The Euro is once more in focus in Britain – and not just because of its strength.

Tony Blair is again trying to force the pace at which the UK decides whether to

join the single currency (finance minister Brown is resisting this effort for reasons

more to do with his rivalry with Blair than his officially stated ‘economic’ objections).

A key part of the discussion is the EU’s ‘Growth and Stability’ Pact.

This pact was a precondition of setting up the Euro, but the more it comes under

scrutiny, the more asinine it looks to be, particularly within the context of a ‘one

size fits all’ currency. Amongst other matters the pact puts a limit on budget deficits.

Fair enough, you might say, but that would be wrong. The size of a government’s deficit

does matter, of course, but this is something that has to be looked at over the

economic cycle as a whole. As the EU’s rules are currently set, it seems as if Germany

will have to either cut spending or raise taxes at exactly the point that its

economy faces the prospect of deflation. What’s the German for Hooverville, I wonder?