A Research On The British Policies Towards European Monetary Integration,1970-1990

Monetary integration is an important part in the process of European integration.As a big power in Europe,the UK did not play a leading role in European monetary integration.It joined European exchange rate arrangements in 1972 and 1990,but before long it separately dropped out of these arrangements.During most of the period from 1970 to 1990,the UK remained outside the core arrangements of European monetary integration,and now it is still not in the Euro area.Yet,the British policy towards European monetary integration and its effect on the relatiosnship between the UK and Europe is still an issue much concerned by the acdemic circle.It is the task for this dissertation to explore the British policies on this issue during 1970-1990.The dissertation consists of six parts.Cahpter 1 is an introduction.It tells why the author chooses the theme,how scholars in China and abroad studied the theme,and what they've obtained.It ends with an explanation of how the work is done and how the dissertation is organized.It also proposes a research framework and briefly points out the possible innovations and shortcomings of the disssertation.Chapter 2 provides historical background.It studies the evolution of British international monetary policy from the end of World War ? till the coming into office of Edward Heath in 1970.It explores the difference between the UK and US on the postwar monetary plans and how they compromised,and pays great efforts to analysing British position in the European Payments Union negotiations,the difference of the opinions on the reform of Bretton Woods system between the UK and the European Economic Community countries,and the sterling problem during Britain's applications to join the the European Economic Community.This will make it easier to understand the main parts of the dissertationChapter 3 deals with the Heath Administration's policy towards European monetry integration during 1970 to 1974.Mr.Heath,perhaps then the only Prime Minister with the strong European idea,had the ambition to lead UK fully into the process of European monetary integration,so he decided to join the Snake in the Tunnel exchange rate mechanism in 1972.But to his disappointment,Britain had to withdraw from this mechanism with a great loss on British reserves after just a few weeks,and this kind of humiliating experience made it harder for Britain to join the Joint Float next year.This decision was made also due to Gemany's negative attitude towards more generous credit arrangements.Anyway,this outcome was not expected by Heath because he really wanted Britain to take full part in the process of European monetary integration.Chapter 4 analyses the Callaghan administration's position on the negotiations of European Monetary System in 1978.Because of the shock of oil crisis,the process of European monetary integration almost came to standstill after 1973,but German Chancellor Helmut Schmidt and French President Giscard d'Estaing relaunched that process in 1978 by agreeing to establish the European Monetary System.This initiation also intended to counter the "Weak Dollar" Policy of the Carter Administration.But Prime Minister Callaghan doubted the intention of Schmidt and Giscard d'Estaing's plan from the beginning,since he thought it was a plan to sacrifice Sterling to ease up the pressure on Deutsche Mark.And at that time,Callaghan's position in domestic politics was under strain,and he didn't intend to risk splitting the Labour Party by European isssues.So at the end of a long negotiations,the UK,although joined the system,rejected to join its core arrangement,the Exchange Rate Mechanism.Chapter 5 thoroughly examines the Thatcher Government's characteristics of decision-making on the issuses of Exchange Rate Mechanism and Economic and Monetary Union.Prime Minister Thatcher,a tough-minded female,resisted the pressure of joining the Exchange Rate Mechanism from her Chancellor and Foreign Minister for several years.In her mind,if Britain joined the mechanism,it would not get enough economic payback,and have the risk of losing the tools to regulate British economy.Although she did reluctantly agree to join the Exchange Rate Mechanism in order to maintain unity in her party and cabinet,she did not escape the fate of resignation finally,mainly because of her strong opposition to Economic and Monetary Union.She regarded the European Central Bank and the single currency as the inevitalble steps to a superstate Eueopean Federation.Was her calculation of British national interest on this issue reasonable or not?Did she use the wisest strategy in fulfiling her objective?All these questions are discussed in this chapter.The last chapter is a conclusion.This dissertation argues that British policies towards European monetary integration varied in different occasions because of changing of the situation,but they did show the strong sign of continuity and coherence.Though the UK always maintains some kind of links with the European monetary integration process,in essence it is the distance it kept with the process that made its policy unique.Its policies could be seen as a typical response to regional integration and economic globalization by a country with a special position in Europe,which we may call "the British Way".It is a comprehensive policy response to historical background and multi-layer and various kinds of influencing factors.In conjunction with different policy-maker's decision-making styles,the British Way could have different kinds of manifestaion,and produce strong influences on the British domestic politics and UK-Europe relations.Generally and retrospectively,the British Way suited its national interest to certain extent then,but it has a strong feature of pragamatism.On the one hand,the UK wanted to impose greater influence on the direction of Europeann integration;on the other hand,it also did its best to hold her sovereignty on the sensitive and core issue areas.These two aspects of consideration sometimes did lead British policy-makers into a dilemma.