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Review of:

Business and the Euro: Business Groups and the Politics of EMU in Germany and the United Kingdom by M.E. Duckenfield
Palgrave Macmillan, Basingstoke, 2006
Pages: xiv+257. £55.00

Reviewed By: Roger Henderson
Reviewed in: Journal of Common Market Studies
Date accepted online: 02/11/2007
Published in print: Volume 45, Issue 03, Pages 745-769
See all reviews for this journal

Book Reviews

European Monetary Union (EMU) has produced many conflicts between economists and politicians: improvements in economic convergence and inflation expectations compare with stalled growth and political divisions over EMU membership. The single currency is shared by only 13 EU members, excluding the UK with its concerns about electoral impacts, entry criteria and timing. Business and the Euro adds to the understanding of these tensions by examining interactions during the 1990s between policy-makers and leading business associations, in both Germany and the UK. The book's premise counters conventional wisdom: instead of politicians supporting EMU under pressure from domestic interest groups, approaches to EMU among business associations depend on their responses to stances taken by governing political parties. The business lobby is seen as relatively passive, neither promoting nor blocking EMU on its own initiative.

The book has a symmetrical structure: an introductory chapter that outlines the central question of why business associations in both nations pursued different EMU policies, followed by two chapters each on Germany and the UK covering respectively the politics of EMU and business. The research methodology section is brief with just a passing reference to the choice of associations and interviews and a limited theoretical framework mentioning the economic interest and collective action literatures, emphasizing that business associations are political entities themselves as well as transmitters of members' preferences.

In Germany the ruling coalition promptly encouraged moves towards EMU while business groups, benefiting from the Bundesbank's independence and the D-Mark's anchor role, engaged later in the debate. While many firms saw relatively few economic advantages, the powerful business associations, such as the Bundesverband der Deutschen Industrie (BDI), covering 35 sectors, and the Deutscher Industrie und Handelstag (DIHT) representing the Chambers of Commerce, endorsed the government's EMU commitment, using the lever of adherence to the Maastricht criteria.

The book argues three factors influenced UK business associations' attitudes: their focus on specific, technical policies; their decentralized political organization and narrow policy evaluations; and the governing political party's prevailing stance, a factor complicated by deep divisions over Europe among both Conservative and Labour administrations. The Confederation of British Industry (CBI) was broadly supportive but reluctant to lead without political support, whereas the Institute of Directors (IOD) and Federation of Small Businesses (FSB) were more openly vociferous against integration. The London Investment Banking Association (LIBA) concentrated on technical issues, while the pro-EMU National Farmers Union (NFU) sought early entry.

It is unclear what is the intended audience for Business and the Euro; the main title suggests the business market yet the political, macro-level focus limits references to euro-business issues and to influential individual companies vociferous in the single currency debates. Hence the assumption is the book is intended for contemporary European historians and students of political and institutional decision-making. Nevertheless, whatever the audience, the book offers an informed perspective on the path to EMU, the ramifications of which continue.