One such change would be to ensure that the inflation target should be able

One such change would be to ensure that the inflation target should be able to adjust for the range of members within the eurozone and their differing stages of economic development, a point I made in this column on 27 May. Although this might lead to a lack of clarity about the ECB’s underlying economic objectives, it really should not be too much of a problem: after all, the Federal Reserve has a better reputation than the ECB within financial markets, yet has no inflation target whatsoever.The more difficult area lies within the field of monetary and fiscal policy co-ordination. If you believe that monetary policy should be aimed at stabilising the macro economy whilst fiscal policy should be aimed at microeconomic supply-side reforms, then the case for co-ordination would appear not to be that great. However, if we enter a world of liquidity traps, helped along by excess private sector debt, the case for a co-ordinated macroeconomic response becomes a lot stronger.

Yet, under current arrangements, it is difficult to see how the eurozone could achieve the necessary degree of co-ordination. Monetary policy decisions are taken at the eurozone level, whereas fiscal policy decisions are taken at the national level and are constrained by a set of euro-wide rules in the form of the Stability and Growth Pact.If the need for monetary and fiscal policy co-ordination increases, there are only two realistic ways forward. Either monetary decisions are devolved to the national level or fiscal decisions are centralised at the eurozone level. In other words, either the eurozone breaks up or it evolves into a much more federal system. In contrast, the current system may not be a steady state when faced with new economic challenges.Now, I’m not going to take a view as to which of these two directions is the more likely.

Suffice to say that if monetary and fiscal decisions eventually need to be co-ordinated, the current eurozone economic arrangements may not last Something will have to give. It will be interesting to see whether the Chancellor will have anything to say, either now or in the future, about how the eurozone’s policy arrangements are likely to evolve, with or without UK membership.Stephen King is managing director of economics at HSBC.stephen.king hsbcib . Mark Clare is digesting the results of a customer satisfaction survey showing that his company is the worst in the country at handling complaints. Not surprisingly, the managing director of British Gas is keen to accentuate the positive and he points to another of the survey’s findings which shows that, on a different measure, it ranks seventh best in terms of looking after its customers.