Title: Benefits Of Single European Currency - Free Coursework from Essay.uk.com
Headings: Benefits of single european currency
Benefits of single european currency
Examine the potential benefits to European manufactures and consumers of single European currency

Content: As markets becomes more contestable firms would try to be more efficiently as firms increase in size thus full economies of scale would be exploited which would be beneficial for natural monopolies. Increase in infrastructure lead by multinational companies as foreign firms invest in the EU they would open up new markets and bring and make new infrastructure thus reducing the setup costs of domestic firms and allowing them to have more profit. As new multinational companies are introduced in the EU domestic firms would benefit as the multinational would train labor, cause the government to reduce interest rates to attract foreign investment. The multinational company would build new roads and infrastructure thus existing firms can exploit and use this infrastructure without paying for it. Consumers will also benefit directly from monetary union. Most goods purchased today include a proportion of foreign components and, therefore, of costs linked to the multiplicity of currencies. The elimination of these costs will help reduce prices and raise the purchasing power of the consumer proportionately. Lower interest rates as the EU central bank cuts interest rates and the EU being such a large area where there is a great diversity in the amount and type of markets available would attract many new firms in. Thus domestic firms would be at advantage as these foreign firms would invest and come up with new products which they in turn could follow their lead thus reducing investment costs. Another benefit is that the removal of exchange-rate variations between the countries of the EU would provide much more assurance to corporate location decisions.