Ladies and gentlemen: good morning – and thank you to the Congress for Democracy for inviting me to kick off today’s proceedings.

Like any great constitutional debate, the one surrounding Single Currency has thrown up some colourful alliances, as I am sure we will be reminded today. The position of the Greens in the British rainbow of opinion ranged against the Single Currency is not always that well understood. On this issue we do not conform to people’s expectations.

Some amongst the left-leaning liberal classes of British politics who might, in moments of self-indulgence, occasionally vote Green, feel uncomfortable with our opposition to the Single Currency – not because they have listened to and rejected our arguments, but because of ‘guilt by association’. Margaret Thatcher and Rupert Murdoch oppose the Single Currency. What more principled a reason could there be for any self-respecting progressive to support it?

Equally, many on the right are at first glance surprised by the Euro-critical stance of the Greens. Perhaps they have only noticed us at European election time, simply associate us with all things European and look no further.

The difficulty the Greens have in getting our views to be clearly understood is typical of many in this debate. It serves merely to demonstrate the extent to which the debate on the Euro is dominated by political platitudes rather than thoroughgoing economic analysis.

I believe this will present the anti-Single Currency camp with a considerable challenge in the run up to the referendum, because there is a marked propaganda asymmetry at the level of political platitudes between anti and pro.

Of course a simple "keep the pound" slogan wrapped firmly in a Union Jack will appeal very strongly to a sizeable minority of nationalist-inclined voters – people who will probably vote against the Single Currency come what may – but equally, it might well alienate the critical centre ground voters. They will be too easily soft-soaped into believing that this is nothing more than the ranting of the little Englanders and will be beguiled by a deceitful vision of the Euro as the height of internationalism and co-operation – and if not that, by the insistence that it is inevitable anyway.

We need a bulwark against this if we are to capture the votes of the fickle middle ground – we will find it by resisting the temptation of the narrow nationalist appeal and lifting the debate from platitudes to sound economics where the consensus is at its broadest.

For economically, the Single Currency is deeply flawed. From a Green perspective this is most obviously so when one looks at the size and diversity of the area that is covered by the Euro.

This takes us straight into the argument about Optimal Currency Areas, with which many will be all too familiar. But put simply, an Optimal Currency Area is one where the impacts of any economic shocks are not felt too asymmetrically within the area, so that no part of it requires demand management

Orthodox economists argue that labour and capital mobility will help absorb any shocks. In other words, unemployed workers in depressed regions have to mount their bikes and pedal off to where e’er the streets be paved with gold, and investors are meant to invest in the depressed regions where there is a pool of readily available labour, rather than where the market is most buoyant as they tend to if left to their own devises. At some point, enough new investment will have occurred in the depressed areas to allow the remaining workers to leave their bikes in the shed and get a new job locally. At that point, equilibrium will have been re-established within the currency area.

And if it doesn’t quite work that smoothly, the government of the currency area can always bolster flagging regions with some regional aid and fiscal transfers from wealthier regions.

Set against this background, it is overwhelmingly clear that Euroland, particularly if we were to join it, is too big and too diverse to be considered an Optimal Currency Area.

• In 1997, GDP per head in the EU’s richest cities was five times that in the poorest rural areas.
• Unemployment levels in Spain were 10 times those found in Austria or the Netherlands.
• The cultural and environmental capacity for further economic growth varies widely throughout the EU.
• Regional aid and fiscal transfers between the regions of the EU are far smaller in proportion to the extent of these EU-wide regional disparities than the equivalent domestic measures are within most member states.
• And there are natural constraints, such as language and family ties, that limit labour mobility within the EU – even if labour mobility is the unalloyed ‘good thing’ that orthodox economics would have us believe. Psychologists have, after all, found that moving house rates amongst the top five most stressful life events, along with redundancy, but not quite as bad as divorce or the death of a spouse.

That the EU is too large for a Single Currency was proved when the economic shock of German reunification proved so asymmetric that Britain was forced out of the ERM.

Of course, what happened when Britain left the ERM was that it regained the freedom to set interest rates at levels that were thought to suit local needs, and let the currency settle at the corresponding exchange rates.

These are the freedoms that surround an independent currency.

They are the freedoms needed by any government that wishes to tailor its economy to local social, environmental and economic circumstances

But worse still than the loss of these freedoms in any abstract sense, will be the consequences of fitting the diverse area of Euroland into the economic straightjacket of a "one size fits all" interest rate policy, administered by a remote and unaccountable European Central Bank.

Eddie George once commented in a moment of frankness that the Bank of England’s job is

"To maintain macro stability for the whole country, and discrepancies between regions and industries were regrettable, but inevitable."

Perhaps then, even Britain begins to look too large to be considered an Optimal Currency Area. It would certainly help to take the heat off the countryside of the South East and to regenerate decaying post-industrial areas elsewhere if the government where to engage more actively in regional demand management – perhaps by introducing regional variations in National Insurance? [There might even be a case for separate regional currencies – though that might raise one or two small constitutional issues to threaten our happy consensus].

But if regional discrepancies are inevitable in Britain, they certainly are in Euroland, only in Euroland; regions could amount to entire countries. This means that as economic shocks impact on Euroland, entire countries are likely to become subject to ‘inevitable if regrettable discrepancies’. As I have already mentioned, regional policy in the EU is relatively weak and labour is not as mobile as capital, nor should it be expected to be, in my view. There will be little then, and certainly not the luxury of national government influence over exchange rates, to lift discrepant regions out of a state of economic despair.

Over time, these regional discrepancies, imposed by an un-elected committee of bankers, coupled with national impotence in rectifying them, are likely to lead to resentment and possible unrest. If anything, the Euro threatens to be a force for European disintegration rather than the opposite.

But of course, these arguments are not new. They are well trod and well anticipated by the opposition.

The Convergence Criteria and the Stability Pact, they claim, minimise the risk of large regional disparities and the Single Currency will reduce costs, introduce price transparency, eliminate exchange rate uncertainty, and so boost trade and growth.

But their arguments invite many more objections than they answer – and are in large part self-contradictory.

• The Convergence Criteria were fudged in the case of Italy and Belgium, reflecting the essentially political imperatives that drive the Single Currency project, but even so Governments’ effort to squeeze budget deficits to meet the criteria were responsible for millions of lost jobs throughout Europe.
• The Stability Pact perpetuates a rigid form of monetarism. States within the Single Currency will be fined if their budget deficit is greater than 3% of GDP. The fines will of course worsen their deficit and the Pact introduces a deflationary bias that will destroy jobs and public services in times of recession. [Even William Hague it seems, no doubt under Michael Portillo’s tuition, has accepted public services might need to be protected in times of recession.]
• The Single Currency clearly does deliver exchange rate certainty and price transparency to participating Member States. It also reduces exchange transaction costs. This might, as is claimed, increase trade and growth, but on the other hand, it might not. Even leaving aside the good Green argument that there is more to life than yet more growth and trade, these so-called benefits of the Single Currency come as a package together with the risks we have already identified and are likely to be more than outweighed by them.
• The Single Currency is also widely expected to increase the mobility of investment decisions within Euroland, leading to a more mergers, acquisitions and restructuring. For this we can read the loss of more jobs and the closure of more smaller locally-owned businesses, ones that are responsive to local needs and rooted in their community. As a result, economic power will be further concentrated in the hands of the multinationals that are already big enough to compete on a European scale and the unaccountable nature of the Single Currency project will be reinforced.

As with all economic arguments, the view people adopt, depends on their assessment of the balance of probabilities, but to my mind the case for an independent Pound is overwhelming.

It is a case based on the defence of our democratic right to run our economy to meet the needs that we identify. It’s not a right I seek because I am British and the people in Brussels and Frankfurt are not. It’s a right I want all peoples to claim for themselves as they best know the full range of their social, environmental and economic needs and are best placed to know how those needs should be met.

And this Congress is a testament to the fact that it is a right that is worth defending and worth uniting across political divides to defend. [Although of course, having united to secure that right, we’ll be free to resume our reassuringly normal arguments about what needs our economy should be serving and how it should be made to serve them.]

Happily, it’s not my job to distil the economics of the Single Currency into the three or four vote-grabbing words of a Sun front-page headline. So I’ll resist the temptation to try and summarise and leave that for Trevor Kavanagh when he speaks.

Thank you very much.