Should The Uk Adopted The Single Currency?

Breitfelder, M. (1998). The Euro Currency Age: Challenges and Opportunities for U.S. Businesses. Business America, 119 (7), 33.

The European Union (EU) is a unique economic and political partnership between 28 different countries. It consists of about half a billion citizens, and its combined economy represents about 20 percent of the world’s total economy (Briney, 2015). Today The European Union works as a single market, with free movement of people, goods and services from one country to another. There is a standard system of laws to be followed, and since 1999 many countries share a single currency called the Euro (Europa.eu, 2015). This essay will explore the background history of the European Union and the benefits and drawbacks of the European Union.

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 issue of whether or not the United Kingdom should remain a member of the European Union has been debated heavily over the past decade, with the debate heating up even more from the current European Sovereign Debt Crisis. Recent polls of the UK population showed that around half of the UK’s citizens would vote to pull out of the EU if it went to referendum. However, after all of the economic, political, and social advantages of being a member of the EU are considered, it remains clear that leaving the EU is not in the UK’s best interest. Economically, it does not make sense for the UK

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 decision of the United Kingdom to leave the European Union has served in reshaping the way politics works in Europe. On June 3rd, 2016 a massive 30 million people came out to vote on the future of their countries. In the end, the vote to leave won 51.9% to 48.1%. Places like England and Wales both voted in favor of the exit, while Scotland and Northern Ireland voted overwhelmingly to stay in. While the long term effects of this decision obviously need time to be observed, the immediate economic impact has been somewhat mixed. The day after the vote was a cause for concern in that “the pound slumped after the referendum - and remains around 10% lower against the dollar and 15% down against the euro” (Wheeler 17). In contrast to this,

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”.

In Europe, the single currency created additional problems because of overvalued exchange rates, and high bond yields.” (Pettinger, 2013).

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.

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.

Title of essay: An evaluation of the advantages and disadvantages of adopting the Euro. A case study of The UK

Introduction of Euro in the world’s monetary union is a milestone. Eleven countries were going to create EMU at the beginning, now there is a long queue to join in EMU. Most of the EMU members get more advantage then disadvantage to join in Euro. Euro creates a large market in the Eurozone. Three core members of EU (Great Britain, Sweden and Denmark) still not participate in European single currency. Many European countries are very excited to join in EU, some of them decided to implement European rate mechanism- 2 (ERM-2). If Britain

When the euro was introduced in January 1999, the United Kingdom was conspicuously absent from the list of European countries adopting the common currency. Although the previous Labor government led by Prime Minister Tony Blair appeared to be receptive to the idea joining the euro club, the current Tory government is clearly not in favor of adopting the euro and thus giving up monetary sovereignty of the country. The public opinion is also divided on the issue.