Should The Uk Adopted The Single Currency?

What the Euro experience has taught us is that even countries which are not vastly different from each other in terms of economic health, can face a phenomenal crisis within just 10 years of the creation of the single union. How then would you expect a global currency encompassing countries with vastly different structures, in vastly different stages of growth and using vastly different means of managing their economies to be stable?

The European Union (EU) is a political economic union of 28 members. The founders are France, Belgium, Luxemburg, Italy, Netherlands, and Germany. The Maastricht treaty established the European Union in 1993. The EU aims to ensure the free movement of people, goods, services and capital and regional development. These 28 member states have successfully integrated because of their similar cultural lifestyles.

The European Union (EU) is the organization which integrates the countries listed below, both politically and economically. It is a customs union, which is an agreement amongst a group of countries to eliminate trade barriers between them on the movement of goods, services, labor and capital, and also to establish a common external tariff on goods and services coming into the union. The EU evolved from the European Coal and Steel Community (ECSC), which was formed in 1951 as a response to the First and Second World Wars to try to ensure future peace in Europe. This became the European Economic Community (EEC) in 1965, which in turn became the European

Whether the United Kingdom decides to join the European single currency and replace the pound with the euro will have profound economic as well as political effects on the country so is a very important decision and has considerable variations in attitudes towards the topic, although the British public opinion has consistently opposed joining the euro. The euro is currency shared by 18 of the European Union's Member States. The euro was introduced in 1999 and automatically became the new official currency of 11 States, followed by another 7 countries joining to date. However, the UK negotiated an opt-out to from the Treaty meaning they don’t have to adopt the common currency as they fit a certain criteria [1]. Joining the European single currency can have major advantages for the UK, such as diminished uncertainty of exchange rate for businesses and the decreased need to pay transaction costs of changing currencies when abroad. It can also have disadvantages such as loss of domestic monetary policy and variable rate debt in the UK.

The European Union consists of 28 member states and has a population of 503 million inhabitants, and a total surface area of over 4 million square miles. The EU has its own currency, the Euro, and the largest single market in the world. It is a global community and power and has a huge influence on our world today in many aspects, and has been slowly built up to what it is today through humanistic ideology , common interests, new structures, treaties, economic policy and the attempt of equality throughout.

The Conservatives, on the other hand, have been against joining the Eurozone ever since negotiating an opt-out from the part of the Maastricht Treaty that would have required the UK to adopt the euro. They remain against the joining the euro, with David Cameron saying in his recent speech on Europe that “Britain is not in the single currency, and we're not going to be”.

These changes will in turn make companies more competitive, expand markets for businesses, as well as increase trade across borders. However, most importantly the euro is intended to create financial market stability within the participating countries. By eliminating the movements of exchange rate and all reference to them, the European Central Bank will control interest rates and inflation. This will lead to less uncertainty and create new opportunities for success.

The European Union is a group of European countries who combined together as allies after WWII for trade and peace reasons. It was established so countries in Europe would not create conflicts with each other to prevent the disaster of the two World Wars. They also signed trade deals to secure the countries in the EU would be financially stable and not go into depression and poverty like most countries did in WWII. Each country in the EU has to provide the EU with money to operate. In return, not only will they see trade with European countries, but the EU budgets will help redevelopment and regeneration of poor areas, seen in

About costs of adopting euro, initially UK has to face to the sensitivity of changes in interest rates. Because house ownership in UK is the highest in Euro club, any changes in interest rates can rapidly impact their economy. Secondly, adopting euro is constraint the

In an optimal currency area, significant changes in exchange rates are not necessary to ensure rapid macroeconomic adjustment European Monetary Union  one of history’s great economic experiments. Never before has such a large and powerful group of countries turned its economic fortunes over to a multinational body like the European Central Bank. Never before has a central bank been charged with the macroeconomic fortunes of a large group of nations with 325 million people producing $16 trillion of goods and services. While optimists point to the microeconomic benefits of a larger market and lower transactions costs, pessimists worry that monetary union threatens stagnation and unemployment because of the lack of price and wage flexibility and insufficient labor mobility among countries. The financial crisis of 2007-2009 is the first major test of this new monetary system.

There are many benefits of trading within the EU, the agreement in 1993 was effectively the start of what we now refer to as the single market, it removed the borders of a member country for trade enabling the free movement of goods between members without the encumbrance of the customs process and reducing the need of a significant amount of accompanying documents that was required for goods being moved across borders. Previously it was necessary for goods to be shipped with certificates of origin, Invoices, packing lists with a full breakdown of package contents. If moved by road, which is the normal method of transport within the EU, a CMR transport note

If The United Kingdom joined the Euro, it would help to decrease the volatility of exchange rate with its the main European Union trading partners. By the use of single currency as a result of the enhancement of European single market, the single currency would decrease uncertainties and risks experienced by exporters and investors in their business dealings all over the zone. However, the pound is

The countries get benefit in the case of converting currencies. Every European Countries have separate currency. When anyone converting the currency of any European country in to another European country’s currency then the converting cost added each time. If we used single currency, we can easily minimize the converting cost. According to Solman and Sutcliffe (2004, p.742) “the European commission estimated that the effect was to increase the GDP of the countries concerned by an average of only 0.4 percent”.

A common currency also minimizes uncertainty about exchange rate fluctuations among member nations. However, as is often the case in economics, there exist tradeoffs that policymakers must recognize. The most notable is that by joining the Eurozone, a nation is relinquishing its abilities to operate their own central bank and easily enact desired monetary policy. Obstfeld warned in 1998 that “nationally asymmetric real shocks” could make transitioning to the Euro difficult for nations (4). Maurer notes that today the EMU has resulted in convergence of nominal interest rates but divergence of real interest rates due to differences in business cycles (5). If business cycles among Eurozone members were to converge however, it might make sense to have a unified central bank and monetary policy. Massmann and Mitchell report that depending on how one measures this convergence, one can get drastically different results (16). These results yield a weak argument that the cycles have converged and suggest centralized monetary policy might be inappropriate at times for some members.

Germany and her neighbors are members of the European Union (EU) and consequently, they share the same currency, the euro. By using the euro, businesses save money by avoiding costly exchange rate processing fees. Likewise, it strengthens competitiveness in the form of equal price comparison. In addition, it creates a fair macroeconomic system among the countries (Peng 118). That is to say, that one country can no longer undervalue their currency to keep other countries from being competitive.