'The European Single Currency project was a bad idea from the start and ought to be abandoned.' Critically examine this statement.

From the introduction of the ideas about the Euro there have been mixed views regarding its success and benefits to the countries. Some of these arguments are political but most are to do with the effects a single currency can have of the economies of the membering states. A common view towards the EMU is why should a stable currency which is not facing any foreseeable downfalls be replaces with a currency to which only predictions can be made about its success?

The first argument against the Euro which is going to be discussed is commonly known as the 'One Size Fits All'. The countries in the European Union have such diverse needs economically, it would be unrealistic to think that they could be brought together to have similar growth rates. This means one country could be suffering inflation when another is struggling with a Balance of Payments deficit. The tools the national governments would usually turn to in such circumstances will be no longer available to them under EMU. As an example if there is a decline in Britains exports there would be an automatic depreciation of the pound which would cushion the effect of the economy. However if there is no pound and only Euro then the cushioning effect will be lost as the decline in exports will be specific to Britain.

If the countries are having the same currency it seems a logical step to have fiscal integration to follow. This idea is intimidating and makes the prospect of the nations loosing sovereignty even more realistic.