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

Should we go in the single currency

Extracts from this document...

Introduction

Should we go in the single currency The euro is a unified currency that is planned to take the place of national currencies following a referendum in the future. The use of the Euro will unite the member states creating a European super nation although this will in effect have implications; some good some bad on individuals, business, economies and governments. Before Britain joins the Euro the following criteria has to be satisfied: * The budget deficit has to be less than 3% of GDP, * The governments total debt has to be less than 6% of GDP, * Inflation has to be less than 1.5% higher than the average of the lowest inflation countries, * Exchange rates should be stable, * Interest rates should be in line with others and stable. Once this has been acomplished a further five economic tests have to be attained which are when business cylcles and economic structures are compatible, whether there is sufficient flexibility to deal with problems (asymmetric shocks), impact on investment (financial service industry) ...read more.

Middle

Consumers can also easy compare prices between member states, which will make firms more competitive for consumers as they will attain perfect knowledge. The Euro would also allow businesses transactions between member states to take place with confidence which should similate growth. Currently exchange rates pose a financial risk to businesses and individuals that are involved in foreign transactions. A sudden fluctuation in the value of a currency could see the cost of a particular item dramatically increase or decrease in a short space of time. A common currency would remove this threat completely. This may also encourage growth by enticing businesses to get involved in international trading. Exact costing of transactions can be calculated before the transaction takes place and the risk of an exchange rate fluctuation would no longer be applicable. This increase in foreign trade would also bennefit the country's economy by increasing export figures. This would have a positive effect on the balance of trade. ...read more.

Conclusion

The responsibility to control interest rates would be passed onto the European Central Bank. The problem which some economists forsee is that the rate changes will be made based on averages and not individual economies. As we have seen the ultimate steps towards the total integration of Europe as a trading block would be through monetary union and a single currency. The Euro has many advantages as discussd such as the abolistion of exchange rates which would enhance international trade, marker efficeincy due to more competition, the goal of the European Central Bank to lower unemployment and people will be able to assess the advantages and disadvanteges in relation to employment and goods and services. The disadvantages however are the loss of soveriegnity, unification of interest rates (what suits one country may not suit another), Britain would have no control over some aspects of the economy. As we have seen above; joining the Euro would carry many economic implications in which the good presently outweigh the bad. ...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. Split Votes: A Nation Divided on the Marijuana/Drug Legalization Debate

    Daddy X's advice is that people should "demand your right to your moments in this holographic gift with no rules, no borders except for those you choose to accept and live by" (KKHE). This is the same moral critical argument that Cypress Hill and many other pro-marijuana advocates preach.

  2. UK Membership of the European Monetary Union.

    Most worryingly, however, the EMU deprives national governments of the ability to use national fiscal policy to counteract recessions - this is not lost altogether, but restrained. There is a danger that in the event of a sharp recession there will be a political reaction against the EU. What next?

  1. The structure of the airline industry.

    Barring any unforeseen events, it appears that the U.S. economy is on the road to recovery. I would predict that production will substantially increase soon, since inventories are now very low. This will force companies to hire, and the new jobs will create more consumption. Low interest rates will also encourage companies to invest, which will also stimulate the economy.

  2. Economics of European Integration

    Hence, incumbent national electricity producers have to accept the entry of European competitors in their market, again to the benefit of electricity consumers. A working paper7 of the commission (2001) shows us "that electricity prices for industrial consumers and small enterprises have gone down in almost all member states since the Electricity Directive was implemented.

  1. Do the Benefits of Joining the Euro Outweigh the Disadvantages?

    the volatility of the demand for imports, as well as the demand for exports outside of the Euro-zone. If the demand for products produced by British exporters is price elastic, then an increase in price caused by fluctuations in the Euro exchange rate will lead to a substantial fall in demand, and a possible threat of insolvency.

  2. The effect of the Euro on 'The Carphone Warehouse' Plc

    Business enjoys less "red tape"; therefore potential for international growth becomes immense The single currency will allow consumers & businesses to buy & sell goods and services abroad without paying commissions in the form of exchange rates. This saving will effectively mean that there are no trade barriers across

  1. The Quest for Optimal Asset Allocation Strategies in Integrating Europe.

    Furthermore, since controls on capital movements and foreign exchange transactions are relaxed, shocks which have an effect on the valuation of many assets worldwide are more easily transferred across countries in an integrated market. For example, after the accounting scandals concerning Ahold, many Dutch institutional investors temporarily lost market confidence

  2. Global Business Plan.

    Whereas the system operates within a political framework of strict Communist control, the economic influence of non-state organizations and individual citizens has been steadily increasing. The authorities switched to a system of household and village responsibility in agriculture in place of the old collectivization increased the authority of local officials

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