European Monetary Union And United Kingdom

1120 words - 4 pages

On January 1, 1999, eleven (Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxumbourg, the Netherlands, Portugal, and Spain) out of the fifteen European countries that make up the European Union(EU) formed the Economic and Monetary Union(EMU) and began using a common currency, the euro. Greece joined as of January 1, 2001. The remaining three countries, Denmark, Sweden, and the United Kingdom have yet to join the EMU either because they do not meet the criteria set in the Maastrict Treaty(the agreement establishing the European Union and the economic requirements for admission in the the Economic and Monetary Union) or because they believe that the EMU's costs outweighs the benefits. The use of the euro currency will unite the existing member states creating a European super nation this will have an effect on individuals, businesses, economies and governments.Before Britain adapts the Euro currency the following five criteria must be satisfied:*The budget deficit has to be less than 3% of Gross Domestic Product*The government's total debt has to be less than 60% of Gross Domestic Product*Inflation has to be less than 1.5% higher than the average of the lowest inflation countries*Exchange rates should be stable*Long term interest rates must be within 2% of the three lowest interest rates in EU.On June 9, 2003 the United Kingdom Government published the assessment of five economic tests which include convergence, flexibility, investment, UK Financial services industry, and the effect on employment. The first condition would require the convergence of the UK economy with that of Europe's, so that the UK would be able to live comfortably with the interest rates set by the European Central Bank on a permanent basis. The second condition will verify whether there is enough flexibility to adjust to change and to unexpected economic events once their ability to vary interest rates and exchange rates has diminished. The third assessment will prove whether joining the single currency would create better conditions for businesses to make long-term decisions to invest in the UK. The fourth and fifth verify the impact of membership UK would have on the financial services industry, and ultimately, whether the single currency will be good for employment. Once four of the five tests are achieved then entry will be considered.Joining the European Monetary Union would exert many costs and benefits on the entirety of the British economy to incorporate the sterling pound into the euro. There are several advantages for the United Kingdom to join the European Monetary Union. Currency stability is one of them. A single currency will end currency instability in the participating countries and reduce it outside them. Because the euro would have the enhanced credibility of being used in a large currency zone, it would be more stable against speculation than individual currencies are now. An end to internal currency instability and a reduction of external...

Find Another Essay On European Monetary Union and United Kingdom

United Kingdom Monetary Policy Essay

1356 words - 5 pages prominence of interest rates means that monetary policy can affect the aggregate demand. For example, at higher interest rate levels, firms invest less and households spend less due to the increase in the cost of borrowing. Therefore, households and firms are less willing to borrow money for investing or consuming purposes. The rising interest rates also can have an affect on the international world. For instance, if the United Kingdom has relatively

The United Kingdom Should NOT Leave the European Union

1260 words - 5 pages The European Union is a powerful and influential organization consisting of twenty seven countries with significantly strong economies including the renowned United Kingdom. The UK benefits greatly from being a member of this union. However countless British government officials and politics as well as the self-righteous citizens of the country think that the EU is preventing the UK’s authority from developing further. The truth is entirely

Sustaining the European Monetary Union

2806 words - 12 pages , and Spain. Many of these countries have become dependent on financial assistance after adopting the Euro, leading to the popular belief that the European monetary union (EMU) is destined to fail.2 Furthermore, debt and illiquidity have crippled the Eurozone with no relief in sight. Despite these problems, the European monetary union can be conserved and improved to maintain stability and establish an evolving model for countries around the world

European Union Military And The United States

6431 words - 26 pages ." Realist scholars have debated this view against its opposite that stability rises from a balance of power, be it bipolar or multipolar, for quite some time.The way in which the debate is framed is a particularly useful of way of analyzing the impulses and interactions between the United States and Europe since the one has become the hegemonic power. On the one hand, balance of power would hold that the European Union should rise as a counteragent

The Impact of European Monetary Union

2107 words - 8 pages between the United Kingdom and the United States were found out as one factor behind the disinclination of United Kingdom to join the European Monetary Union. The United States is a much more important source of capital income for the United Kingdom vis-a-vis the members of the Euro- zone (HM Treasury, 2003). Secondly, Lane (2006) claims that the existence of a single currency “... has actually reduced the scope for risk-sharing across countries

The History of the European Monetary Union

3624 words - 14 pages )1. The development of the European Monetary UnionIn 1998 the European Exchange Rate Mechanism (ERM) was introduced as part of the EMS in order to reduce exchange rate variability and to achieve monetary stability in Europe in preparation for the European Monetary Union and for the introduction of the Euro. In 1999 ERM II replaced ERM. ERM II is an exchange rate mechanism for EU countries which are currently not taking part in the monetary union

Is the European Monetary Union a disaster? ? Discuss

3423 words - 14 pages EMU in the Maastricht Treaty that ought to be reformed. It takes the viewpoint that although since the introduction of the Euro there is an apparent recession in the Euro area countries, it is not entirely to be blamed on new currency and that the allegation that the EMU is a disaster is totally unfounded. For over thirty years now a European Monetary Union has belonged to the articulated aims of the European Union. All previous attempt to

Genetically Modified Organisms: The European Union vs. The United States

4919 words - 20 pages Genetically Modified Organisms: The European Union vs. The United States "By increasing the fertility of the land, it increases its abundance. The improvements of agriculture too introduce many sorts of vegetable foods, which, requiring less land and not more labor than corn, come cheaply to the market." -Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations Book I.XI.n The United States and the European Union

The European Monetary Union (EMU) - The Euro as a Single Currency

1720 words - 7 pages The European Monetary Union (EMU) - The Euro as a Single Currency Liberalizing trade is nothing new to the world, but we have never witnessed such a vast economic integration between sovereign countries like the integration carried out in the European Union. Customs duties between European countries started to come down steadily in the early 1950s and were abolished in 1968 with the introduction of a customs union and the implementation of the

The Pros and Cons of EMU - European Monetary Union. A concise summary (3000 words) of the main pros and cons of EMU and the Euro - covering economics, social issues, national soviergnty, etc

3421 words - 14 pages advent of the Breton Woods system in the USA promised increased stability through the use of a controlled mechanism of exchange rates. And, by 1969, the EU was beginning to target full monetary union, and this was the centre of debate at the Hague Summit. Progress was very slow however, and it wasn't until 1979 that Chancellor Schmidt of Germany, despite the advice of his own central bank, decided to implement the European Monetary System (EMS

Trade protection in agriculture by European Union and the United States results in gains for some and loss for others. Evaluate the impact of US Farm Policy or EU Common Agriculture Policy on...

2328 words - 9 pages Question 2Trade protection in agriculture by European Union and the United States results in gains for some and loss for others. Evaluate the impact of US Farm Policy or EU Common Agriculture Policy on developing countries.The European Union (EU) is the agricultural leader among developed countries in international trade. It is well-known as a world's major food exporter. In 2010, for example, its agricultural exports, mainly processed foods

Similar Essays

European Economic And Monetary Union Essay

3924 words - 16 pages European Economic and Monetary Union The Economic and Monetary Union (EMU) is a single currency area within the European Union in which people, goods, services and capital move without restriction (Europa Quest (1), 2001). Imperative to the success of the EMU is the implementation of a single European currency, the Euro, and the application of specific macro-economic policies by the EMU member states (Harris, 1999: 78). Moreover, it is the

The United Kingdom In The European Union

1844 words - 7 pages In joining the European Union, the United Kingdom has been affected in many different ways. We have had the advantages and the disadvantages, the benefits and the costs. Advantages to the EU cover many fields; there is greater specialisation and economies of scale, for example the more efficient a firm is in producing their product then the bigger the scale of production leading to higher capital for them and also leading to lower

The European Monetary Union Essay

602 words - 2 pages The European Monetary Union The European Monetary Union (EMU) serves as an economic necessity, a complement to the European single market, which is the free movement of people, goods, services, and capital within the European Union (EU). The Euro, a single currency created under ideals of the Maastricht Treaty, will strengthen European unity and constitute as a factor for stability, peace, and prosperity for all member states as well as

European Monetary Union Essay

2802 words - 11 pages . Since there is one currency, it should be an objective for the Commis-sion to introduce a single VAT-rate as well.3 Does the monetary Union make sense, in your view?What are the implications for members of the Euro-pean Union, with regard to diverse business cycles, growth rates, unemployment rage, labour policies and social values?January 1st, 1999 eleven members of the European Union adopted the currency Euro and at the same time the European