By far the major reason why the EU growth rate has fallen from the very high levels achieved during the 1950s and 1960s - averaging nearly 6% per annum - to the much lower rates since the early 1970s has been misguided attempts to lock the currencies of Member States together. Every time this was done - first with the "Snake" between 1971 and 1976, and then with the Exchange Rate Mechanism between 1979 and 1993 - the EU growth rate fell. This happened because for almost all of the time no other country could compete with Germany’s export competitiveness and low inflation. As the object of currency stability was to stop devaluations, all the countries having difficulty competing were then left with no alternative but to deflate their economies to protect their balance of payments. In turn, this hit German output, since two thirds of German exports went to other Member States. The inevitable result was a cumulative decline in the whole EU growth rate. During the early 1990s, output was almost stagnant across the whole EU, before the ERM was effectively abandoned in 1993.

Slow growth rates have a huge impact on the standard of living. If the population is roughly stable, an increase in national income of 2.1% per annum produces a cumulative increase in living standards over a quarter of century of just under 70%. If the growth rate is 3.7% per annum, living standards rise over the same period by nearly 150%. If, as in China, output is expanding cumulatively at a little over 9% per annum, over 25 years the economy grows to nine times its initial size. At this rate, if present trends continue, living standards in Europe will soon be completely outclassed by those in Pacific Rim countries, including China within perhaps as little as two decades.

Every country’s power and authority in the world is much more closely related to its economic performance than to any other variable. Military prowess cannot be sustained if the industrial and financial capacity to support it is absent. Other ways of influencing world events - whether directly by trade dominance, investment and aid programmes, or indirectly by having the resources to set trends, sustain a strong cultural identity, and provide an example to other countries - all depend to a greater or lesser degree on economic success. As Europe’s economy has declined relative to other parts of the world, so its influence has waned in the United Nations, the World Bank, the World Trade Organisation, and many similar international bodies, and will continue to do so, unless current trends change.

Unquestionably, there is. Over all the developed world during recent decades there has been a steady increase in productivity of those in employment, even if the economies in which they live and work have been growing slowly. These increases in output per person have occurred because of growth in the use of computers, new capital equipment, better training, more cost effective management methods and increased competition. In countries where demand and output have been going up fast, rising productivity has led to increased incomes and higher living standards. In slow growing economies, the results have been much more problematic. If productivity among those in employment rises by 2.5% per annum - about the EU average - but economic growth is only running at 2.1%, the simplest calculation shows that about 0.4% of the members of the potential labour force will lose their jobs every year.

This is what has happened across the EU. If unemployment rises by 0.4% for 25 years, 10% of the labour force will become workless. The number of those registered as unemployed in the EU, at about 12% of the registered labour force, is now rising towards 20m. The number of people who would work if they could is much higher - about 30m - as can be readily calculated from published Eurostat figures. The EU’s desperate unemployment problem is a direct result of its slow growth rate.

Yes there is. Conditions need to be created which will enable EU Member States to take the action needed to make them grow more quickly again. Much more expansionist policies are required, appropriate to each of the varied EU economies, based on low interest rates, plentiful sources of borrowing, especially for productive investment, and exchange rate adjustments to enable European industry to become competitive again. Not only does the value of most EU currencies need to fall to be competitive with the Far East - and of course sterling especially so - but clearly there need to be parity adjustments between countries such as Spain, now suffering from 21% registered unemployment, and other parts of the EU where unemployment is much lower. This is the only way to enable the EU economies to grow at least as fast as the world average, which the IMF estimates was as high as 4% last year, let alone to provide Europe with a chance to keep up with the pace being set in the Far East.

Unfortunately, moves towards the Single Currency are leading the European Union in entirely the wrong direction. Instead of making it easier to alter exchange rates in response to shifts in competitiveness, the intention of monetary union is to make such changes impossible. Instead of encouraging expansion, fulfilment of the Maastricht criteria - a requirement for all Member States, whether or not they intend to join the Single Currency - is causing the EU’s limping growth rate to slow down again. In 1996 it was only 1.6%, although Britain did a little better, mainly because of our earlier departure from the ERM. Instead of making the European Union more competitive, still more deflation and falling investment levels will guarantee that EU manufacturing industry gets further and further behind the rest of the world in competing both in the key growth sectors for the future and the production of mass market consumer goods.

Britain should not only explain why it intends to stay out of the Single Currency, if the first tier goes ahead at the beginning of 1999, but British political leaders must also try to persuade the other Member States not to go ahead with the Single Currency at all. It is not in the interest of the EU that monetary union should proceed, and it is certainly not in the interest of the UK that the economies of the continental countries should falter. If the Single Currency is going to lead, as all the evidence suggests it will, to lower growth, higher unemployment, rising fiscal deficits, penalties under the Stability Pact, rising taxation, cuts in public expenditure and falling competitiveness, it would be much better if the whole project were abandoned in the interests of all the countries and peoples of Europe.

It may well be possible to achieve this goal now. It is increasingly clear that, apart from Luxembourg, none of the countries which want to join the Single Currency will meet the Maastricht criteria. Opposition to monetary union is now much more widespread than it was, as evidenced particularly by the June French general election. The dishonest fudging which has been going on, even in core countries such as France and Germany, has discredited the project to an extent which seemed inconceivable a few months ago.

Even if the euro does come into operation on 1st January 1999, it is far from certain that the Single Currency, once established, will last. The European Union lacks the key characteristics for a successful single currency area. There is almost no capacity for redistributive taxation between successful and unsuccessful countries and regions. There is no equality of competitiveness on which to build. The strains on the Single Currency, as with the Snake and the ERM, are therefore likely, before long, to become unbearable.