Weaker economies should be allowed to leave the Euro

11 August 2011

In response to Osborne’s statement on the Eurozone and UK’s recovery.

Dr Eamonn Butler, Director of the Adam Smith Institute, says:

On greater fiscal integration in the Eurozone

“Greater fiscal integration in the Eurozone may be the only way to keep the Euro together. But few people in Europe, apart from its leaders, actually want to be part of a tax and welfare union. It would be better to let the weaker economies leave the Euro. Unfortunately the Euro is a political project rather than an economic one. But you cannot defy economic reality forever. It is bound to split, and Britain should be trying to make sure that happens in a measured way rather than as another crisis. And we should be urging that European governments need to do much more to balance their books and get out of debt – which is the whole reason why markets have ceased to trust governments and central bankers.”

On this autumn’s growth agenda

“The Chancellor's promise of further action on the growth agenda this autumn is now vital. He should start by lowering company taxes and national insurance, both of which make firms hesitate to take on workers. The 50p tax rate should be abolished, because it simply drives investment abroad. And most regulation on the smallest firms should be scrapped entirely.

“Claims that the UK recovery have been 'choked off' by public spending cuts are plain daft. The public sector is the least productive part of the economy – indeed, its productivity has been falling. If we are to get out of our debt hole, we must lift the burdens on the private sector, which is our only hope of economic growth.”

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