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The Euro and the Uk

In: Business and Management

Submitted By edelas
Words 3967
Pages 16
INTRODUCTION

On May 14th 1947, in the Royal Albert Hall, Sir Winston Churchill said, "We are ourselves content, in the first instance, to present the idea of United Europe, in which our country will play a decisive part, as a moral, cultural and spiritual conception to which all can rally without being disturbed by divergences about structure. It is for the responsible statesmen, who have the conduct of affairs in their hands and the power of executive action, to shape and fashion the structure. It is for us to lay the atmosphere and give the driving impulsion."

Ironically, today, only Britain could possibly rival Denmark for anti-EMU (European Monetary Union) feelings. In 1992, after tough negotiations, Great Britain signed the Treaty of Maastricht but with a special demand: an opt-in option. This meant that Britain could join the EMU whenever it decided to do so. Ever since the election of Prime Minister Tony Blair and his Labour Party, the government argues that the country should join the EMU when and if the economic conditions are right. Denmark had asked in the Treaty of Maastricht for an opt-in option, however, on September 28th, 53% of the Danes decided to keep the krone.

Economically, the UK would find more advantages than not in joining the Euro zone, as shows the following table[1]:

|Advantages of entry |Disadvantages of entry |
|No cost or uncertainty of changing currencies |Less ability to offset local shocks to real demand |
|Lower interest rates |Possible deflationary bias at the beginning |
|Fewer output fluctuations |...

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