Peter Jackson column

Mar 29 2007 By Peter Jackson, The Journal

It may be getting a little late in the year, but I'll make a prediction. By the autumn Europe will have moved back up the political and business agenda.

For one, the European Union, will adopt its usual policy to any vote or referendum which goes against its dearly held wishes, namely to operate on the `let's make it best of three then' principle, and consult the people again, hoping for a more favourable result.

Already the Commission and the German presidency are agitating for a revival of the constitution which was so decisively rejected by the French and Dutch, even before we had the chance for a spot of decisive rejecting ourselves.

There will also, I suspect, be a temptation to test Gordon Brown's resolve before he has fully consolidated his position.

And then, there's every chance the question of British membership of the euro could raise its head again.

Oh, I know, the Europhiles were put to rout last time and just about every one of their arguments has been discredited - the British economy has done very well thank you outside the Eurozone, London's position as Europe's financial capital is stronger than ever, our share of trade has not been diminished and British tourists were not won over by the thrill of handling euros.

But, the pound has been moving upwards against the dollar and, despite some downward moves earlier this week, there are predictions of it rising even higher. It will even break through - what business journalists love to describe as the `psychologically important' - US$2 barrier.

The driver for this will be the threat of inflation and therefore the need to raise UK interest rates.

If this happens and the pound does rise, there will be cries of anguish from business leaders, particularly those who depend on a cheaper pound to make their exports affordable.

Then we can expect to hear again the voices that call for euro membership to cushion us against the perils of currency fluctuation.

These voices will perhaps be less strong than they were 10 years ago and they will be no less mistaken, but they could find an audience here in the North-East with our reliance on manufacturing and export.