РефератыИностранный языкSiSingle European Currency Essay Research Paper There

Single European Currency Essay Research Paper There

Single European Currency? Essay, Research Paper


There is a rather large debate going on in the United


Kingdom. This debate asks whether or not we should opt to join the single


European currency, just as many other European countries such as France and


Germany have. There are two sides to this argument, both being very strong and


convincing.The main advantage of the single European currency is the


fact that it would cause prices to be greatly reduced. At the moment, Great


Britain has been given the label of ?Rip-off Britain? due to the frequent


extortionate prices which we are charged for goods compared to other countries.


The single European currency would allow trading to take place much easier,


without the need for exchange rates and currency commission. Easier trading


would mean that some countries can specialise in one good or service whilst


other countries specialise in others. This would mean that there are more goods


available to consumers at a lower price, and lower prices means people have


more money to spend on other goods, so there will be a higher standard of


living. Also, goods would be able to be transported for free between


participating countries. So by joining the European currency, there would be


more trade available and therefore a wider choice of goods and services to


choose from. Another main benefit is that a fixed exchange rate would act


as an anchor against inflation. Countries such as Italy and the United Kingdom


have seen this as an effective way to break inflationary expectations in the


labour market, in part by the implied reduction in the discretion of national


policymakers. Low-inflation countries such as Germany, however, are concerned


about whether the ECB would continue to follow the conservative monetary


policies of their national central banks.The single European currency?s ease of trade would allow the


easy establishment of Trans National Corporations (TNC?s), which in turn would


create more jobs for more people on a greater geographical scale. This would


mean that benefits would be lowered, as not as many people need to claim them.


The money saved from benefits would mean that more money is available for


public spending, so public services, such as the NHS would be able to offer


more quality services.The above arguments seem to convey a very positive view of


the single European currency. But on the other hand, there are many reasons why


people believe we should not participate.Firstly, looking at the moral aspects of the argument, the


loss of our own currency would be a loss of our heritage, our independence, and


our freedom. Many people do not want to see the face of the Queen banished from


the head of our coins to be replaced by something unfamiliar and European. The


British nation has a reputation of independence ? being our own little island


away from mainland Europe. Many people believe the Euro will take that away


from us.Also, many people are sceptical about trusting foreign


countries in this matter. We have been deceived before, and it could very well


happen again. The recent scandal of BMW selling off Rover, after they promised


not to is a classic example. Others include World War One, World War Two and


the more recent political scandal involving Helmut Kohl and also the ban on


British beef.Another reason against the single European currency is that


we would lose a great deal of democracy

. Rather than our government controlling


our money, foreigners in Brussels would be, who have not been elected by us and


are complete strangers to us. Each country joining the single European currency must meet


the convergence criteria. One part of this convergence criteria is the fact


that a joining country?s government borrowing deficit must not be more than 3%


of that country?s GDP. But in Great Britain, the borrowing deficit is 6%, and


the reduction of this figure would require public expenditure to be cut by an


astronomical £18 billion, or an alternative would be to raise income tax 9p to


33p per pound and/or VAT from 17.5% to 24.5%. The public would definitely not


appreciate these cuts. It is estimated that these cuts would raise unemployment


by approximately a minimum of 500,000. This would mean more people claming


unemployment benefits. And who pays for this? We do: the taxpayers.The question on many people?s minds is why change? We have


managed fine up to now, so why bother changing when the pound is strong and the


Euro is weak? Also, it is not really a massive loss if by not joining the


single European currency we are preventing trade with the rest of Europe. There


are alternatives: USA and the commonwealth can provide many more goods and


services than Europe. A single monetary policy cannot deal with the differences,


divergences and cyclical variations in the European economies. National


currencies provide an adjustment mechanism, and allow governments to use interest


rates to respond to events. A single European currency would remove these


options. Instead, a single European interest rate, set by the European Central


Bank in Frankfurt, would apply indiscriminately to the whole single currency


area. This creates the problem of how a participating country could adjust to a


shock or economic development specific to that country.? Simply taking a look in the media, it is true to say that


the Euro has met its first hurdles. It is failing in many aspects including being


very weak against the pound. So would the people of Britain be wise to join a


system which is already, within its first year of real operation, facing flaws?


I am sure the answer is no.There is great variation in the economic cycles of the


European countries involved in the single currency. The unification of these


nations under the banner of a crisp Euro note would be confusing for many


countries and it would be a long and arduous process until they were all


similar. This process would most probably involve high prices, high taxes and


increased unemployment for a great deal of time until these problems are


rectified.? So, as you can see, there are two sides to this debate, both


providing strong arguments. But, if the British government is to adopt a


sensible approach to this matter, it should steer well clear of the menacing


demon that is the Euro. The main problem being the long term implications of


the single European currency having yet to be determined. In my opinion, the


question of monetary union has been more focused on political reasons rather


more important economic reasons. The question on everyone?s mind is: ?But isn?t


a European single currency inevitable?? The answer to that is no. The world has


survived without one and Europe would be better placed without one. There are


serious problems that Europe faces, it?s just that the "Euro" isn’t the serious answer.

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