The Euro and its consequences for the United Kingdom

(This article is under construction and will only consist of key bullet points as it is being

assembled)

European Government's Accounting Practices

Unfunded Pension Liabilities

The amount of unfunded pension liabilities in Europe are huge. Even the United Kingdom, which has one of the lowest national debts in Europe has very considerable unfunded pension liabilities. Most Governments and Central Bankers have little understanding of these liabilities as no official estimate has ever been produced. Nevertheless these liabilities reprasent real promises given by Governments which were never properly costed. Most of the liabilities were incurred in the socialist atmosphere of the 1970s when politicians were free with their promises and electorates were not sophisticated enough to understand the true cost to future generations of such promises.

The only estimate published (since believed to have been withdrawn under pressure - possibly from embarrassed Governments) was by a Dutch insurer in 1990:

	UPL in ECU Billion	% UPL/GDP	%Debt/GDP	%Total/GDP
Belgium	184	112	128	240
Denmark	108	97	67	164
France	1,078	106	47	153
Germany (West)	2,290	179	44	223
Greece	112	196	96	292
Ireland	38	103	102	205
Italy	1,723	184	98	282
Luxembourg	19	238	7	245
Netherlands	510	210	79	289
Portugal	85	167	68	235
Spain	770	183	45	228
United Kingdom	582	70	40	110
Total	7499	145	60	205

The effect of a single currency is that the United Kingdom would have to take on its share of Europe's Unfunded Pension Liabilities - equivalent to about 100% of our GDP which is currently some £700 Billion. One currency must ultimately mean one balance sheet with common assets and liabilities. Therefore, if the United Kingdom enters a single currency every man, woman and child would take on a European liability of some £11,864 each - more than doubling the debt per head.

Copyright David Shaw MP, April 1996