The UK is trading just fine, together.







This is a brief response to Ed Conway “The UK is becoming a disunited Kingdom”writing in The Times (£) on 8th December. 

Mr Conway – Sky News Economics Editor – argues that the various UK regions do not constitute an “optimal currency area” and should not be sharing a single UK market and common currency.

Normally questions of single markets and currency areas would be the stuff of arcane economics – the sort of thing I’d be teaching to second and third year university students. However, it is pretty clear how commentary like Mr Conway’s could play into some current debates.

An intuitive presentation of what an optimal currency area might go something like this- because Newcastle-upon-Tyne and Newcastle-under-Lyme and Newcastle County Down do a lot of trade together it makes most sense that they share a currency: the pound sterling.

But imagine a town called Neuburg in Germany, the flow of trade between Germany and any of the UK Newcastles would be much smaller. Also, many other economic conditions would vary between the UK and Germany. Therefore, it makes sense for the UK to use the pound and Germany to use a different currency (the Euro, at the moment).

But, back to Mr Conway.

His argument that the UK-wide single market and currency area is breaking up is rather exaggerated.

He claims, for example:

 “…Northern Ireland is edging closer to its immediate neighbour”

However, the most recent data show that 86% of all of the sales of the Northern Ireland economy stay within the UK – 66% to Northern Ireland itself and the rest to GB – compared to only 5% to the Republic of Ireland.

Other UK regions are also trade dependent on the rest of the UK.

The UK optimal currency area/single market still has a strong economic rationale.


Dr Esmond Birnie – Economist