Title: What are the arguments for and against joining the Euro - History Learning Site
Headings: What are the arguments for and against joining the Euro
What are the arguments for and against joining the Euro
These are some of the arguments put forward for Britain joining the Euro
These are some of the arguments put forward against Britain joining the Euro

Content: Opponents of the EMU offer only textbook systems as an alternative, in reality floating exchange rates do not deliver stable and well-aligned exchange rates. Reduced exchange rate uncertainty for UK businesses and lower exchange rate transactions costs for both businesses and tourists will bring an increase in economic welfare. Eliminating exchange rates between European countries eliminates the risks of unforeseen exchange rate revaluations or devaluation. The EMU will be stronger and more resilient than the Exchange Rate Mechanism and will not be susceptible to the speculative attacks on the currency seen during the 1990s. The failure of the earlier ERM is not evidence against a currency union since individual countries possessed separate currencies and monetary policies within that system. A European central bank will focus on economic conditions across the community and so will have a less volatile interest rate policy than the Bank of England, or other central banks. The credibility that attaches to the monetary policy of a European-wide central bank will render the Euro a strong currency and thus permit lower interest rates than at present within the UK – investment and growth are obvious beneficial consequences. The prospect of sustained low-inflation under the responsibility of an independent European Central Bank should reduce long-term interest rates and stimulate sustained economic growth and competitiveness. The UK has a successful flexible labour market that would be highly effective inside a single currency area. Though the EMU might restrain independent fiscal policy, it will not totally remove the opportunity.