• 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...


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.


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.


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. UK Membership of the European Monetary Union.

    interest rate issue - is fiscal policy sufficient to offset asymmetric shocks? * Britain's financial system is different - e.g. mortgage arrangements * Europe's unfunded pension liabilities - a constraint on fiscal policy * The European Labour market is not flexible enough.

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

    We will first concentrate on the columns A of each sample subperiod. The first thing that is notable is the fact that average correlations among sectors (0.560) are substantially higher than country correlations (0.396). This is a bad sign for diversification strategies among industry sectors.

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

    people have the right to do what they will to themselves, and they attack the government's own moral critical stance that they know best. In regards to legalization, the media does an excellent job covering the topic, and economics is widely used.

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

    economic stability, brought about by the higher stability of the Euro (inflation is more controlled and less dynamic). As individual currencies will no longer exist, there will be no fluctuating exchange rates between countries and therefore levels of economic uncertainty are significantly reduced.

  1. Entry criteria to the Euro

    (Source: http://www.statistics.gov.uk/cci/nugget.asp?id=277 [02/02/2004]) TEST PASSED 1.3. Exchange Rates The Treaty stipulates: "the observance of the normal fluctuation margins provided for by the exchange-rate mechanism of the European Monetary System, for at least two years, without devaluing against the currency of any other Member State."

  2. Overview of Intercontinental Hotels Group

    Equipments such as printer, fax, or copier are within their reach from the spacious desks in the business rooms. In preventing business travelers from missing an important phone call, the Hotels' rooms are also equipped with dual-line telephone system with voicemail functions.

  1. Living Wage

    But how long will this low-wage advantage last? It would be unreasonable to expect definite answers however we should bring light to some main factors at play which are quantity and quality of labor available to businesses, and trends in productivity and spread of knowledge.

  2. Global Business Plan.

    Our target market is the foreign organizations that are producing or offering services in China. This applies to hotels and the auto industry as well as the other major industries that operate in China. We do not seek to offer central air but air conditioners top cool rooms and offices.

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