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| Switching To The Euro Would Be A Good Move For The UK. |
| I was talking about this with a friend the other day. Not being an economist, i really don't know and was just interested to see what other, maybe better informed individuals, thought. |
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No it wouldn't because in the bible in the book of revaluations it says specifically that satan will
come into the world on one currency and that is the Euro dollar. |
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The British pound is one of the strongest currencies in the world and everyone of all generations
has gotten used to it. There is no point in changing it because there would be uproar like when Tony
Blair sent us into war despite being advised not to |
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The main argument FOR the Euro is twofold:
1. It will reduce transaction costs (costs of trade such as shipping, currency exchange) between us
and mainland Europe allowing more trade. More trade (both imports and exports) is universally
accepted by economists to be a good thing so this would improve our economy. There is also a concern
that without joining the euro firms may begin to trade in the eurozone in preference to the European
union and we will lose out.
2. If we refuse to join such a large plank of the EU then we will be poorly positioned to continue
to integrate into Europe and may be squeezed out politically. This could be a turning point in our
relationship with Europe.
Number two is seen by some as an advantage some as a disadvantage, it depends on your
perspective.
The argument against the Euro is partially political (see #2 above) and partially economic, the
economic argument goes as follows:
1. We will lose the ability to set out own interest rates. We currently set out interest rates
through the Bank of England and the Eurozone has a collective rate set by the European Central Bank.
Interest rates are one of the key tools by governments to control their inflation and GDP growth.
The ECB has been highly effective in controlling inflation across the eurozone, however our economy
is structurally very different to many European ones (for example, home ownership in the UK is very
high, renting is much rarer than in the rest of Europe. This means that our property market is more
sensitive to interest rate changes than others in Europe). Because our economy is different there
will inevitably come a time when we badly need interest rates to go up or down and the majority/rest
of europe needs them the other way. The ECB would be forced to do the opposite of what we need and
the damage to our economy could be considerable.
Personally I think the risks outweigh the gains, though it should be noted that the argument against
has been somewhat weakened by the ECBs excellent job over the past 5 or so years. The real test of
the ECB and Bank of England will come in the next 5, when the world economy is not so smooth. |
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 For and Against Recent Activity
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21 Jun 2008 00:38
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