Media: Lies, damned lies, and how the press reports the euro

THE FINANCIAL markets rarely make it to the front page of newspapers. When they do, it is usually because of some catastrophic event - a stock- market crash, perhaps, or the pound's undignified exit from the European Exchange Rate Mechanism in September 1992.

However, in the run-up to last week's elections, the European currency markets were making headlines again, but this time nothing much was happening.

Just as bizarrely, technical negotiations to exempt the City from a planned "withholding tax" on savings were amplified into a campaign painting the EU as a nest of tax-and-spend conspirators. The Tory Eurosceptic papers used the genuine but undramatic decline of the euro and some arcane discussions on taxation to set the agenda in the European election campaign.

It was a task made all the easier by the vacuum left by the Government. Within the Cabinet, there was a debate between those who wanted to campaign on European issues and those who preferred to emphasise Labour's domestic achievements. The latter won.

Thus, on a day when the euro had fallen by a negligible amount, The Daily Telegraph had a headline: "Euro hits a new low against the pound." A big picture of William Hague on the front page outlined him against a background of a big blue "NO". It was by no means the biggest daily fall in the currency, however. And each day for a period brought a "lifetime low" for the declining euro.

Similarly, The Mail on Sunday filled its front page on 23 May with the headline: "Secret plan for 100 Euro taxes". This referred to discussions the Treasury Minister, Dawn Primarolo, is having with EU counterparts, on preventing harmful tax competition between member countries. It is not dreaming up new taxes. It is an advisory group to will make recommendations the Government can accept or reject.

Even more misleading has been coverage of the withholding tax. The Prime Minister pledged in the House of Commons to veto a plan that would harm the City. The Treasury is drawing up detailed proposals to exempt London's Eurobond market from the tax. The Telegraph's headline, the day after the finance ministers' meeting that agreed the UK should do this, was nevertheless: "Brown accused of raising white flag. Climbdown over EU tax on savings".

It is certainly not the case that there has been no news favourable to the Eurosceptic cause. The new currency has been weak. It was dealt a particular blow by the decision of EU finance ministers to allow the Italian government to breach its budget deficit target - a story reported first in a front-page splash by the Financial Times, whose editorial line is clearly in favour of British entry. Richard Lambert, the FT's editor, says: "In Continental Europe we are regarded as hostile to the euro because we publish stories like that.

"The weakness of the currency has been taken up quite shamelessly by the anti-euro press. But we didn't feel particularly driven by what was appearing elsewhere."

However, it is argued in financial circles that even the FT, with its specialised readership, has reported the discussions on the withholding tax in far more detail than would be warranted in a less politically charged atmosphere.

The newspapers' editorial stances reflect the views of their readership reasonably accurately. According to polling carried out on behalf of the (pro-euro) Britain in Europe campaign group, The Independent's readers are, on balance, 54 per cent in favour of UK membership, followed by The Guardian's at 42 per cent and the FT's at 24 per cent. The Star, The Sun and Daily Mail have the highest balance of anti-euro readers, at 53, 52 and 33 per cent respectively. The Daily Telegraph's are 25 per cent against, while The Times has a small balance in favour.

So there is a sense in which most readers are simply having their own views reinforced by their newspapers. However, senior officials at the Treasury and the Bank - whatever their personal opinions - are concerned that the country is ill-served by the one-sided public debate. One says: "There are journalists who must know that what they are writing is false. But on issues such as taxation and the future of the nation, this is when grown-up debate matters most."

It is striking, too, that the anti-Europeans have chosen financial stories for their propaganda war - reflecting the fact that the average reader has scant interest in or understanding of them. Common sense doesn't take you far in understanding the financial markets. Until the Government decides to set an alternative agenda, however, currency fluctuations and the minutiae of taxation are likely to remain the stuff of front-page headlines.