Never say never about GBP joining the eurozone

As any long-serving member of the foreign exchange markets will attest, GBP’s formal relationship with its continental counterparts over the past 20 years or so has been far more a product of political than economic considerations. How else is it possible to explain Chancellor Nigel Lawson’s somewhat curious decision back in 1988 to shadow the DEM at a time when West German interest rates were set at a level that was clearly too low for the needs of the UK economy, leading Edward Heath to call Lawson a “one club golfer”? Equally, it is hard to see the UK’s decision in October 1990 – a month before Margaret Thatcher was forced from office – to join the ERM at what was clearly an inappropriate rate as being driven by anything other than the exigency of politics.