Term Paper on "Should the UK Adopt the Euro?"

Term Paper 10 pages (4473 words) Sources: 1+

[EXCERPT] . . . .

UK adopt the euro?

The British Labor Party could succeed in coming into the power in June 2001, with the manifesto for holding a referendum to decide for adoption of the single European currency. The British Prime Minister Tony Blair emphasized the decision of joining euro to be of much significant to the generation as a whole and has assured that a referendum in this regard will be made at the conducive treasure conditions of UK. The Treasure during June 2003 proclaimed of failure of it in five economic conditions, irrespective of the fact that the Government has assured of the promotion of eventual membership of the euro to the British people. Even though drifting towards euro notes and coins is presently complete across the 'euro-zone' consisting of 300 million people as a whole, most of the British people, therefore, strangled in a controversy of deciding whether to adopt the single currency or not. (Introduction: www.theeurodebate.co)

Most people think the decision of UK is not as simple as it appears to be. It is to be influenced much by the associated emotions rather than the underlying facts alone. Those who have already decided include those who advocate the adoption of single currency is only a next logical step in formulating a next logical step in the development of a truly single market that will fetch greater economic prosperity, stability and security for the inhabitants of Europe and Britain in its association would accomplish the dominating voice in the arena that has the prospective of gradually being the most powerful economic zone of the world. According to others a successful common market cannot be established with adoption of a single currency that they could visualize it only to be another irreversible step towards the political union of Europe. They proclaim that this will lead to a loss of national sovereignty, weakening the voice of British electorate delegating much of the power to the unelected officials centered in Brussels and Frankfurt. (Introduction: www.theeurodebate.co)

It is to decide as to who is right. The damages resulting from trying to unite the conflicting economies under one currency and with one interest rate may injure the potentialities of economic development. Or is it correct to think that the long-term impact is to elevate the weaker economies to a level similar to that of the more prosperous economies so as to developing the Europe as a whole. Actually, the European monetary union implies more than mere use of the coins and notes that of the other countries in the euro-zone. The resorting to a single European Currency implies that the economic prospects of UK is associated more closely with that of the continental Europe in both ways for good and bad. Now the question arises whether in the perspective of the EU extension to the east and new members gradually thriving into the joining of euro is the Britain venture to remain separated from Europe. Or could her non-participation prove to the greatest virtue forcing the country to the economic autonomy and flexibility essential to make the economy competitive in the global market place. (Introduction: www.theeurodebate.co)

The argumentation is unidirectional to an amazing magnitude. There is no model and none is aware of the efficacy of Euro. The euro is considered to be a risky trial with no surety of success irrespective of the fact that its failure undermines the relative harmony in which the western European countries have been living since the Second World War. With the expansion of the euro-zone to the east to incorporate the former eastern bloc countries, the dominance of Britain on the policies being pursued by the European Central Bank expected to become even more weakened. The Britain is not supposed to ever been a party to such a condition and nor been expected to surrender her sovereignty. However, if she has to sign up to the single currency she would be protected into the irreversible process leading to that very result. (Should Britain join the European single currency?) for most of them those were against the single currency, it is not merely an ill advised responsibility, but a dangerous one.

A pace further along the road to a European super state will immerse the independence of the European nations in an awkward coalition, shuffled by bureaucracy exerting little popular support and imposing an impeding burden of regulatory and other costs on European economies. The critics also visualized this to be a disruption from the two emergency jobs that is confronted by the EU, such as fulfillment of single market and enlargement of the Union to the east. Most of them held that the EMU will prove impracticable and would split Europe seriously into 'INS and 'OUTS'. (the Pros and Cons of EMU) the labor administration pronounced five economic conditions for membership-continuous interaction between the Britain and euro economies; Elasticity to cater to the economic change; influence on investment; influence on employment; and the influence on the financial services industry. According to the Chancellor of the Exchequer Gordon Brown about four out of the five economic conditions are still left to be fulfilled by Britain. (Economic conditions not right for Britain to adopt euro, government says)

Conservative Party Treasury spokesman Michael Howard asserted that merging with the euro would harm Britain's affluence, wipe out employments and bring about a permanent failure of power over economic policy. Additionally, the director general of the British Chambers of Commerce David Frost stated that 49% of companies reviewed by his group felt Britain should wait prior to making a decision on merging and observe how the euro expands, although all requirements are fulfilled. The anticipated gains of euro membership consist of better production, reduced operation costs for businesses and customers, and expansion in trade of up to 50% over 30 years with other affiliates of the euro zone. However Britain's economy must first congregate more intimately with those of the euro affiliates and builds up its agility to endure economic shocks. (Economic conditions not right for Britain to adopt euro, government says)

The statement by Wim Duisenberg, president of the European Central Bank, that UK will need many years for it to become fully comparable to the current 11 euro members to satisfy either the Maastricht necessities or the British government's own convergence conditions, is reasonably correct. On current signs, convergence appears as remote as Duisenberg imagines. Sterling is about 20-35 per cent higher than a pragmatic exchange rate on most economic representations; and although the control in trade towards high technology and service products has made these approximations obsolete, it is implausible that any British government would take sterling in at latest rates equivalent to DM3.20-DM3.30 to the pound. At the awfully bare minimum, it will have to go down to about DM2.90; and even then several industrialists and economists would be annoyed. On the supposition that the current interest rate relations will prolong to exist, the might of both the dollar and sterling are understandable. (Blair should forget the euro for 5 years)

The development happening nowadays in euro countries could become amazingly tough. Estimated either by the cash flow or by the pointers that considers the spur from a miserable euro, monetary policy is very peaceful there. If the ECB has to ultimately squeeze in excess of what is anticipated presently and the Fed and the Bank of England were to slash rates, then, Britain would initially observe a drop in sterling to a more flexible level, and then, a merging of British and euro interest rates. However this would be very similar to two ships passing in the night than moving as a group. In fact, a large transfer of euro and British interest rates in opposed directions would emphasize how different the business cycles continue in the UK and the euro-zone. Furthermore, if sterling is eliminated instead of putting into an exchange rate rule, there is every possibility that governments should make a decision on the conversion rates into euros. But none of these things are occurring. (Blair should forget the euro for 5 years)

The history has seen fall down of many currency unions. There is no assurance that EMU will triumph. It is pretty likely that the monetary union will give up; countries that realize themselves to be in trouble may call off their membership and reinstate an autonomous currency and an inflationary monetary policy. The case of Ireland's exit from the sterling currency area implies that parting a currency union is advantageous when compared to combining with the union. In concept, a currency union can give economic paybacks that too under lucky conditions. The absence of exchange rates takes away a very efficient means for regulating inequalities between countries that can occur from varying upsets to their economies. It has been shown in the past that carefully selected devaluations can save an economy from troubles; hence, the UK should preserve this choice. (What are the arguments for and against joining the Euro?)

The EMU… READ MORE

How to Reference "Should the UK Adopt the Euro?" Term Paper in a Bibliography

Related Term Papers:

United Kingdom and the European Union Essay

United Kingdom: Maintaining a 'balanced' attitude towards membership in the European Community

The recent international 'Greek tragedy' of debt and insolvency has caused many Britons to breathe a sign of… read more

Essay 3 pages (1212 words) Sources: 4 Topic: Economics / Finance / Banking

---

UK Membership of the Euro Macroeconomic Implications Book Report

UK Membership of the Euro

Macroeconomic Implications of UK Membership of the Euro

Macroeconomic Implications of the United Kingdom's Membership of the Euro

Britain joined the European Economic Community (EEC)… read more

Book Report 5 pages (1404 words) Sources: 5 Topic: Economics / Finance / Banking

---

Should the UK Join the European Monetary Union? Essay

UK join the European Monetary Union?

The launch of the EMS or European Monetary System on December 5, 1978, was projected to accomplish monetary stability and foster convergence and cooperation… read more

Essay 9 pages (2939 words) Sources: 8 Style: Harvard Topic: Economics / Finance / Banking

---

Credit Crunch on UK Residential Property Dissertation

credit crunch on UK Residential property: Is there an opportunity for the buy-To- let?

The effect of the credit crunch on UK residential property: Is there an opportunity for the… read more

Dissertation 30 pages (9799 words) Sources: 40 Topic: Urban Studies / City Planning / Housing

---

Would Euro Become a Reserve Currency in the Case of UK Adoption? Term Paper

Euro as Reserve Currency

The position of the dollar in the world economy has seldom been questioned. Although economists feared for the currency's status as dominant reserve currency during events… read more

Term Paper 10 pages (3457 words) Sources: 7 Style: Chicago Topic: Economics / Finance / Banking

---

View 100+ more related papers  >>