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Should Britain join the Euro?

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Introduction

Geoff Campbell 11T Should Britain join the Euro? INTRODUCTION: There are a lot of differing opinions on this subject. I will try to determine whether it makes political and economical sense for Britain to "join the Euro". I have researched into the arguments for and against, then I will explain them and make my conclusion after weighing up each of the arguments. I will research using the internet and search engines to find many differing opinions from a variety of sources. I will also visit the websites of Labouri, the Conservativesii, the Lib Demsiii and the UKIPiv to find out about their policies regarding the Euro. Advantages of joining If Britain were to join the Euro, it would affect many Industries, Businesses and Economies in different ways, whether they are in Britain or not. One example of this is when Businesses' are heavily affected by transaction costsv - they are involved in lots of exporting and importing. For example take a company, which imports its goods. ...read more.

Middle

It would therefore improve the economy as more Businesses would be willing to make more products. If Britain were to join the Euro it would become the target of Foreign Direct Investment (FDI). For example, a Japanese company selling guitars, e.g. Yamaha. If they were selling to a European market they would have to change their revenue from Euros to Yen. To circumnavigate this problem they could set up a factory in Europe, where their expenses and their revenue would be in Euros. Thus they would save themselves the transaction costs they would have otherwise paid in changing their Yen to Euros and vive versa. Disadvantages of joining Until recently (1997)vi interest rates were set by the government; the government often used their ability to manipulate the interest rates to their political advantage; e.g: in the 1980's the government lowered interest rates in the run up to the general election, so that more of the voters would be employed and thus more would vote for them. ...read more.

Conclusion

Again, if we join the Euro this will mask our Company's international competitiveness, but this in turn would force them to become more efficient themselves, which is good for the British customers. The estimated costs of changing our country's pound to the Euro is many times larger than the costs saved by businesses on transaction costs, though in the very long term it would make up for this. Conclusion In conclusion the arguments for joining the Euro are largely Economic, and the arguments for staying out are largely Political, like the country wanting to keep it's sovereignty. There are also questions of timing - what exchange rate do we join at? Perhaps the British economy has already got many of the benefits of the Euro even though they haven't joined. Also there is the issue of the inevitable collapse - will Britain be able to pull out if they want to. It would also seem that in the global situation there needs to be a counterbalancing force to the US and it's dollar. This could well be the Euro. ...read more.

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