tax?
Yet, while all this know, and know well, by our government, the chancellor assured his audience in New York only days ago that the decision to enter had already been made. Was it only last autumn that he laid down five conditions for our entry into the euro? So far we have complied with none, nor do we look like doing so. I worry again when the Sunday papers last weekend were full of inspired leaks that the government would assure the euro members later this week that we would enter directly after the next election. So I think to myself, has the referendum gone the was of the chancellorŐs five conditions?
My concerns really are serious. I know about the working conditions on the mainland of Europe. I have been on the supervisory board of German companies and, indeed, remain so to this very day. I have experienced the corporatist economies ies of continental Europe first-hand and I assure you that they will simply not work for us with our different traditions. Indeed, I suspect that they no longer work for them.
This is simply not the time for yet another political experiment. We have a good economy, and already we have seen the advance guard of European regulations take a bite out of our more entrepreneurial climate. Do we really want to go back to the era of trade union strife we see week after week in France? Do we really want to see their employment regulations start to harmonise our unemployment rate with theirs, and do we really want to increase our tax rates just to harmonise with theirs? Yet all this is part of the agenda of the euro.
Now perhaps to be fair, our government is being carried away with the rhetoric of the forthcoming euro meeting. I certainly hope it is because we are in an enviable position just as we are today. If the euro works, and my fears and those of many in business today are proven to be groundless, then we can think of joining. On the other hand, if - as I believe - it will end in tears, we can stay outside and help our partners pick up the pieces. That will take us way past the next election.
Let me make just one final point. The government boasts of bringing power closer to the people. Indeed, we are now engaged in more constitutional change than at any time in this century. We may get a mayor for London; I now believe that we are within a decade of an independent Scotland; we will have an assembly for Wales with regional assemblies for England. Now, if the government thinks that is what we want, that closer government is in fact better government, then why centralise our economy on Frankfurt and on Strasbourg? Why make the economy so very remote from the people?
I believe that this is the main political and economic issue of our times. I do not believe that the outcome is inevitable. I believe that everything is still to play for, despite what the papers say. So let us all, members of our institute, our distinguished guests, ensure that there is is going to be a full debate. Let us all take part in it and that outcome will dictate how we, our children and our childrenŐs children will live and will prosper.
