Saturday, 7 May 2011

One Currency to Rule Them

One currency to rule them all, One currency to find them,
One currency to bring them all and in the darkness bind them
In the land of Brussels where the shadows lie.

So I am not a big fan of the European Union as you all probably know. There are many reasons why I do not like it, and I shall possibly write a blog about this at some stage. But for now I would like to focus on why Britain should not join the Euro.

The 'LOTR' adapted quote shows one of my main reasons for not wanting to joining the Euro: stability. It may result in an unsustainable economy throughout Europe, and one country may bring down the rest of us. If this does happen and one or two countries then decide to opt back out of the Euro which could tip the balance in any form of Inflation Policies. The UK should be wary that joining the Euro may have its benefits but only during periods of Economic Strengths, which the world in general, and certainly Europe are not experiencing.

Due to a single interest rate, the EU will have to increase payments to countries which have had their debt and interest rates increased, which will reflect badly on the rest of the EU. This happened in Holland where inflation grew by 48%. It will be harder for such countries to sustain a failing currency and Holland would be better off starting a new currency entirely, which brings back to the possibility of them having to leave the Union.

We have handed over most of our political sovereignty to Brussels; why should we give it our financial power as well? Whether or not they would handle it well isn't the case. We are the United Kingdom, we are British, we are a country who is giving all our power over. People in Scotland don't like the Government because there is England; who has been making their laws. So why should we stand for someone in France making the rules for the entire UK?

Finally I simply just cannot be bothered to change currency, I am not very good with maths and the worst thing about going on holidays is the annoyance of constantly having to convert currency. I simply don't like it. I know this last point one is a terrible excuse, but I would be lying if I didn't say it was a factor.

Yes, I know there are many reasons for why the Euro should be introduced, but I hope my arguments effectively counter them. At the end of the day: we cannot implement the Euro at this time anyway for three important reasons.

1) The Maastricht convergence criterion state that our public debt must be below 60% of deficit; below 3% of GPD. Even economic observers state that the Government aims of creating this are optimistic in the short term. (which is, as of March of this year, at 76.1%)

2) We must have spent 2 years in the ERM which Britain have yet to do especially after 'Black Wednesday' in 1992.

3) Public Opinion. There has been little proper coverage to the public about this issue, if the Euro is to be put in place the two main parties who support the Euro state a Referendum must be held. Taking into account the recent Referendum which had just over 50% turn out voter fatigue may play a part which will put back the date of any such referendum.

For now I think we should be happy with Sterling and if the Euro is what we need, then perhaps we should wait, and see if our circumstances become any better.

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