Should the United KingdomJoin the Single Currency? :: Economics

Should the United KingdomJoin the Single Currency?IntroductionThis project lead concentrate on analysing the arguments baffle forth infavour of adopting the Euro as our currency, as well as those againstit. A conclusion will then be drawn that weighs both the pros and consand decides whether it would be beneficial to the UK prudence if weadopted the Euro or continued to opt-out.TheoryThe major economic theories that will be used are the following* Macroeconomic objectives.* political macroeconomic policies. abridgmentArguments for the EuroThe arguments put forth for membership of the Euro z oneness (countriesthat have adopted the Euro as their currency) are split into twogroups political and economic. A give out towards a national atomic number 63(Churchills ideal of a United States of Europe) that is governed ina similar way as that of the U.S.A. is the primary political argument.A Federal Europe would be governed as a whole with member countriesretaining a few powers but losi ng almost wholly political sovereignty. Itis argued that this reason is one of the driving reasons for the put up of the Single European Currency. France and Germany inparticular want to integrate the core European economies more closelyand move towards a single European Economy. The economic arguments arefurther sub-divided into three groups transaction be, tradecompetition and investment. Ultimately, if the United Kingdom does notadopt the Euro higher costs will be incurred as cold as transactioncosts are concerned. The commissions involved in buy the Euro whentrading with European countries will ride out and the uncertaintyarising from a floating exchange rate will also continue to beapparent. Whilst this is unlikely to make a significant difference forUK businesses buying continental European exports, it could wellaffect the number of UKexports being purchased by continental Europeancompanies. Basically, UK exports will be more expensive to Euro zonecountries compared to e xports of separate Euro zone countries receivable to thechanging cost of buying the pound. The UKs membership in the Eurozone would eliminate these costs. Trade competition refers to the factthat if exports from Euro zone countries are all priced in the homogeneouscurrency then it is easier for companies to see price differencesbetween companies across borders, ultimately increasing competitionbetween companies. In effect, with the lack of tariffs or quotas forimport and export between Euro zone countries, it is almost like anintegrated single European Economy as buying from a company in a chap Euro zone country is exactly the same as buying from a companyin your own country. This is called price transparency it will becomefar easier to compare prices across the markets of the Euro zone.Should the United KingdomJoin the Single Currency? EconomicsShould the United KingdomJoin the Single Currency?IntroductionThis project will concentrate on analysing the arguments put forth infa vour of adopting the Euro as our currency, as well as those againstit. A conclusion will then be drawn that weighs both the pros and consand decides whether it would be beneficial to the UK economy if weadopted the Euro or continued to opt-out.TheoryThe major economic theories that will be used are the following* Macroeconomic objectives.* Governmental macroeconomic policies.AnalysisArguments for the EuroThe arguments put forth for membership of the Euro zone (countriesthat have adopted the Euro as their currency) are split into twogroups political and economic. A move towards a Federal Europe(Churchills ideal of a United States of Europe) that is governed ina similar way as that of the U.S.A. is the primary political argument.A Federal Europe would be governed as a whole with member countriesretaining a few powers but losing almost all political sovereignty. Itis argued that this reason is one of the driving reasons for thesetting up of the Single European Currency. France and Germ any inparticular want to integrate the core European economies more closelyand move towards a single European Economy. The economic arguments arefurther sub-divided into three groups transaction costs, tradecompetition and investment. Ultimately, if the United Kingdom does notadopt the Euro higher costs will be incurred as far as transactioncosts are concerned. The commissions involved in buying the Euro whentrading with European countries will remain and the uncertaintyarising from a floating exchange rate will also continue to beapparent. Whilst this is unlikely to make a significant difference forUK businesses buying continental European exports, it could wellaffect the number of UKexports being purchased by continental Europeancompanies. Basically, UK exports will be more expensive to Euro zonecountries compared to exports of other Euro zone countries due to thechanging cost of buying the pound. The UKs membership in the Eurozone would eliminate these costs. Trade competition re fers to the factthat if exports from Euro zone countries are all priced in the samecurrency then it is easier for companies to see price differencesbetween companies across borders, ultimately increasing competitionbetween companies. In effect, with the lack of tariffs or quotas forimport and export between Euro zone countries, it is almost like anintegrated single European Economy as buying from a company in afellow Euro zone country is exactly the same as buying from a companyin your own country. This is called price transparency it will becomefar easier to compare prices across the markets of the Euro zone.