How would entering The Euro be good or bad for Britain's economy?

However, Britain is currently enjoying a period of sustained economic growth and stability which has been achieved by being able to adopt the economic policies appropriate to her circumstances. In particular, the setting of interest rates to a level appropriate to each phase of the economic cycle have imposed the necessary brake or impetus to keep the economy on track. By joining the single currency Britain would lose the ability to set her own interest rates and in future could have to endure rates quite inappropriate to her phase in the economic cycle (too high in times of recession or too low in times of boom). The constraints placed on Eurozone countries by the one-size-fits-all interest rate policy and the requirement of complying with the stability and growth pact will remove their freedom to react to changes in economic circumstances at a national level. Participating countries may be congratulating themselves now on the relatively smooth introduction of euro notes and coins but the real test of the currency will come when the economies of two or more countries diverge significantly.

Although countries will lose the ability to unilaterally adjust interest rates to control the effects of over-heating or recession in their economies, it can be argued that this freedom has too often been abused in the past. Decisions have been made to suit the short-term political goals of the political party in power rather than the long-term health of the national economy. Instead of this, the decisions concerning interest rates is taken by a group of experts in The European Central Bank who have the entire region's interest at heart and therefore, it is very unlikely the interest rates will be too far from perfect for the whole region. Seeing as every country has to meet the criteria anyway.

Yet, we no longer see interest rates set in this country for a political gain, because they are set by The Bank of England, not by government. Also, many countries, on entry into the Euro, did not fully meet the stipulated criteria, a main example of this is most countries failed to achieve the required budget deficit figure of 3% of GDP, with the exception of Greece. The subsequent poor performance of the euro on the international currency market is testimony to its inherent weakness. It could be said that giving up the pound for the Euro could only damage Britain's current economic strength.

These arguments are what the government has to look at, as well as many other sources, before they make a decision that could either ruin our stable economy or further improve it. Through research I have carried out, I can see that the overall vibe from people who work in finance is against Britain converging to the Euro.

Many of the arguments against becoming part of the Eurozone from my questionnaires (appendices) are based on the fact our country needs to be able to decide her own interest rates, to fit the state of the economy at that time. There is also the fact that The European Central Bank has a reputation of incompetence regarding to the solving of problems. This is not an organisation that should be trusted with something as important as our economy.

With regards to the British Stock Market, there yet again an overall euro-sceptic overtone. Most of my participants explained how the joining the Euro would be detrimental for our Stock Market as many British companies will lose their competitive edge, not only in Europe but throughout world markets. This, of course, would be dire for the companies' share prices. My participants are quite content with free trade with Europe but would decline any further integration.

The main question however, is how will our economy bare up a few years after further integration, if it did occur? Until The Eurozone can retrieve power from dominating unions and install 21st century employment laws there is little chance of any major improvement in the overall economic performance of the Eurozone. France and Germany continue to struggle with massive union intervention in working practice, Pensioners out number workers in all government run corporations (rail, utilities etc) by at least 2.5 to one. 35 hour weeks have been introduced which has cost business dearly and many smaller firms have gone under. Notably in the restaurant and catering areas. The lack of any incentive to work and earn money, which is heavily taxed, has resulted in 60% of all students having one ambition and that is to work for the government

because they believe that their pensions will be secure !! Without any ambition and economic growth how wrong they could be. This is not a good advertisement for any country who are deciding on whether to join in the Eurozone.

A recent article in the Financial Times (see appendices) has strongly outlined how business is opposed to further integration into Europe and the Eurozone. A MORI poll has found that nearly seven out of ten finance directors are opposed to the new European constitution and basically none of them strongly want to adopt it. Due to this massive majority, it seems for any government who want to further integrate, their hardest job will be persuading business.

There is little doubt that being part of the Eurozone is a definite possibility for Britain in upcoming years. However it is important for any government who make the decision to join, that they are doing so for the right reasons, and not because of an optimistic ideal of increased personal power, because this is would simply not be the result. From my research it is hard to see that joining the Euro is the way forward for us at the moment as would we not only be putting our stable economy at risk, but we would lose further control of our country and therefore lose more of our national sovereignty which, as a whole, we are very proud of.