Arguments for and Against Joining the Euro

Topics: Monetary policy, Euro, European Union, Central bank / Pages: 5 (1198 words) / Published: Feb 2nd, 2012
A briefing document to provide arguments for and against the UK joining the Euro

The single European currency was established in 1999 and since then the topic of whether the UK should join the Euro has been at the centre of many debates. This document will look at the arguments both for and against membership of the single currency and then provide a critical analysis on whether the UK should join the single currency.

Arguments for and against joining the Euro

|Arguments for joining |Arguments against joining |
| | |
|Joining the Euro would improve costs to businesses that trade with |The loss of Independent Monetary Policy would result in the UK |
|Europe as there would no exchange rate costs, this would also |being unable to set its own interest rates. As the European Central|
|benefit tourists to the UK and overseas. |Bank (ECB) sets the interest rates for the whole euro zone. |
|Enable businesses to more clearly understand their profit and |The UK would be required to bailout other Euro countries in order |
|losses as there would be no fluctuations in exchange rates. |to stop the euro collapsing and maintain stability. |
|Trade between Euro zone countries has increased 20% faster than |The UK is extremely sensitive to interest rates as many people have|
|their GDP, whereas trade between Britain and Europe has stayed |mortgages. Any slight change in these rates could either cause a |
|around the same level as GDP. |housing boom. |
|Joining the Euro could ensure a stable exchange rate and provide a |The threat of peak oil will have an adverse affect on the euro



Bibliography: Huhne,Chris ( 2004) Ideg.org. Online at http://ldeg.org/en/article/2004/097392/12-reasons-for-joining-the-euro [accessed 02 December 2011] Layard,R. Buiter,W. Huhne,C. Hutton,W. Kenen,P. Turner,A. (2002) Why should Britain join the Euro. Online at http://cep.lse.ac.uk/layard/RL334D.pdf [accessed 03 December 2011] Pettinger.R (2007) Economicshelp.org. Online at http://econ.economicshelp.org/2007/03/why-uk-will-never-join-euro.html [accessed 04 December 2011] Tarry,L. (2011) Moneywise.co.uk. Online at http://www.moneywise.co.uk/markets/economy/joining-the-euro-what-would-it-mean-you [accessed 04 December 2011] (n.d) Economicshelp.org. Online at http://www.economicshelp.org/europe/costs-euro.html [accessed 28 November]

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