U.K ECONOMICS

How does European Union Policies affect U.K Economy?

Abstract

The adoption of European Union policies has long remained a heated debate among the British analysts and economists. The adoption of the single currency should allow UK consumers to more easily compare the prices of goods in a market where competition would thereby be increased. These benefits are however limited as part of the UK economy. The expected benefit of the abolition of exchange pound sterling / euro would be four times lower. There are quite a number of evident benefits associated with the U.K. adoption of the Euro. The main expected benefits of EMU are three in number: the reduction of transaction costs, the disappearance of currency risk, greater price transparency. European monetary integration will have a significant impact on British business irrespective of whether the UK decides to participate. Entry into the euro zone will involve those countries with significant economic changes. On the one the other hand, closer integration with the euro area is positive affected their economic growth and efficiency. The negative consequences of EU membership in terms of additional constraints on business and U.K Government can probably be managed.

Table of Contents

Abstract2

Introduction4

Research Aim and Objectives5

Thesis Statement5

Discussion and Analysis5

The Five Economic Tests8

Arguments10

The UK Perspective: Limited Benefits and Higher Risks11

Conclusions and Recommendations15

References17

How does European Union Policies affect U.K Economy?

Introduction

The accession of Great Britain in European Monetary System has generated heated debate in the eighties. In 1990, Britain joined the European Exchange Rate Mechanism (ERM) but it comes out two years later. Finally, Britain negotiated an opt-out clause in the Maastricht Treaty in order to stay out of EMU. While the economic and monetary union is seen as an economic construction; political determinants are found first within the EU itself, since EMU was conceived as an instrument to a closer European political union. Before a Member State to adopt the euro, it must meet certain economic and legal criteria. The economic convergence criteria are designed to ensure that Member States are sufficiently prepared for adopting the single currency and can integrate seamlessly with the monetary regime of the euro area. Legal convergence implies that national law is compatible with the Treaty, particularly on issues relating to the national central bank and currency (Stafford, 2009, 13-25).

The replacement of national currencies by the euro is a major operation that requires a lot of practical preparations, for example to ensure a rapid withdrawal of the national currency, the conversion and guarantee the correct display of prices of goods and ensure that citizens are well informed. All these preparations depend on the changeover scenario adopted by a candidate country for entry into the euro zone. Valuable experience was gained when the euro was launched for the first time, and candidates for the euro area are now receiving. The European Commission, in particular, is actively assisting and advising the candidate countries (Jordan et.al, 2011, 101-155).

Research Aim and Objectives

The aim of the research paper is to review the impact of the policies of ...