Flight of the EMU: Business groups and the politics of Economic and Monetary Union in Germany and the United Kingdom

This dissertation examines the attitudes and activities of business associations regarding Economic and Monetary Union (EMU), the European Union's project for a single currency. Prior to 1999, business associations had ample opportunity to take part in the political battles within their nations over participation in monetary union. In both Germany and Britain, EMU was a divisive political issue with polls regularly showing that the majority of the population was opposed to the project. Nonetheless, German business groups were united in their consistent support for German participation in monetary union. In contrast, British business associations were divided over the possibility of British membership and pressed their positions very weakly, if at all. Explaining the different responses of business associations in these two countries is the primary purpose of this dissertation.; National differences in the political organization of business influenced the extent to which different associations were able to consolidate a position on EMU. Specifically, the degree to which the associations of an industry were vertically-integrated within a common institutional framework heavily restricted the autonomy of subordinate-level associations. Industrial associations that were part of an encompassing "association of associations" deferred to the political position of higher-level associations. These federations of associations had long-standing relationships with governments and existed as quasi-official institutions. As a result of the close and frequent interactions with government institutions and political parties, these peak associations sought cooperative relationships with the government. The vertical integration within German business associations is the mechanism that provided nearly unanimous business support for EMU in Germany. Industrial associations that lacked such direct linkages with other associations and did not have such intimate relations with the government had more variance in the political positions their leaders could stake out, although most resisted taking a stance on EMU. The relative absence of associational integration led to greater fragmentation of interests across British business associations. Even so, the interactions between Britain's peak associations and the British government were characterized by the same cooperative dynamic that the Federation of German Industry displayed in its involvement with the German government and political parties.