But there is no doubt that the unique, intra-European exchange rate certainty that would be provided by a single currency could nevertheless -- through increased competition as a result of greater price transparency and lower transaction costs, and through the associated improvement in resource allocation -- greatly increase the benefits that are to be derived from the single market. So, on the positive side there is no doubt that it would -- other things equal -- be a very desirable complement to the single market. The problem is that other things may not necessarily prove to be equal. Essentially, the downside is that there is a risk that the single monetary policy -- the single short-term interest rate -- throughout the euro-area, which is a necessary corollary of the single currency, may not, in the event, prove to be appropriate to the domestic needs of each of the participating countries. That risk was quite clearly recognised by the drafters of the Maastricht Treaty. They quite deliberately included in the Treaty the famous convergence criteria in order to ensure that countries wanting to participate in the euro-area should have to demonstrate, before they were allowed to join, at least a minimum degree of sustainable economic convergence precisely in order to reduce the risk of divergent national monetary policy needs once the single currency is introduced. Without that, the potential problems could be serious.
On that basis, the euro-area would have no reason -- and certainly no right under European legislation -- to seek to act in any discriminatory way. Indeed, it would be economically damaging to both sides if it were to do so. I have no serious concerns on this score. Assuming, as I do, a continuing responsible and constructive relationship -- which, as I say, would clearly be in our mutual interest -- it seems to me that some of the concerns that are occasionally expressed, for example, about the possible loss to the UK of internationally mobile investment, are exaggerated. I would suppose that, in the future as in the past, investment will be located wherever it is expected to earn the highest return -- indeed I would suppose that shareholders would insist that this be the case. And while exchange rate uncertainty may be a factor in such decisions, it is not at all clear that it is likely to be the decisive factor very often, when set, for example, against the whole range of supply-side influences, including labour market flexibility. Similarly, in relation to concerns about the future of the huge UK financial services industry, the reality is that financial activity will be carried on wherever it can be carried on most conveniently, efficiently and profitably. And in this case, too, the question of whether or not the UK is part of the single currency is unlikely to be decisive.