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

Do the Benefits of Joining the Euro Outweigh the Disadvantages?

Extracts from this document...

Introduction

DO THE BENEFITS OF JOINING THE EURO OUTWEIGH THE DISADVANTAGES? Introduction The changeover to euro notes and coins is now complete across a 'eurozone' of 300 million people, for the majority of British people the debate over whether to adopt the single currency is just getting started. For most people in the UK the decision will not be an easy one. With those who have already decided, there will be people who argue that the introduction of the single currency is just the next step in the development of a truly single market which will lead to greater economic prosperity, stability and security for Europe's inhabitants, and that by joining the euro, Britain would get a part in what could eventually become the world's most powerful economic zone. Others believe that a successful common market is not dependent on the adoption of a single currency, which they see as merely another step towards the political union of Europe. This, they say, will lead to a loss of national sovereignty, weakening the voice of the British electorate. By presenting some of the arguments put forward by both sides of the debate over British membership of the euro, my aim is not to ...read more.

Middle

An appreciation of the Euro against the dollar subsequent to our joining would do the UK's important trade with the USA no favours. 9. UK firms would probably enjoy reduced borrowing costs, encouraging investment and growth, as British interest rates fell to European levels, and UK homebuyers would enjoy cheaper mortgages. It is true that industrial investment in this country has been persistently handicapped by the short term use of interest rates against inflation, but even the present level of interest rates in the UK appears to have set off house price inflation in the south. 10. Rip-off Britain: Those firms that currently price discriminate between different European markets would find it difficult to sustain this practice as price transparency increased. Some profits could be lost by UK firms, but consumers could benefit. Disadvantages of joining the euro: 1. As with ERM membership in 1990-2, a major concern of some economists is that membership of the Euro would deprive the UK of an independent monetary policy, and subject it to a possibly inappropriate monetary regime. If Euro interest rates were lower than seemed appropriate for the UK, as according to the Bank of England's Monetary Policy Committee they are at present, an ...read more.

Conclusion

these tests are subjective questions that perform a political rather than economic function; that is, they allowed the government to put off a decision that was likely to be unpopular. Several of the "tests" are unquantifiable matters of opinion, and will probably be subjected to anecdotal rather than scientific evidence in any referendum campaign. Conclusion: Overall, the benefits of United Kingdom joining the euro do outweigh the disadvantages. Plus the adoption of the Euro is likely to result in a stable trading climate within the Euro-zone, allowing firm's to make long-term decisions and realistic financial projections. Implementation of the Euro is likely to mean that both the UK, and the collective Euro-zone will have increasing influence in the world economy, and this will reduce the volatility of the Euro, thus promoting long-term trade with countries external to the Euro-zone. A further reason once more promoting the adoption of the Euro is the fact that British firms are likely to become more productively efficient as a result of the reduction in average cost arising from the incurrence of substantial economies of scale. � To euro - exchange rate This shows how the euro is becoming ever stronger against the pound. SALLY ROBERTS 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics 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 GCSE Economy & Economics essays

  1. The Euro.

    'hot money' to gain higher returns on savings in a country with higher interest rates.

  2. Retailing In India - A Government Policy Perspective

    The Government has set up an inter-ministerial Committee to examine the existing procedures for investment approvals and implementation of projects and suggest measures to simplify and expedite the process for both public and private investment. The Committee, which was set up in September 2002, has submitted Part I of its report (dealing with Public sector projects)

  1. This report will establish the opportunities and threats presented to Sony by the EU ...

    However, small businesses can't afford to spend too much attention on quality due to the expense. Being part of the EU enables the member countries to be treated as one domestic market, so trade and people find it easier to move around due to less paper work needed.

  2. Discuss the advantages and disadvantages of British membership of the Euro for a UK ...

    Consequently, electronic stock control would be made easier. One reason for this, is because some firms try to avoid the high prices by stockpiling products, which can result in additional costs such as storing the stock and waste.

  1. The costs and benefits of economic growth.

    Is Economic Growth Sustainable? Environmental pessimism: resource depletion and the declining environmental quality of planet earth Some people argue that economic growth is not sustainable in the long run.

  2. Liberalization: where it has lead us and where it is headed

    And they don't have conflicting agendas: They apply all their knowledge and resources to contributing to the success of their investee companies and the consequent return to themselves and their investors. They don't have to struggle with people in their organizations who may have different agendas.

  1. Split Votes: A Nation Divided on the Marijuana/Drug Legalization Debate

    But by accepting a neoclassical market and legalizing drugs, the market will eliminate many of the inefficiencies and negative externalities, along with giving the government more tax revenues to put towards more effective policies. Drug prohibition and legalization are not a widely covered by economists.

  2. UK Membership of the European Monetary Union.

    It may prove to be a recipe for economic stagnation and high unemployment if a deflationary monetary policy for Europe is pursued, to keep inflation within the 2% limit. o Euro not an optimal currency zone Within Euro-Zone countries there is geographical immobility of labour and there is insufficient wage

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