Joining or not the Euro is a difficult desicion, because it brings a lot of changes (andvantages & disadvantages) for the UK.
One good thing that joining it can make is the elimination of currency conversion costs, making trades and importations with other countries of the european union cheaper (and the prices of imported products will be cheaper as well). With the euro comes an unification for european countries in economy and it will be convenient for the UK, because an economic union makes countries get closer in a political way too and with this an european war will be less likely.
By the other side, one of the worst problems that changing currency can give, is the transition costs. The UK would have to spend a lot of money in changing the currency from pounds to euro, and they'll have to change cashiers, vending machines, underground ticket machines, etc. (expending with this changes in machines a big amount of money too).
All the necessary modifications to join the euro can't be done in one day. It would be a really problematic, expensive and long process. People won't be happy with all the difficulties of the process.
Other bad thing is the lost of identy, because even the coins can tell you some things from the country where they are from, for example the persons impressed in the billets of the UK make tourists and visitors know them or at least recognize them if they see a picture and know that they are or were important for the UK.
In conclusion joining the Euro will have a hudge impact in all the internal and external aspects of business. I can't say if it will be good or bad for the UK, because it brings as much advantages as disadvantages and people disagree in this aspect in forums and internet pages I visited, and I didn't get convinced reading their arguments. I'm neutral:)
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Haha... Do you think a european war might be likely when the UK does not join the EMU(European Monetary Union, this involves all countries who have the european currency)? :-)
ReplyDeleteWhy would the change from the pound to the euro be so problematic? Other European countries did - in general - not have that much problems in changing.
Also, I don't think the loss of identity will be such a problem. The UK will still be able to reflect its identity to the coins. (There is a nice place for the queen's head on every coin =D)
As far as I know there was one main argument why the UK decided not to join the EMU is because the UK was in another economic situation than the most European countries.
For example:
When a country might be going into a recession and AD(Aggregate Demand) is falling, the government may decide to lower the interest rates to stimulate the economy.
However, if a country is currently facing huge economic growth lowering interest rates might have a countereffect.
At first it will raise AD but as soon as the AD starts declining there will be the burst of the inflated bubble(the bubble caused by decreasing interest rates at the wrong time) and for the country it would be best if the interest rates would be lowered.
Because the UK does not have 100% influence on the interest rate changes anymore they will not be able to just lower the interest rates causing even more problems...
The main argument for the UK not to change to the Euro - as far as I know - is simply that they were in different stages of the economic cycle.