Euro - possibly the right thing to join, but just not yet (The Euro)

Member Name: julwhite

Product:	The Euro
Date:	22/12/08 (123 review reads)
Rating:

Advantages: Lots of economic advantages

Disadvantages: Lots of political disadvantages

As my own personal view, I'm sceptical of joining the Euro, but believe that it should not necessarily be ruled out. Although of course things in financial markets change all the time, at the moment the pound has fallen sharply against the Euro, and the dollar, which causes great instability for some businesses.

For businesses that have to buy in materials from overseas, the costs of importing items go up when the value of the pound goes down, which makes it more expensive to produce items. Although the reverse is true, and our exports become cheaper for overseas buyers, it's the more the lack of certainty that threatens businesses and could put them out of business.

Joining the Euro would therefore give us some stability in the financial markets, which would make it easier for companies to invest here and do business here, without worrying about exchange rate fluctuations.

For individuals, buying overseas would be easier if there was a single currency. It would be much easier to compare prices across different European countries, and pay for them without again worrying about changes in the exchange rate, or being surcharged for buying an item in another currency.

There is also the possible benefit of constraining the economy if we were a member of the Euro. A large currency is less likely to be hit by fluctuations, which might make it easier to control inflation, interest rates and even taxation.

However, there are political dangers, even though there are many economic advantages in my opinion. Handing over control of your currency is a major development for any nation state, and is inevitably risky, as decisions are no longer always necessarily made on behalf of this nation. It could be argued that in a global economy, it's hard for Governments to isolate our economy in any event, but there is a reassurance that in times of trouble for Britain, a British Government would be in control of the economy and all the fiscal and monetary instruments.

So overall, I'd say that for the moment we need to stay outside the Euro zone, as there's no rush to join. There are some political dangers, and we can have the advantage of waiting to see how the Euro works over a longer period of time. That gives us the advantages of deciding whether it is right for Britain, having seen the experiences in other major economies such as France and Germany.

Therefore, possibly the Euro is a good system to join, but the for the moment, in my opinion we do ourselves no harm by sitting outside the Euro zone and seeing how it progresses.

Summary: We're not ready to join yet