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Should the UK join the Euro?

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Introduction

by Christine Shaw Introduction Whether the United Kingdom should join the European single currency or not, is a question that has sparked heated debate over the past few years and shall continue to do so for quite some time. This debate is one of the major issues discussed in the UK today and although there are many reasonable arguments both for and against the United Kingdom joining, the arguments involve crucial details and are discussed with great passion, which has even resulted in reports of splitting some political parties. The principle is quite simple, it involves replacing all of the participating countries monetary value with one single currency, however the consequences and arguments are extremely detailed and complex. Because of the complexity of the arguments involved in this debate, it would be impossible to present all arguments within this essay. I have therefore structured my essay by introducing the main bodies involved in the Euro then by reviewing the most dominant arguments both for and against the Euro and concluding upon those arguments. Main bodies The European Central Bank (ECB), based in Germany, is one of the key bodies, and is the sole issuer of the Euro. Its main objective is defined in the Maastricht treaty as ensuring price stability. This is achieved by setting interest rates, which are short-term, and together with the National Central Banks, the European system of Central Banks (ESCB) is formed. The operations of these are highly decentralised and their responsibilities will include placing the policy of the ECB into operation. ...read more.

Middle

This will also in turn encourage competitiveness and increase customer choice and therefore create markets with healthy competition, increasing efficiency of companies, which in turn could be passed on to individuals creating a more efficient market for all. However this would be more likely to affect companies selling more expensive items and a prime example of this would be the recent issue, which has arisen regarding the great price differences in cars. Many pro Euro experts believe that although, through the reality of a single currency, the market is expected to suffer a minor economic low, it is expected that in the long term the economy will prosper so much so, that it will outweigh the negatives. Sir Ken Jackson who is the general secretary of the Amalgamated Engineering and electrical Union stated "more than 3 million jobs depend on being in Europe". Many also fear that by not being part of the Euro, companies will move towards using participating countries as their head offices and Britain will as a result suffer in terms of unemployment. Pounds you win, Euro you lose Although great advantages are argued, disadvantages of joining the single currency can also be seen, which include the difference in economic cycles, tax harmonisation, a possible rise in interest rates, restrictions of the Maastricht treaty, excess debts, unemployment risk and failure of the Euro. One of the most dominant arguments arising against the UK joining the Euro is that the economic cycle is different in the UK compared to Europe, and could therefore create economic difficulties for the UK, should they join. ...read more.

Conclusion

It is also a political and constitutional decision and although in the long term when the convergence criteria and a competitive exchange rate is achieved the United Kingdom will probably join the Euro. Due to the magnitude of this decision, it must first be debated whether it is to Britain's advantage or not. Downing street stated, "Mr. Blair is committed to joining a single currency once economic tests set by Mr. Brown have been met and if voters agree in a referendum" (Metro, June 14, 2000). It is said that five economic conditions should be met, Gordon Brown stated "Plainly Britain can only join the Euro if the economic conditions are right. But we will only be ready for that event if we now resolve in principle that we want to be a member" (Financial Times, June 15 2000). The debate has shown strains on party policy and has even created conflict. Recently a speech by Robin Cook, was criticised and text praising the Euro was cut at the last minute. The reason for this is unsure, but Gordon Brown is of the opinion that any decision on the Euro must wait until after the general election (Evening Standard, 15 June 2000). Many critics of the government have also accused the government of using delaying tactics, so that the general elections are not affected by any decisions on the Euro. In the short term, I personally feel that the government will work towards the economic conditions and eventually, once these five economic conditions are met, Britain may in the long term join the rest of Europe in the single currency. ...read more.

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