Blickpunkt Großbritannien Büro London November 2008 “It might be politically toxic- but we must join the euro now” It is the City's need to borrow at least£100bn a year for the foreseeable future, on top of the government's need to borrow the same- made acutely more diffi­cult by a sterling crisis- that is the heart of the problem. Suddenly membership of the euro- politically toxic- is beginning to look a very attractive escape route. Will Hutton* When the euro launched nearly 10 years ago, an unnamed euro-sceptic currency trader- now almost certainly redundant- famously called it a toilet currency. Last week it climbed to an all­time high against the pound. Moreover, in Washington this weekend, the euro was the most important currency next to the dollar. The ease with which it can be converted into other currencies, and in huge scale, are two key preconditions to being a reserve currency. The euro and dollar qualify. So does the smaller yen. * Will Hutton is Chief Executive of The Work Foundation and a well-known writer and colum­nist. This article was first published in The Ob­server , November 16 th , 2008. Sterling does not. It may be convertible, but at present only sellers are exercising their rights. Three months ago a pound was worth more than two dollars. On Friday it bought$ 1.48 – an extraordinary fall. Shadow Chancellor George Osborne blames Gordon Brown's excessive government borrowing. The explanation is far more complex, and for a Conservative, far less congenial. For years Britain has indulged the City, allowing our financial system to grow four and half times the size of our GDP, a more modest version of Iceland, Ireland and Switzerland, but with the same risks. Friedrich-Ebert-Stiftung London Office The Chandlery(609) 50 Westminster Bridge Road London SE1 7QY, UK Phone+44(0)20 7721 8745 Fax+44(0)20 7721 8746 e-mail website feslondon@feslondon.org.uk www.feslondon.org.uk