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THE UK AND THE EURO

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Introduction

Introduction: Economic advantages and disadvantages to the UK of participation in the European single currency, Euro. Will British businesses be better or worse off if the country decides to participate? The Second World War which ended in1945 left a disastrous effect on Europe. Europe was greatly devastated politically and economically creating a divide among the people. The union grew out of the carnage and devastation of the war and has proved to be the world's greatest peace process, uniting old enemies and friends alike in a common effort to ensure peace, freedom and prosperity for all of Europe. The freedom and prosperity of the region were the core goals of the enabling treaty which has been successful. Today, the region has witnessed a lot of unprecedented growth in its economies. In a bid to boost the economic well being of the region, it was envisaged that a single currency among other factors for the member states will enhance the progress of businesses in Europe. Whether the single currency will be of benefit to the UK has remained a debate over these years. Will it really work? Will UK be better or worse off? Chapter 2: Origin of the European Union/ Objectives The European Union came into being following the treaty of Rome which was signed by six member states namely; France, Netherlands, Belgian, Italy, West Germany and Luxembourg. ...read more.

Middle

This would have increased the level of activity in the city and subsequently increase income generated from that sector. This action could result in "banks relocating to the Euro zone, loss of jobs. In other words, it risks minimising our influence and maximising once again our chances of being once again shut out" 5. Trade The Euro zone is the second largest market after the US. If the UK joins in the EMU, she will witness a higher market trade transaction because the separate currencies which act as a barrier to trade have been removed. These will translate to a higher confidence in the minds of investors because there will e no more fluctuations in currency. Studies have shown that Canadian provinces buy and sell more to each other rather than their immediate neighbour, the USA. This is as a result of the use of same currency among the provinces. However, joining the Euro might likely have a negative impact on the UK economy. The Euro is quite unstable against the dollar and most of UK's export is to the USA, being the reason why the pound is stable against the dollar. This is because UK has refused to join the Euro zone. ...read more.

Conclusion

Nevertheless, if the UK joins, the ECB will concentrate on economic and fiscal policies towards ensuring a less volatile interest rate. Reference 1. Anon. Euro to benefit UK economy http://news.bbc.co.uk/1/hi/business/855310.stm (Date retrieved: Mon April 24, 2006. 2. Anon. (2005). Experts Highlight Success of Euro and Integrated Financial Markets. euinsight, May, 2005. 3. Anon. Ambassador's Corner www.eurunion.org/euinsight (Date retrieved: Mon May 1, 2005. 4. Anon. Macroeconomic Framework: benefits of a single currency to the economy as a whole http:// Europe.eu.int/comm./economy_finance/euro/benefit_1-en.htm (Date retrieved: Fri April 21, 2006) 5. Single market: reaping the full benefits of the EU's single market http:// rope.eu.int/comm./economy_finance/euro/benefit_2en.htm (Date retrieved: Fri April 21, 2006) Introduction: 1 Economic advantages and disadvantages to the UK of participation in the European single currency, Euro. Will British businesses be better or worse off if the country decides to participate? 1 Chapter 2: Origin of the European Union/ Objectives 2 Common Market 2 The Origin of the Euro 2 Chapter 3: Advantages and disadvantages of the Euro to the UK 3 1. External economic instability 3 2. Competition/comparative advantage. 3 3. Exchange rate 3 5. Trade 4 6. Savers and Borrowers 5 7. Mortgage issues/interest rates. 5 8. Taxation 5 9. Inward investment 6 10. Cost of conversion 6 11. Influence 6 Will UK be better or worse off by joining the Euro: 7 Reference 8 ?? ?? ?? ?? 1 ...read more.

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