Joining the Euro

[The Super Pope]

Given that the value of the pound has sunk lower than the Titanic and Britain's economy has taken a journey up a certain creek, would now be the time for Britain to join the Euro?

[aarons got funky fresh]

I don't think so, sure, now is a bad time for us all, but in a few years (10?) the pound will be up and running again.

[Mikelus Trento]

Given that the value of the pound has sunk lower than the Titanic and Britain's economy has taken a journey up a certain creek, would now be the time for Britain to join the Euro?

I was under the impression that the economic downturn is affecting all the Euro countries. I would think being part of the group would make options less flexible for GB. But that's just my opinion.

[HansDuet]

'bout time.

[MKT-Smokescreen]

'bout time.

Actually, it was entirely the correct choice to remain with the pound for so long.

The UK is a primarily import economy, and we only really export a few items (such as luxury yachts and other such high-value products).

A strong currency is ideal for an import economy, and a weak one is more suited to an export economy.
So unless the entire nature of the British economy changes, the UK ought to stay with the pound.

In the current economic crisis, I suppose a switch to the euro could be good, but as it's value is already set - and crucially isn't an awful lot better than the pound right now - it wouldn't really put life back into the economy.

Any gain would be counter-acted by the increase in prices that would inevitably occur, just like it did when the pound was decimalized. If we switched over to the Euro, we would have to trust every single business in the UK not to set the new prices higher than the direct exhange rate would dictate.

Past experience with the decimalisation of the pound doesn't really suggest this would be the case; also our government is going to be alot less inclined to trust private enterprise during an economic crisis caused by - at least partly - private businesses abusing their position and status in a free market economy.

[patrick1191]

Ugh every time the dollar/pound drops people wanna jump ship. What really will happen is the pound will drop, allowing tourist to spend more money causing the pound to once again rise.

[Kavhan Isbul]

Interesting argument.

The UK is an import economy, granted. But do foreign exporters, especially those from the EU, prefer to get paid in pounds or euros? I would say euros, as the euro at least right now appears to be the more stable currency. That being said, eventually it is in the UK's best interest to adopt the Euro.

There is the argument that when the switch is made, there will be inflation. Sure, but isn't there a pretty high inflation in UK right now anyway, just because the pound has fallen? Which is better - a one-time inflation due to businesses adjusting prices or high infaltion over years?

When one puts the emotional factor of abandoning the pound, it is hard for me to be convinced that the benefit of maintaining control over a country's money supply outweighs the gains that come from having the same currency as almost the rest of Europe.

[The Super Pope]

We can dump our economic woes on the economies of the rest of Europe. Makes a change from them dumping explosive ordinance on us

[Mikelus Trento]

We can dump our economic woes on the economies of the rest of Europe. Makes a change from them dumping explosive ordinance on us

And you feel somehow they won't be dumping their economic woes on GB? Why would that be?

[Sphere]

Nobody is "dumping" the cost of the recession on anybody else. The argument for the UK to adopt the Euro is three fold.

1.) Economic activity that involves a Pound-Euro exchange rate has increased risk; loans, material suppliers, retailers all have to factor in the risk that the exchange rate will change and hurt their bottom line.

2.) The Euro has become the second largest reserve currency, meaning that the percent of its value exposed to the money markets is much lower. Thus the Euro has a higher degree of stability.

3.) The UK may see its credit-rating dropped, and joining the Eurozone may reverse this.

There are several arguments agaisnt, the main one being the forfiet of UK control over interest rates. The UK would only be one voice (although an important one) in the ECB, and so interest rates would be a comprimise, and probably higher than the UK would like.

[Mikelus Trento]

I would offer you another reason against......basing an important decision like that because of current economic conditions is foolhardy, since those conditions might be reversed at some point.

[Sphere]

I would offer you another reason against......basing an important decision like that because of current economic conditions is foolhardy, since those conditions might be reversed at some point.

The point is the current arrangement exposes the British economy more to these fluctuations. Right now with the pound historically low versus the Euro, British exports to the EU should be growing. But like you said, the pound is likely to recover which would hurt the UK export market. This tempers those UK producers who might want to invest in increasing their exports.

In this type of situation, investment and growth is hindered by the risk that economic conditions can change drastically.

[rusina]

Yes.

[Elrond]

I think joining the Euro now would be awful decision because of the current exchange rate but I would support joining the Euro when things have returned to normal. The Euro is likely to replace the dollar as the world currency at some point and even now it has a level of security that the pound (the 3rd reserve currency) doesn't have. The UK joining the Euro would provide a significant boost to it because its adds a huge economy to the already big Euro zone - it would bring the Euro zones GDP very near to that of the US. I also think that the UK would benefit in the long run by not being able to set interest rates - to me its a sign of weakness of the regularity and monetary system that they are as important as they are.

[JP226]

Nobody is "dumping" the cost of the recession on anybody else. The argument for the UK to adopt the Euro is three fold.

1.) Economic activity that involves a Pound-Euro exchange rate has increased risk; loans, material suppliers, retailers all have to factor in the risk that the exchange rate will change and hurt their bottom line.

2.) The Euro has become the second largest reserve currency, meaning that the percent of its value exposed to the money markets is much lower. Thus the Euro has a higher degree of stability.

3.) The UK may see its credit-rating dropped, and joining the Eurozone may reverse this.

There are several arguments agaisnt, the main one being the forfiet of UK control over interest rates. The UK would only be one voice (although an important one) in the ECB, and so interest rates would be a comprimise, and probably higher than the UK would like.

But you lose currency autonomy which is a massive biggie.

[Sphere]

But you lose currency autonomy which is a massive biggie.

I don't get what you mean by currency autonomy. The UK central bank has some tools to influence the pound, but it is a free-floating currency whose value is determined by the markets.

[Musthavename]

Going in when the pound is suddenly weak is a terrible idea. Ofcourse, going in before the crisis would have been a bad idea aswell, because of the huge differences in what the Bank of England and the European Central Bank have done to interest rates.

Though, unless it was really beneficial for us, i'd still rather stick with the Pound. I really cannot imagine myself saying "Euro" instead of "Quid"

[Otherside]

we wont there was a pretty recent poll which surggested even tho the value of the pound has gone down the british public are still against the euro.

[Helm]

The UK would joined it from the start if it had it been up to me.

[Panzerbear]

Given that the value of the pound has sunk lower than the Titanic and Britain's economy has taken a journey up a certain creek, would now be the time for Britain to join the Euro?

I dont think British Pound question is a subject to a temporary economic convenience. its more like us vs them nationalist contest.

frankly, I dont think the British are kidding anyone. they want to be part of EU only on paper.