Your argument for the Euro is correct. It also perfectly fits the EU.g g We are countries, not states, we have different cultures and one plan will not fit all 28 countries ,29 when Turkey joins. The original idea. was OK,it was called a common market. The politicians have empire built for their own benefit. In my opinion it is unmanageable and will sink under its own debt Whether we are in or out. They won't admit this because it is the best gravy train ever.
Having an independent currency doesn't quite allow the UK to 'tailor our economic policy to our specific needs' but it does allow for some capacity to alter its own circumstances. In fact, the value of a currency (its exchange rate) affects a huge number of other variables. If the exchange rate for the pound is low, the UK exports more cheaply and its goods are more competitive in foreign markets. If the value of pound is high then it can purchase a lot more from overseas (effectively, imports become cheaper). However, a low pound means that debt servicing is more expensive and obviously, a high- value pound makes it easier to pay off foreign debt. As the Pound is a floating currency, its exchange rate is determined largely by supply and demand. The demand for pounds in particular is affected by a number of factors and governments can manipulate it to some extent to create favourable conditions. For example, if the UK raises interest rates, the value of Sterling rises and conversely, lowered interest rates prompt a fall in the Pound's value. Thus, if a government wanted to increase exports, it could lower interest rates; if it wanted to pay off more debt, it could raise interest rates. The problem with the Euro is that it is a single currency for 20- odd economies that have different prevailing conditions and requirements. For example, the current value of the Euro benefits Germany by maintaining an acceptable level of competitiveness for German exports as well as an acceptable rate at which German debts can be serviced. For Greece, however, the rate of the Euro is too high for Greek goods to be competitive and not high enough to have a positive impact on servicing Greek debt. By not taking up the Euro, UK has retained quite a deal of capacity for independent action with regards to its exchange rates, whereas Greece has no capacity at all to affect the Euro's exchange rate to its own benefit.
Is it really all about money? Haven't we discussed greed enough on this board? Surely with all the troubles around the World this is a time for Countries to find more ways of coming together 'for the greater good'? Breaking apart for money reasons doesn't seem to me to have any level of priority. These things can be discussed and argued to find better ways within Europe, surely that is what we are good at? We don't need to behave like a spoiled child and run away.
Membership of the EU and having a sovereign currency (Sterling) engender two different sets of economic conditions that Pa and Mailman touch on. Membership of the EU has meant better terms of trade with Europe including lower tariffs, access to subsidies and grant and greater negotiating power in trade deals with countries outside the EU. In general, these conditions enhance the UK's capacity to trade and indirectly, foster employment and economic activity in key industries (car making and finance for example). The argument here is that Britain accrues a range of benefits from EU membership that provide a secure basis for solid economic growth that it otherwise wouldn't have as a small, independent state that had to navigate individual trade deals and access to markets. For example, in a trade deal with China, the EU carries much more economic clout than Britain would if it had to negotiate directly because of the size and sophistication of the European market. Britain alone would be the junior partner in this trade deal and the argument holds that the deal itself would be worse than a deal with the EU with Britain as a member. Financial markets view UK EU membership favourably and, coupled with the UK's strong financial governance laws, this means that Britain can borrow money at rates that are relatively cheap; the effect here is that Britain can run trade and current account deficits for long periods without markets pushing up the costs of its borrowing.
Datafeed and UK data supplied by NBTrader and Digital Look.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk.
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.