| Rate Rise |
10 November 2003
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Bank of England Raises British Interest Rates
While their Continental trading partners have struggled with recession, the British economy is having different troubles, namely too much consumer spending and debt. So, the Bank of England raised its base rate to 3.75% , up a quarter of a point. Good thing Britain is outside the eurozone.
If viewed as a reversal of July's precautionary cut, then the move is a mere adjustment. Some, though believe that it is the beginning of a trend that will eventually put the base rate at 5% in twelve months time. In either case, this move will help the case of the Eurosceptics who want to keep the pound. The independence of the Bank of England is the only factor that permitted this move. Vital though it would have been, had Britain been in the eurozone, the rate increase could not have happened.
Prime Minister Blair is committed to the euro when the time is right. His Chancellor of the Exchequer, the Right Honourable Gordon Brown MP, PC, less so. And the opposition Tory Party has yet to decide if it wants to be part of Europe at all. The only party really pushing for membership in the Continental currency group is the Liberal Democrats. They may wish to reconsider.
Britain has always been economically out of step with Europe. While that has been a negative at times, there are occasions when growth there has aided growth elsewhere, and vice versa. Abandoning the pound, and thereby the ability to set Britain's house in order, can actually be seen as anti-Europe in such a light.
Regardless of the outcome of the next election, it will be fought partially over the pound-euro issue. While Mr. Blair has promised a referendum before ditching the pound, he and his party need to consider whether the intellectual purity of a single currency is worth losing the ability to keep Britain's economy on an even keel. As much as one may wish the EU well, keeping Britain apart that small bit may just be good for the entire project.
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