Early Warning

by Andrew Stuttaford

Enoch Powell (1912-98) was one of the most controversial British politicians in the second half of the twentieth century, ultimately exiled into some sort of wilderness for his views on immigration.

But there was more to Powell than immigration.  He was notably early to grasp the nature of the European venture—so much more than a free trade pact—for which parliament was being asked to sign up in the early 1970s.

He was also a monetarist avant la lettre (he resigned from a Conservative government in the late 1950s, essentially over its failure to cut spending by enough). In Like the Roman, his biography of Powell, Simon Heffer notes how Milton Friedman wrote (in 1967) that “Powell was the only man in Britain who understood what had to be done with the [British] economy.”  The two men were able to agree over a great deal over the years.

It almost goes without saying that back in the 1970s Powell was warning about the disaster that a European monetary union might bring in its wake.

Here, for example, he is in the course of a parliamentary debate in 1978:

Inflation or deflation, necessitated by the attempt to maintain fixed parities of exchange rate, runs right the way through the story, however, complicated or simple the mechanisms have been. When we had a fixed exchange rate on a gold exchange standard from 1925—I do not need to remind the House and certainly not the Labour Party—this meant that grinding deflation had to be imposed upon this economy.

And that, (in many respects) is what is happening in the eurozone’s periphery.

Food for thought that. And not just in Europe.

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