1. The decision not to join the EUR at its inception (in 1999).
2. The inequitable austerity regime that restricted UK GDP growth post 2007/8 financial crash. (Note: GDP growth plays a major part in currency values).
3. The Brexit referendum (when UK turkeys voted for Christmas) seriously restricts GDP growth prospects - in particular from exports and rapidly increasing domestic inflation.
I would disagree with 1. The Euro crashed around the millenium by a third of it's value, so it's subsequent rise is not surprising - it has been in positive territory against all the other currencies for most of this period. As for 3 ...... yes, financially Brexit was a Turkey vote !
I did do some work years ago looking at the early years of the Euro when I would agree that there were definitely some significant early stumbles; however, despite those stumbles, I concluded that UK citizens would still have been better off financially had the UK joined the Euro at its inception.
With regard to where we are today, I have absolutely no doubt that UK citizens would be considerably better off without that monumentally dumb Brexit referendum.
The EUR has done remarkably well (even with a series of self-inflicted wounds) especially when you consider the relentless attempts to sabotage both the EU (EEC at the time of joining) since the UK joined and the EUR since its inception.
The UK had also done remarkably well since it joined the EEC on 1st Jan 1973 when it was the sick man of Europe - a state of sickness that, very sadly, the UK Brexit referendum effectively voted to return to (anyone who has had the years of experience that I have had with exporting is more than well aware that outside of Europe it is extremely hard to find new markets that have customers that are actually credit worthy and countries that won't be seriously pissed at a UK that has an electorate that has declared itself to be racist and intolerant of foreigners).
The real impact on the GBP of the Brexit crash and its ever continuing decline is actually worse than it is portrayed as the percentage fall in the GBP is not the same as the percentage increase in cost it generates – there may be some who retain a memory of that quirk of percentages from their schooldays; this is it in chart form:
Returning to the problems of the early days of the EUR; from my aging memory (as I can’t find it in the files on the laptop I have with me) some of the early problems I identified related to:
- 1. Being new, everyone was on a learning curve.
2. It was almost wholly an “electronic” currency when launched (before the days that internet banking started to really take off).
3. There were no notes or coins until 1 January 2002 (although banks and businesses did rapidly learn to cope with using and converting legacy notes and coins)
4. Geopolitical concerns:
- a. From the UK not having joined.
b. Denmark being in referendum limbo land.
c. Parties that had (and still have) a vested interest in the failure of the Euro and the EU failing.
Anyway, rather than rely on my faulty memory, this is the extract on the launch of the Euro from the Wikipedia article on “History of the Euro”.
The currency was introduced in non-physical form (traveller's cheques, electronic transfers, banking, etc.) at midnight on 1 January 1999, when the national currencies of participating countries (the eurozone) ceased to exist independently in that their exchange rates were locked at fixed rates against each other, effectively making them mere non-decimal subdivisions of the euro. The euro thus became the successor to the European Currency Unit (ECU). The notes and coins for the old currencies, however, continued to be used as legal tender until new notes and coins were introduced on 1 January 2002 (having been distributed in small amounts in the previous December). Beginning on 1 January 1999, all bonds and other forms of government debt by eurozone nations were denominated in euros.
The value of the euro, which started at USD 1.1686 on 31 December 1998, rose during its first day of trading, Monday, 4 January 1999, closing at approximately USD 1.18. It was rapidly taken up and dealers were surprised by the speed at which it replaced the national currencies. Trading in the Deutsche Mark was expected to continue in parallel but vanished as soon as the markets opened. However, by the end of 1999 the euro had dropped to parity with the dollar leading to emergency action from the G7 to support the euro in 2001.
Later in 2000, Denmark held a referendum on whether to abandon their opt-out from the euro. The referendum resulted in a decision to retain the krone, and also set back plans for a referendum in the UK as a result. The procedure used to fix the irrevocable conversion rate of 340.750 between the Greek drachma and the euro was different, since the euro by then was already two years old. While the conversion rates for the initial eleven currencies were determined only hours before the euro was introduced as a virtual currency, the conversion rate for the Greek drachma was fixed several months beforehand, in Council Regulation 1478/2000 (EC), of 19 June 2000.
Full article: https://en.wikipedia.org/wiki/History_of_the_euro
This link to “The Telegraph” has an interactive graphic of the EUR/GBP rate from its launch to 2008, it clearly shows the stumbling of the Euro that Rick refers to at its start and then its recovery: