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Should Britain Join the European Union. With the change over to the Euro
notes and coins now complete across the "Euro-zone", twelve ...
... make other countries want to join EEC and ... s application claiming that although Britain
improve its ... feared would be the “US Trojan horse” (European Union). ...
... remain unemployed while Eastern Europeans would enter Great Britain to acquire ... British
Industry (2006) Bulgaria and Romania to Join European Union [Online] URL ...
Should Britain Join The Single Currency? The debate has waged for several years
now, ever since news of a single European Economic Union came first surfaced ...
... process of European integration. Britain did not join the European
Economic Community until 1973. Then the hope for ...
Submitted by scagliotti on October 12, 2007
Category: Business
Words: 5385 | Pages: 22
Views: 244
Popularity Rank: 43,832
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With the change over to the Euro notes and coins now complete across the "Euro-zone", twelve countries that have adopted the Euro as their currency, the debate over whether to adopt the single currency in Britain continues. There will be those who argue that the introduction of the single currency is merely the next logical step in the development of a truly single market, and that by joining, Britain would gain a voice in what could eventually become the world's most powerful economic zone. Others believe that a successful common market is not dependant on the adoption of a single currency, which they see as merely another irrevocable step towards the political union of Europe. But the main focus of the debate centers on the parameters of macro economic objectives.
So, assuming exchange risk is a big factor, consider whether joining the Euro will actually reduce it or not and if so by how much. Here we immediately trip over the key point that joining the Euro is not to join a world currency but a regional one. Unfortunately for our exchange risk we trade very heavily with the dollar area. Let us not get tied up in the vexed question of the exact shares of our trade with Europe and with the USA, and what sorts of trade should be counted (in goods? in goods and services? or in all cross-border transactions including foreign investment and earnings on them?). The point is that if we regard exchange risk as a sort of tax on transactions involving exchanging currency, then it is plain that the broadest definition should be used for the ‘trade' affected by this tax. Most of the world outside Europe either uses the dollar or is tied to it in some formal or informal way. We might then say, in a rough and ready way, that we trade and invest half with the Euro area and half with the dollar area.
It so happens that the Euro/dollar exchange rate has been highly variable for a very long time - see Figure 1 which shows the DM/dollar rate up to...
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