Why doesn't the UK adopt the Euro?

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Yes they do. If the value of the currency does not fluctuate then firms can KNOW WITH CERTAINTITY how much their goods will be worth in the future. For example if you investested in a factory in the UK and it took two years to build then the value of the currency may have changed making your goods less profitable. The bottom line is that it increases risk to international trading (BAD) and causes uncertainity (BAD)

Providing our economy stays stable (Which is perfectly feasible with control of our own interest rates), this doesn't really pose a massive problem. UK inflation isn't anything spectacularly large to the point where it provides issues with foreign investment.

It makes some sense. However we do not give up all power. If we joined we would be a major player on the ECB. Also we would have more power in the EU generally. Also our trade cycle is very similar to the EU so our problems are their problems. Hence we would set the same interest rate anyway.

It's little to do with trade cycles but more to do with the make up of our economy. It shows by the fact that the UK and the Euro have different interest rates at the moment. They used roughly the same pattern when it came to the recession (i.e drop interest rates massively very quickly), but still at a different rate, which shows how important economic sovereignty is.

Cyclical consistent reccessions are better than infrequent massive economic **** ups caused by a planned economy........... no?

I'm not quite sure you understood what I was getting at. It's nothing to do with planned economies. I was stating that the fact that the UK has a (largely) free market means cyclical recessions are more or less inevitable, and when they do happen we need control of our own interest rate. It's nothing to do with free vs. planned economy. Under the Euro these cyclical recessions could potentially be worse.

The states in the US are still independant to some degree. Agreed they have less control than EU countries though.

Their independence is mostly on social issues, not economic.

(edited 13 years ago)

Reply 41

jvasos

Have you seen the current state of the Euro. A lot of the countries that have adopted it have to remain at the same fiscal level as struggling countries with the Euro such as Greece and Ireland and are constantly bailing them out.

Maybe in the future the UK could adopt it but it does not make much sense right now as the pound is fairly stable and strong, however in order for the UK to truly meet its economic capabilities, in the future the Euro will help this cause.

The 'Euro-block' as it where will essentially become a force akin to China and the US.
The Euro is still fairly new and needs a lot of work and restructuring if it is to work. I reckon it may even need a 2 tier system with the stronger countries and struggling countries, as why should a country be held back in this respect. However, it is hugely beneficial for trade etc in the UK and its Euro allies.

so not needed right now but definitely in the future.

Reply 42

User570431

pound is stronger than euro end of

Reply 43

smellysocks

It's got nothing to do with it being British or for Nationalistic reasons, the current decimal system is not exactly old... anyone remember shillings and sixpences? .... oh just me (not) - Purely economic reasons.

Oh and the Euro bashers: yes a lot of laws are set by Europe, however we get a hell of a lot out of being in the EU. For instance I work in local government and the majority of my projects are EU funded, the British government wont give us a penny. All my projects revolve around creating long term job opportunities.

Reply 44

DorianGrayism

Original post by turn and fall

The super EuroZone main benefit is not to stop the contamination of the currency but to allow the weak economies to depreciate their currency and achieve export lead growth. At the moment the German economy is pulling the currency up which does not help the likes of Portugal.

And I dont reckon it will happen. It costs a lot of time to implement and money. By the time the system is complete the problem will probably be gone.

How does it allow the weak economies to depreciate their currency?

Reply 45

Psyk

I've never been against the Euro on social, cultural or political grounds. But so far it seems like we made the right decision staying out of it. Really the only thing I'm concerned about is how it affects our economy.

Reply 46

Ledarifique

How is the Euro bad? It's regulated by Frankfurt so no douche bag can go printing and thus depreciate the value. France and Germany are 4 and 5th largest economies in the world and the 2 biggest in Europe and they seem to be doing fine. Didn't they get out of the crisis first? Don't ask me how or for what reasons but the Euro zone is not bad at all.

Reply 47

Aphotic Cosmos

A single currency shared amongst multiple, diverse economies doesn't work, although I do think that if the economies of European states continue to converge and globalise that the Euro could be a sensible idea in the future. I don't have any political objections to the Euro, though - integration with Europe is a good thing and I want more of it where it's sensible, maybe even to the point of federation in the medium to long term future.

But for the moment, it's just silly.

(edited 13 years ago)

Reply 48

murray29

Basically right now there is only one country that profits from the EURO: Germany.
Wages don't rise in line with productivity in germany, so germany could become "Exportweltmeister", but this happend at the cost of all the other EU countrys, with it's exporting strenght based upon wage dumping germany is the only country that profits from the Euro, the "weaker countrys", all those in the south couldn't protect themselfs against this practice because they could not adjust their exchange rates.

if you want to know wheater it would make economic sense to joint, make a chart with producivity increase vs wage increase, if Productivity increased more o than wages, it would make sense to join, if the value is about the german one, other wise not.

Besides this economic issue, the pound is one of the things that makes britain unique, and one should carefuly consider if one wants to give this up, for an economic benefit [if any]- depending on the productivity/wage ratio it might be a horrible idea to join.

A third point: Joining the Euro, would make traveling, and other thins much easier, it would be a trade of cultural identity for convenience!

(edited 13 years ago)

Reply 49

EsStupido

Because it's dying on its arse.

This is despite the fact they've done all they can to prop it up.

Reply 50

Steph90

Original post by Barden

Non-economic reasons are invalid and just plain irrational. However, I used to think this way until I was about 15...

I disagree.

Non-economic reasons are also of importance because they have a bearing on society too. Joining the Euro will be seen as much more than just an economic decision.

But yes, I think it would be a bad decision on both fronts, economic and social.

Reply 51

Steph90

Original post by Aphotic Cosmos

You want our country to integrate with a primarily undemocratic body?

I know that the EU parliament has slowly, gradually increased its powers over the years but it is still over seen by the Commission, the most powerful organ of the EU. Further to this, the second most powerful institution within the EU, the ECB is also an unelected body.

Our country's soverignty is extremely important, why would you want to give it away? What possible benefit could there be from further integration? I've never really understood this view point.

My personal view is that we are currently integrated too much already, any integration should only be minimal. It should entail a mutual benefit for trade ofcourse but the fact they can legislate over our Parliament is totally absurd. I even like some of the policies that come out of the EU - I'm not a Daily Mail type who objects to everything that comes out of the EU.

But I prefer to look at it from a constitutional prespective, the EU has managed to effectively erode parliamentry soverignty. There is no reason why we cannnot bring in similar legislation where it is required (but we have way too much already). Further integration offers no benefit to us.

There have been many positives of joining the EU which I think we could have enjoyed as a country without becoming a part of it. But this argument usually falls on deaf ears. I even have no objection to 'freedom of movement', which is usually a big objection by a lot of people who think that Eastern Europeans shouldn't be allowed here etc. etc. I will also concede that we have to make sacrifices or pay in some form for these benefits, nothing comes for free. But it has gone way past the point of mutual benefit - we are now paying much more into the EU than we get out of the EU, considering other countries have many of the same benefits without paying anything!

Sorry if this sounds all sounds like a load of ****, but I'd appreciate if you can answer by above Qs - what possible benefit do you see from further integration?

Reply 52

Steph90

Original post by Ledarifique

We may also be a large economy like France or Germany, but we are a different economy.

You say the Euro Zone is not bad at all, please see: Portugal, Spain, Ireland, Greece (and more to come I have a feeling in the near future).

The inadequacies of these economies is going to result in the collapse of the EU.

Reply 53

meatzaper

the euros or stupid.... I saw one on the floor and I was thinking 'yes a £2 coin' then i got closer and realised what it was.... disappointing

Reply 54

Aphotic Cosmos

Original post by Steph90

And so is the Bank of England. An elected leader or controlling board of any central bank would lead to economic ruin - it's not a very fair criticism of the ECB, even though there are many valid complaints against it. As for the commission, I think that it needs to be completely dismantled and it's powers distributed between the Council (the assembly of national leaders and ministers) and the Parliament before I would or could agree to the EU becoming a federation. The EU must be democratic before there can be any serious talk of a federation.

I do agree with the existence of the EU and our membership of it, but that's not to say it isn't in need of dire reform as with a lot of our own national political apparatus as well.

Our country's soverignty is extremely important, why would you want to give it away? What possible benefit could there be from further integration? I've never really understood this view point.

I agree that the power to create laws is extremely important, but there's a lot of hyperbole out there about the extent of the EU's legislative power. 70% of our laws do not come from Brussels, and those laws that do derive from Europe are ultimately left up to us to implement in national law a way that suits us as a nation. We seemingly fail to do this most of the time and are left with either pointless laws that clog up the statute book, or laws that follow the EU directive to the letter without much concern for it's impact on the British people. It's a different approach in Germany and France where EU directives are taken with a pinch of salt and applied with regard to the political, social and economic contexts of both nations by national governments.

I also think that it doesn't really matter whether it's a British or a pan-European body that passes legislation as long as it's democratic. Surrendering national sovereignty to Brussels is no bad thing as long as (a more democratic) Brussels doesn't invest that power in the commission, . Lisbon was a good step because it removed a lot of the commission's power and powers transferred to Brussels were transferred to the parliament rather than the commission, and I'd like future treaties to start downsizing and limiting the commission and forcing the EU to start passing audits.

Sorry if this sounds all sounds like a load of ****, but I'd appreciate if you can answer by above Qs - what possible benefit do you see from further integration?

I don't think it's necessarily bad if we don't integrate in to Europe, but I do think that we significantly improve our chances of being a successful nation in the near future, in the age of rising Brazil, China and India, if we work together as a political unit. An economy of $15t (the largest in the world), with the third highest population in the world, around 1/3-1/2 of the 500 largest companies in the world and what would probably be a huge, technologically advanced military, as well as a rich heritage in the sciences and engineering. The EU, if done correctly, could guarantee the British people a place in the world.

Reply 55

Ledarifique

Those countries also happen to be the poorest countries in the EU. They are not even counted as very rich only rich(Ireland, Spain) and Intermediate(Portugal, Greece). So I don't think that their demise is a good representation of the health of the Euro in the future.

Reply 56

chrislpp

TL;DR:

We don't want to get dragged down with every other country in Europe when our economy is more stable.

Being from Northern Ireland and working in a retail part-time, the amount of people from the ROI coming to spend over christmas (and throughout the year) has made a lot of shopkeepers say ''what recession?'' especially last year when the rate was given mostly as 1:1 to make things easier. That is not as common now. 5 years ago accepting euro more than a few miles from the border was though of as crazy.

It took a worldwide downturn to get the pound and euro almost 1:1 (it was never that officially on the markets IIRC), we keep the pound because it's not just an identity, it's one of the strongest currencies which is good for investors and it's thought of as a ''safe'' currency, at least it was, in the good old days of yesteryear when £1 = $2

That is why it stayed with us for 10 years, and now the current financial climate will mean we have it for 10 year more.

(edited 13 years ago)

Reply 57

paddyman4

Have a cheeky look at the continent. The UK relied heavily on changing its interest rates and through quantitative easing throughout the recession - had we been part of the Euro, we wouldn't have been able to do this unless everyone else happened to require the exact same interest rate and the exact same amount of quantitative easing. Then, when countries in the Eurozone started falling (partially because they were unable to set their own economic policy) the other Euro countries had to pay to bail them out in order to save market confidence in the Euro and stop devaluation of their currency.

On top of that, the Bank of England does a fantastic job - we want it to be controlling our currency, not other countries.

Reply 58

Square

why try and fix something that isnt broken?

Reply 59

paddyman4

Original post by DorianGrayism

How does it allow the weak economies to depreciate their currency?

Because countries borrow money by selling financial products like bonds to investors. With a bond, an investor gives money to, say Greece, in exchange for the bond. Greece then pays the investor an amount of interest every month, and then at the end of the bond's life, Greece pays the investor back the original amount. Investors can also buy many other things like this.

When Greece looked like it was going under, investors got worried that if they were to buy a bond, Greece would be unable to pay them their interest payments and would just be holding onto the investor's money with no gain to the investor. Therefore investors decided that it wasn't worth buying bonds from Greece (i.e. lending money to Greece).

Now in order to buy bonds or any other financial products from Greece, you need Euros - just like if you want to buy a cup of coffee in Greece you need Euros. So when everyone was buying bonds from Greece they first had to buy Euros. A high demand fr Euros meant a high value. If everyone suddenly loses interest in buying Greek bonds, then that's a lot of people who don't need to buy Euros anymore. Therefore the value of the Euro falls.