journal of european integration history revue d'histoire de l ...

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Juhana Aunesluoma
for Britain “for obvious reasons”. 28 Hence, if Britain was not to contract out of Europe
completely, Scandinavia was their only chance.
Irrespective whether this reasoning made much sense as a long-term strategy for
Britain's European policy, the economic implications of a closer association between
Britain and Scandinavia could not be overlooked. The original British studies over the
pros and cons of an Anglo-Scandinavian economic association were remarkably optimistic
both in terms of the extent of the projected association and the timetable of its establishment.
What the British originally suggested was Scandinavia's association with
the sterling area as “non scheduled territories”, without participation in the gold or dollar
pools. In effect, this would have meant full freedom of currency convertibility and
capital movements, which would in turn have led to a situation where both the sterling
area and the Scandinavian countries would have agreed to hold each other's currencies
without limit, i.e. would give each other unlimited short term credit. Otherwise the British
did not suggest any far-reaching concessions in the most important and difficult
fields of tariffs and the allocation for export of scarce raw materials such as coal, but
such an extensive financial liberalisation within the group would undoubtedly have had
implications on trade in due course.
The initial Whitehall view, that there did not appear to be any serious objections
for closer economic association, was subsequently revised when the plans were
first discussed with the Scandinavians in December 1949 and January 1950. 29 The
Swedes in particular were concerned lest they would end up financing the whole
scheme, as they already held substantial sterling balances as a result of the imbalance
of Britain's imports and exports with Sweden. As the Swedes saw it, the deepening
of economic relations between Britain and the Scandinavian countries was
ultimately dependent on the degree of equilibrium in the trade between the countries
as long as multilateral trade was not re-established elsewhere.
What proved most damaging to the British proposals was how further studies revealed
that they would actually increase the existing disequilibria and probably lead to
further increases of sterling balances in Sweden and Denmark in the short term at least:
in plain words, a further increase of the credit they were already giving to Britain. 30 Not
surprisingly, this made the Swedes especially apprehensive that they were to finance the
whole scheme, a concern that was already familiar from studies conducted on the feasibility
of further Scandinavian economic integration. Hence the Swedes were keen to
find out what the British could give them in return in trade matters. As was soon found
out, there was nothing to be expected on that side. Most important for Swedes and
Danes were British exports of coal, which had not been touched upon in the preliminary
discussions. Indeed, trade was scarcely mentioned in the discussions, which centred
around financial and payments problems. 31
28. Ibid.
29. Treasury memorandum, 'Scandinavia. The Financial Problems of closer Union', 8 November1949, T 236/
5370; Treasury memorandum, 'Scansa', undated, T 236/5371, PRO; Sharman Wright minute, 3 November
1949, OV 28/31, BEA.
30. Berthoud memorandum, 'Ukiscan', 20 December 1949, FO 371/78139, PRO.
31. Playfair to Christelow, 20 December 1949, FO 371/78139, PRO.