• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Explain the significance of 'Euroland' on the world economy

Extracts from this document...

Introduction

Bernice Berschader The Euro (a) With reference to the first paragraph, explain the significance of 'Euroland' on the world economy. The article refers to the 'Euroland' in the first paragraph. The 'Euroland' refers to the group of 11 countries which have adopted the euro. This region makes up for 19% of the world domestic product or world output. This high GDP of the countries within the EU takes into account the output of foreign firms within the Europeans Union yet it does not include the output of EU firms located beyond the barriers of the EU. A high GDP is necessary for regions to achieve economic growth and have high living standards, which has materialised in the EU. (b)(i) Examine the factors which might explain that prices "varied on average by 24% (line 19 - 20) within the euro area. According to the article the price variations are justified in the article as a result of differences in VAT and other taxes across the Euro-zone as well as the differences in pricing strategies of the firms. However, the intention of implementing a price transparency which will cause consumers to be more aware of the price differences, this will result in pressure being placed on producers to have same euro prices with the implementation of a common European currency. ...read more.

Middle

However, this will have trade off effect. A depreciation will discourage speculative 'hot money' being invested into the wealthier countries for they look for the highest rate of interest on savings. The implementation of the Euro will cause the member countries to join the euro it would share a common interest rates with its fellow EU members who have also adopted the euro, as a result 'hot money' will no longer be attracted. As a result the autonomy of the Banks in each country will be abolished over the setting of the interest rates, the European central Bank sets interest rates for all EU countries who have adopted the euro. (c) Analyse the implications for location decisions by businesses of Britain remaining outside the euro zone. The article argues that British businesses which will decide to remain outside the Euro-zone will have to face a number of issues. British businesses are likely to lose jobs, increasing unemployment in Britain doe many jobs will be transferred to the Continent. However, on the other hand it is expected that unemployment will also increase in the EU zone. The reason British firms outside the EU may suffer is due to them experiencing a 'competitive disadvantage'. ...read more.

Conclusion

Also due to the pound being of greater value that the euro, an adoption of the common European currency in Britain would benefit firms who heavily rely on exports. The abolition of Sterling is likely to lead to a depreciation making UK goods more competitive on the international market. However, this will hava trade off effect. A depreciation will discourage speculative 'hot money' being invested into the UK economy for they look for the highest rate of interest on savings. If the UK were to join the euro it would share a common interest rates with its fellow EU members who have also adopted the euro, as a result 'hot money' will no longer be attracted. As a result the Bank of England will lose its autonomy over the setting of the interest rates, the European central Bank sets interest rates for all EU countries who have adopted the euro. If the UK were to join the euro it would also be committed to a single fixed exchange rate within the Euro-zone which would make trade easier and less time consuming and no longer prone to price fluctuations, firms would no longer have to sell and buy currencies on the foreign currency market. It is important to take into account however that the Euro can fluctuate with currencies outside this zone such as the US Dollar or the Japanese Yen. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level European Union section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level European Union essays

  1. A clear explanation of key underpinning economic theories relevant to the EU.

    Benefits/ affects to Boots/ Business The induction of the euro will have an impact on Boots, whether or not the UK decides to join the EMU. Boots has business in nine of the first wave countries. *Boots is prepared for the induction of the euro since 1999.

  2. The Euro.

    There will be eight euro coins to the value of 1 and 2 euro and 1, 2, 5, 10, 20 and 50 cent. Who will produce the euro banknotes and coins? The European Central Bank will be responsible for authorising the issue of euro banknotes.

  1. The question of whether Britain should gravitate toward adopting the euro is indeed an ...

    Member States in the EU have shown us that much. The main issue about European Monetary Union is that all the countries in it will have the same single interest rate and that's one of the things that are causing the real problems for Germany and France at the moment.

  2. The Euro

    France, Germany, Italy, Belgium, Netherlands and Luxembourg signed it. The process of establishing the Euro got its real start in 1989 when Jacques Delors, president of the European Commission published the Delors Report. This important report outlined a Three-Stage Transition Plan that would create a single European currency. CHANGEOVER PLANNING As outlined in the Delors Report, the transition to

  1. Managing Work Team Conflict: Assessment and Preventative Strategies

    217). In addition, Kezsbom (1992) did a study in which 285 managers and specialists of technology Fortune 500 companies rank ordered 1921 conflict sources. Thirteen conflict categories were used and were also ranked from the highest to the lowest ranked conflict sources, including: goal and priority definition, personality, communication (see also

  2. "The World We're In," by British author Will Hutton - A discussion of America ...

    And to be honest, we haven't done all that badly. Europeans, on the other hand, are at a much more remedial stage of accepting those who are different in their own backyard. Almost completely absent are the good parts of America.

  1. What is the Euro?

    seeking to increase their market share and are constantly competing with the likes of Tesco and Sainsbury's. The main argument for membership is that of the benefits that removing exchange rate uncertainty will bring. If there was a common currency within Europe, businesses could be more confident about investment, as

  2. Can the euro challenge the dollar as the world's international currency?

    The single currency had a long history before Kohl and Mitterrand, however. Today's euro is the end result of thirty years of work by politicians and bureaucrats across Europe. Here's a quick chronology: 1969 European summit in The Hague makes Economic and Monetary Union (EMU)

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work