United Kingdom Pros and Cons to join Euro Zone Essay

Published: 2020-02-22 09:20:30
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UK policies are quite similar to those of Euro, but the issue of whether to join Euro or stay out of Euro remains a debatable concern. Since joining or not joining shall have very important bearing on the political, social and economical dimensions of UK. Therefore, in todays sensitive society towards economic, social and political completion and dynamism the argument should be based on the pros and cons for joining and being out of Euro. By doing this the argument shall weigh cost benefit issues and general development.

Holding onto this view of the situation, this paper shall examine both sides of the argument for UK being in Euro or outside Euro in dimensions like social, economic and political, which are fundamental to international integrations that enhance value. Introduction Euro zone as one of the EMU (Economic and Monetary Union) in economic environment forms when countries members of Europe abandon and abolishes their currency and economical transaction policies to adopt a single currency and common economical policies (Ian 1992).

This is the fundamental principle for formation of the Euro zone that gives UK a conditional requirement in joining Euro zone. This implies that UK shall have to adopt monetary, political, economical policies and loose monetary policy control to European Central Bank based at Frankfurt. With this light into the argument, the paper shall asses the benefits and shortcomings of the UK in relation to joining Euro zone. The main sides of the assessment shall be whether the Great Britain shall successfully abolish the sterling pound in favour of euro and its pros and cons.

Other issues to consider are the employment for Britons, foreign countries investment effect, Euro zone impact on Britain if it does not transact using euro, interest rates, Britain membership position in the EU and its sustenance of its influence globally (Mifflin 2002: 107). All these issues must be weighed against own currency in relation to comparative and competitive advantages in the global market by joining Euro zone (Mifflin 2002). Additionally, Britain policy makers should learn or benchmark from past EMUs to come up with a better policy.

The next section shall look the kind and nature of benefits and shortcomings assessment for joining or staying out of Euro zone. Assessment of the Euro zone benefits and shortcomings to UK Benefits assessment is the key to proper economical planning that shall enhance effective and efficient policy management to harness maximum benefits from Euro zone community. The vital components to be considered should be suggestions and studies by authority in the vital components that are connected with economic drivers rather than politically driven opinions. Some essentials of effective assessment ought to be employed.

These are: learning from historical EMUs, cost effectiveness of having the single current against any possibility of loosing in the long run and the projection of benefits of the Euro community in its capability to improve and advance the economy (Lye, Keith 1999). In assessing the benefits or shortcomings of Euro zone to UK, the paper shall examine euro currency use, business oriented benefits, job opportunities, political gains and general public benefits. Business advantages The business world benefits from the reduction of the cost of exchange rates within the euro zone.

Empirically, cost reduction in exchange rate accounts to lees than 0. 5%. This reduction to business persons and removal of exchange rate charges for companies which wishes to export goods and services to Europe and the European Union zone are two major advantages for Britain. This reduction in the cost solves a major challenge that engulfs the export scenario, since it is usually the main challenge faced by the exporters (Rawlace 1995). But this waiver is only dependant on the economic performance and progress of their own countries.

In this view, the most beneficial businesses are in the category of the large scale like multi-national corporations, which have large volume of transactions costs and transact in bulky within Europe environment (Kali 2005). In that regard, it is seen as a way used by these large scale corporations to free themselves from these burdening costs that have a bearing on their profit margin. Hence in this perspective domestic and small scale operators have very little to gain in the waiver in relation to joining euro. Empirically in Britain today over 80% of businesses are domestic producers (Marvin 1997).

Hence under this case as depicted in the economical terms, most businesses in UK are not likely to gain much from the business merit clause as stipulated by EU. Therefore any agitation for ditching pound in favour euro from the business community side is based on the individual interests and reasons rather than business or economically oriented ones. It should be noted that UK has performed and progressed better since it dropped European Exchange Rage Mechanism, (Lether 2000) than those European nations that used Maastricht convergence while preparing for the Economic and Monetary Union since the year 1992.

This fact nullifies ideology of clinging for euro that would increase the business based opportunities and economic growth. Although that is not to say that there is totally no good in euro to UK, but the goodness is a little bit at a low level or minimal that cannot seem to benefit the Britain much economically. Hence UK should weigh carefully in order to take decision for or against euro in relation to economical or business advantage (Lethe 2000: 186). Euro currency advantages to the UK public The remunerations that are attached to the business community of the Great Britain also apply to the public benefit.

Therefore, the public gets the advantage of the reduced exchange costs whenever they are within the euro zone to their advantage (Lether 2000). This will prove convenient to all Britons wherever they are traveling. Furthermore the use of the single current as opposed to the individual countrys currency enhances the aspect of transparency in pricing of the commodities across the EU region. These will avoid the unnecessary price fluctuation on the similar commodities and services, reduce consumer exploitation with the dishonest service providers and minimizes unwanted shortages due to hoarding of the products.

The greatest benefit will be the lower prices likely to be enjoyed by the public, which results from use of euro as a common currency (Lether 2000) hence enhancing competition amongst business enterprises. For instance at moment the prices of the common commodities across Europe varies greatly. But this may be accounted for from the dimensions of the attracting forces for interaction between regions like demand and supply, transportation costs, labour costs, national indirect and direct taxation rates, complementarities, the intervening factors and centrality in relation to sources of the goods and services (Lethe 2000: 241).

On contrast, Euro zone policy to regulate the indirect taxation rates within the euro zone may oppress the public. EU will regulate indirect taxation rates through standardizing all rates across Europe. This will easy some commodities while increase the price for the other goods and services. In this regard, in UK public shall lead to payment of Value Added Tax on various goods and services which are zero rated in Britain today. This on the other side will deliver no greater good to the public (Mifflin 2002). Euro and Political benefits Every economic and social benefit has a bearing in the political influence and benefits at large.

But the degree of the benefit depends on the individuals point of view. This is seen in terms of the whole issue of the EMU is geared towards creating a United States of Europe just like the United States of America (Ian 1992). Thus creation a politically super power with influence globally to overthrow the US. But the avenue taken is through the use of the Euro to get to political stardom and kingdom. In addition to that, there is other added propaganda which aims at giving an insight that EU only is capable of giving peace and prosperity politically, socially and economically which may not be the case (Wilson 2006).

In that regard, the democratic states of the world usually run their affairs internally and smoothly with each other through mediation, negotiations and diplomacy, without making war advances or threats to dance according to their tunes. This was evident in the periods after Second World War most nations were peaceful and democratic and had no need for a body to neither monitor their democratic space nor maintain peace (Andrew 2001). And as a matter of fact peace in Europe was mandated by NATO and not European Union.

But in recent cases EU has changed the mode of operation by replacing democratic accountability of member states with the EUs from Brussels. In that case the EU creates instability in the member country through creating a supper state hence rendering euro of little political gain to Britain. In fact Britain is better off the way it is right now than adopting euro (Lethe 2000). Job related issues The Britons have less to expect to better their sight in terms of employment and securing job opportunities in the EU community.

This is evident from the countries like Germany and France whom since 1992 stuck rigidly to the Maastricht European Union Treaty, in an effort to make their economies ready for the EMU (Marvin 1997) . This included the interest rates, levels of inflation, exchange rates and budget deficit all this in preparation for the monetary union. Then the result was terrible and horrific that still disturbs these governments up to date in relation to social crises and more so in the high unemployment rates amongst the youths who graduate out of learning system.

In this sense, (Andrew 2001) , states that history does not repeat itself, but we ought to learn from history and correct the incidences that lead to its happening, so that we deter it from happening once again in our life time. Hence we ought to learn from these occurrences in the Europe history in relation to this monetary unity. Furthermore it is evident from the treaty in article 105 which states that the main objective of the European Central Bank is to pursue deflationary policies.

In economic terms deflation translates to the high rate of unemployment as opposed to the inflationary based policies. Hence these monetary policies that aims at maintaining price stability through putting down inflation (John 2001) through regulation acts of the ECB and member countries shall render many jobless in UK. In fact there is high rate of unemployment which continues to steadily rise on daily basis across Europe than in UK, therefore if UK gives in to the ECB to control her economic activities and planning the public shall definitely suffer unemployment (Andrew 2001).

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