In this opinion I will make the case for Britain joining the Euro. Some disadvantages are much overplayed by the media. I will explain the disadvantages of the Euro but ultimately I will show that the advantages outweigh the disadvantages.
There are several distinct arguments for and against the Euro. There are Economic arguments; Political arguments and many people have very personal reasons for their preferences.
Sterling v Euros: The Economic Arguments
Since joining the Euro is essentially an Economic decision then the Economic arguments are the most important. Perhaps the most obvious Economic argument is the“Transaction Costs” argument. By joining the Euro we will cut the costs of each transaction that we make with Euro-zone. Since most of our trade is with the Euro-zone the money we would save from cutting the cost of each transaction will be significant. Every time a business exports or imports something from the E.U. the business has to exchange sterling in to foreign currencies. If the Euro is introduced these costs would disappear overnight.
According to the Labour government car prices in Britain are higher than in Europe and this probably strikes a chord with anyone who has attempted to import a car from Europe. A single currency would allow any consumer in the UK to see exactly what price cars were in Germany or France. This transparency would mean that companies could not get away with charging different prices in different countries.
Every business must take risk into consideration when deciding on its strategy. The more risk involved with a certain strategy the higher return the business requires to make that strategy viable. Risk is a bad thing, something that any company would try and minimize. This is especially true of companies that to business abroad. Every business venture that involves foreign trade is exposed to the risk of currency fluctuations.
There are several distinct arguments for and against the Euro. There are Economic arguments; Political arguments and many people have very personal reasons for their preferences.
Sterling v Euros: The Economic Arguments
Since joining the Euro is essentially an Economic decision then the Economic arguments are the most important. Perhaps the most obvious Economic argument is the“Transaction Costs” argument. By joining the Euro we will cut the costs of each transaction that we make with Euro-zone. Since most of our trade is with the Euro-zone the money we would save from cutting the cost of each transaction will be significant. Every time a business exports or imports something from the E.U. the business has to exchange sterling in to foreign currencies. If the Euro is introduced these costs would disappear overnight.
According to the Labour government car prices in Britain are higher than in Europe and this probably strikes a chord with anyone who has attempted to import a car from Europe. A single currency would allow any consumer in the UK to see exactly what price cars were in Germany or France. This transparency would mean that companies could not get away with charging different prices in different countries.
Every business must take risk into consideration when deciding on its strategy. The more risk involved with a certain strategy the higher return the business requires to make that strategy viable. Risk is a bad thing, something that any company would try and minimize. This is especially true of companies that to business abroad. Every business venture that involves foreign trade is exposed to the risk of currency fluctuations.
Most of our foreign trade is with the Euro-zone. This is not to say that that trade with other countries would suffer if we joined the Euro. At the moment we negotiate trade treaties as part of the EU. Joining a single currency strengthens our position and the negotiating position of the EU. However I think that a stronger Euro is not necessarily a good thing. Currencies fluctuate against each other for various reasons. The essential reason for currency fluctuations is to balance trade between countries. Currency speculation will distort this process and has probably contributed to the weakness of the Euro. But even so a weak Euro is not a symptom of underlying problems. It makes exports from the Euro-zone more attractive and has certainly increased employment within the Euro-zone.
Overall there are Economic arguments for and against the Euro. I think that our reliance on trade with Europe outweighs the problems associated with losing control of our monetary policy.
Brussels Bureaucrats v Our National Sovereignty: The Political Arguments
Most of the Economic arguments argue for the Euro. The political arguments are, in general, set against the Euro. If we join the Euro is argued that we will lose our sovereignty to un-elected “Brussels Bureaucrats”.
If the UK wants to become further integrated in to the EU then the Euro is an essential stepping-stone. However I think that the arguments over whether the UK should become further integrated into the EU are irrelevant. The Euro can stand as a single issue. It therefore means you cannot argue against the Euro because it allows further integration.
Undoubtedly joining the Euro will be a diminishment of National Sovereignty. As a country we will no longer be able to set our own interest rates and we will no longer be able to control our own currency. An un-elected body, the European Central Bank, will decide all this.
However at the moment our elected representatives and the government do not decide the interest rates. In the field of monetary policy the Bank of England has far more power than the government. Many people in the country believe that this is the best way to make policy. Therefore it seems reasonable to accept that an un-elected body should decide our monetary policy.
There are many cases where we have accepted the subsidiary principle and where it has benefited the UK. It therefore seems sensible to accept it when dealing with economic issues. The economic arguments show that it is better to decide monetary policy on a Europe wide level and therefore it seems sensible to accept this.
Sentimentality v Progress: Personal prejudices against the Euro
Many of the reasons people give against joining the Euro are quite personal. People want to keep the Pound and the Queens head on their £5 notes rather than having funny “German notes”. I think there are two personal reasons why people want to keep the Pound: sentimentality and xenophobia.
There is not much else that can be said. If you value a sentimental attachment to a piece of paper and a couple of shiny metal things over a stronger country and a better standard of living then there is not much I can say that would persuade you otherwise.
I think that many of the tabloid papers approach to the Euro have simply been designed to stir up xenophobic prejudices. Virtually all of the “Euro stories” in the Mail and in the Sun have simply been rants against so called Brussels Bureaucrats and of course the Germans. It is sad to think that the outcome of the referendum might simply be decided by the personal prejudices of Sun readers.
My mind is obviously made up. All I ask of you is that you assess the arguments that I have set out and that you
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