UK OPT OUT OF JOINING THE EURO ZONE

UK joining the Euro Zone

UK joining the Euro Zone

Introduction

There are several arguments as to why the UK should adopt the euro but there are also several arguments as to why we shouldn't. Some people argue that jobs are being lost because of the decision to remain with the pound for the time being. Companies such as Matsushita, Hitachi, Canon and Sony have all cut jobs or moved production to other parts of the world because of the high rate of sterling against the euro. This means that the UK is less efficient and isn't maximising its labour, this will have a negative impact on the balance of payments. Also people are worried that if the UK doesn't adopt the euro future investment will be lost.

UK joining the Euro Zone

Eventually demand for UK goods may decrease, as it is easier for firms within the 'Euro-zone' to trade with each other due to price transparency. Price transparency is a major advantage as it would make it easier for a consumer to compare goods and this would force companies to become price competitive. This is good for the consumer. Price stability would make it easier for firms to plan and trade would increase between the other eleven countries who have adopted the euro. If the UK joined the euro then it would be more convenient for tourists to visit and for goods to be exported and imported because currency wouldn't have to be changed, as this costs money it would also be cheaper. The European Commission has found that the UK is already using the euro in international transactions so adopting the euro would just be taking the next logical step. Also a higher percentage of UK firms have a euro bank account than the EU average. This suggests that the UK is already involved with the euro and because it has had no negative effect on the economy the adoption should be taken. The European Central Bank would be in control of the UK's inflation rate and this would hopefully be able to keep inflation low. There are claims that not joining the euro is leading to job loses and a lack of investment however, in 1999 investment in the UK created over 50,000 jobs. Countries like Japan and the US are investing and it seems unlikely that they will stop in the near future. ...