Euro Policy Updated April 2002 What is the EURO? The Single Currency, Economic and Monetary Union (EMU), known as the Euro, was launched on 1 January 1999. The conversion rates of participating national currencies were irrevocably fixed and the Euro became legal tender in the 11 countries. Coins and notes began to be circulated from January 2002. Who's in it? Participating countries in the Eurozone are: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. Those currently out of the Eurozone are Denmark, Greece, Sweden and the UK. UK Government Position In principle the UK Government is in favour of joining; in practice the economic conditions must be right. The Government has stated that if it is clearly and unambiguously in the national economic interest to join, there is no constitutional bar to joining. The Chancellor's Five Economic Tests will define whether a clear and unambiguous case can be made. They are: sustainable convergence between Britain and the economies of a single currency; whether there is sufficient flexibility to cope with economic change; the effect on investment; the impact on our financial services industry; and whether it is good for employment. The Government has said that the Treasury will complete an assessment of the Five Tests within two years of the start of this Parliament. The assessment has not yet started, but the necessary preliminary analysis is underway. On the basis of the assessment, the Government will take a decision on whether the Five Tests have been met. If the Government recommends UK entry, it will be put to a vote in Parliament and then to a referendum of the British people. Government, Parliament and the people must all agree. http://www.hmtreasury.gov.uk/topics/ topics_euro/topics_emu_index.cfm TUC / STUC Position British Trade Unions have a range of views on the Euro and its potential impact on union members. Unions representing workers in manu-facturing industry have been alarmed at the impact of the high pound in relation to the Euro. However unions in the public sector see that the adjustment of the exchange rate could impact on stability and lead to inflationary surges which could prompt the independent Monetary Policy Committee to impose interest rate increases and the Government to reduce public spending. Therefore the TUC and the STUC have both taken a cautious approach to the subject which accommodates all positions and emphasises the need for a public debate. (TUC General Council Report Chapter 3 - The European Dimension August 2001) http://www.tuc.org.uk/congress/tuc-3617-f0.cfm UNISON's view As the largest union representing public sector workers UNISON is opposed to UK membership of the Euro. UNISON's EURO policy was most recently debated at National Conference 2001, (UNISON and a Single Currency: Motions 6 and 9). Opposition is based on 3 principles: The deflationary effect of EMU on employment and growth. The impact of the rigid convergence criteria and stability pact on public spending and welfare provision. The loss of economic control to an undemocratic, unaccountable European Central Bank. We welcome Gordon Brown's 5 economic tests but believe that a greater emphasis should be placed on employment and growth and the Public Sector. Our principal concern is EMU's impact on public spending, the provision and quality of public services and the knock-on effect on jobs within the public sector. We fear that the existing convergence criteria (which limits public expenditure deficit to 3% of GDP) will effectively cap expenditure for years to come. Recent developments between the Chancellor and the European Commission illustrate our concerns. The European Commission has challenged the Chancellor's public spending plans for the next three years. The Commission believes an increase in public spending will mean the Government effectively exceeds the public spending deficit level of 3% and therefore strays outside the criteria. Gordon Brown quite rightly has challenged the Commission's assessment and has made it clear that he intends to continue with his ambitious public spending plans. Whilst he should be congratulated on this, it should be noted that such restrictions and inflexibility are part and parcel of economic and monetary union and do by their nature impinge on national parliaments' spending plans. (UNISON Policy Document: Jobs, Growth and the Euro, 2001) http://www.unison.org.uk/resources/index.htm UNISON Scotland's Position UNISON Scotland is concerned about the impact of EMU on regions within the UK. Scottish Council February 1999 agreed a motion stating that: "EMU fails to provide adequate scope for either a domestic or European response to differential regional economic performance" UNISON Scotland believes public debate over future UK membership of the Single Currency has been superficial at best. The implications of EMU on the economies of the countries and regions of the UK has attracted insufficient attention. Whether or not the UK ultimately joins the single currency, EMU will have profound consequences for regional economies. UNISON Scotland supports the re-invigoration of regional policy at home and in Brussels, to ensure that economic growth is distributed in an equitable way. Public services are crucial in supporting economic development activity, and job creation in both public and private sectors. Action for Branches: Discuss EMU at your branches - invite guest speakers. Write to local newspapers / participate in radio phone-ins expressing UNISON concerns on EMU, to encourage wider debate. Speak to your employer about EMU, explain to them UNISON's position.

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