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is it time to adopt the euro?

souroull

Established Member
ive been reading quite a few articles about how more and more academics and politicians are joining the not so popular Euro adoption bandwagon, so it got me thinking.

more specifically, if matters get worse, everyone seems to agree that theres no more than 3 options.

One of them being national bankruptcy, the other being a turn to the IMF for help (said to prolongue the recession, introduce many unwanted changes in various policies, but save from bankruptcy), and the third being to adopt the Euro and join fellow Europeans that have the Euro as a cushion from this worldwide sh*tstorm.

anyone have any educated thoughts on this? i would prefer no sterling pride talk (dont think theres any anyway)

i personally wouldnt mind the world's second reserve currency to finance the uk out of this, and i definitely wouldnt mind turning the central bank of england into a hospital or something useful

discuss
 

Steve N

Distinguished Member
Looking at it objectively and without sentiment I have to agree.

The strength of the Euro against the pound right now certainly suggests that adopting the Euro would have offered more strength and stability to our currency.

On a more partisan front:
I wonder if Camerons populist declaration that he would "Never adopt the Euro" may be something that he comes to regret.

He's certainly gone quiet about it lately.
 

jamiesdad

Established Member
My feeling are No :)

With the pound v euro at almost one for one people are now saying it is time to join

But i bought some thing in tesco the other day at £3. Euro price was 4.50 (not one for one)

So my worry is this if we move to euro now will we just pay the euro marked price which would in effect be a price rise to £4.50

Or would the euro marked prices come down so that the £3 would equal 3 euros

Does this make sense or am i missing something

Cheers
 

nheather

Distinguished Member
No, a terrible time.

With hindsight we should have done it when it was 1.4 but not now.

It would devalue your savings\earnings\possessions and woul result in massive inflation.

I also think that a fall in Europe this year is inevitable. The UK is leading the field because are economy is small compared with Europes plus it has a large reliance on banking.

However, Europe is also feeling the recession and some countries such as Spain are beginning to have a very hard time. As it begins to take its hold in the poorer economies in Europe this will put a strain on the stronger economies and euro will fall.

Cheers,

Nigel
 

vader100

Prominent Member
No. Adopting the Euro is a bigger thing than just what the current exchange rate is. We would lose all control over our national fiscal system. i don't want to be bailing out other countries in more of a mess than we are.:thumbsdow
 

av12

Standard Member
I believe that Britain should adopt the Euro. :thumbsup:

The main reason I think this is that, when going abroad you can lose money on exchanging currency. The Euro would solve this problem for most EU countries.
 

nheather

Distinguished Member
The trouble is that when the Euro was form it was valued against other currency at the time and the £ was worth roughly 1.4 euro.

Prices across Europe were set roughly equal (though off course some things were cheaper in some countries than others) but basically level.

So when it form imagine a UK man in a job earning £20,000 and a plasma TV costing £2000.

Also imagine two European countries one poor and one rich (similar to UK).

Imagine the men all had very similar jobs

UK Salary - £20,000 (28,000 euro)
Rich EU Salary - 28,000 euro (par with UK)
Poor EU Salary - 15,000 euro

Consider a plasma TV the same price in each country

UK - £2000
Rich EU - £2800
Poor EU - £2800

Now imagine we adopt the Euro at 0.9

UK Salary - 18,000 euro
Rich EU - 28,000 euro
Poor EU - 15,000 euro

Before that plasma TV was 10% of your salary. Now it is 15.6% of your salary.

UK would no longer be on a par with the likes of Germany and France.

You could say that this is effectively the case now, but the virtual of keeping the pound as a seperate currency enables us to maintain a seperate economy and pricing structure so that, at least within the UK your savings and earning retain (for the most part) the same value.

Having the seperate pound means that you can't simply role in exchange rate effects on goods - yes they are going up but nothing like as much as if you applied the excahange rate fall - this is why the mainland europeans are flocking to buy cheap stuff in the UK at the moment.

In the past having a seperate independent economy and currency has supported 'rip off britain' but now it will actually assist us - so now is not the time to adopt the euro.

Cheers,

Nigel
 

souroull

Established Member
No. Adopting the Euro is a bigger thing than just what the current exchange rate is. We would lose all control over our national fiscal system. i don't want to be bailing out other countries in more of a mess than we are.:thumbsdow

hm, last i checked the uk was in deeper **** than anyone else (no, iceland doesnt count), and the control that the bank of england has right now is a big part of it... so in essence you dont want to give up sinking.

anyways, now, Nigel, i do agree that at the current exchange rate the UK would lose a good part of its purchasing power, but it wont happen overnight either. With a bit of negotiation (well, common sense really), the sterling can be pegged to the euro at a reasonable rate, and can be brought there within a reasonable amount of time.

Lastly, yes, the Europeans are indeed flocking the UK right now, but thats only because devaluation of the sterling was far too steep and hasnt had time to be absorbed (as in, cycle stocks in warehouses) . if this goes on any longer, expect the next few waves of imports to be priced 1:1 in sterling/euros
 

pandemic

Prominent Member
We can't join the Euro even if we wanted to, national debt must be 3% or less to join the euro the UK's national debt is 6%
 

pandemic

Prominent Member
hm, last i checked the uk was in deeper **** than anyone else (no, iceland doesnt count), and the control that the bank of england has right now is a big part of it... so in essence you dont want to give up sinking.

Not true, the difference is the UK is being honest about the state of its economy. Whereas the rest of Europe is putting up a cover.
 

xit2050

Prominent Member
Not true, the difference is the UK is being honest about the state of its economy. Whereas the rest of Europe is putting up a cover.

Got any more lies to spread around?
:rolleyes:
 

loz

Distinguished Member
hm, last i checked the uk was in deeper **** than anyone else

it depends how you measure "deeper ****"

For example, Spain's unemployment has risen to 13.9%, way above ours.
BBC NEWS | Business | Spain's jobless rate hits 13.9%

Spain's problem is going to be exacerbated by the fact it is in the Euro, not helped, because it now cannot devalue it's currency to help make its products and service more attractive overseas. How many British for example are going to think twice about that holiday in Spain now because of the Euro.

On the other hand, being in the Euro has meant that despite their problems there hasn't been a run on their currency like ours.
 

eric pisch

Distinguished Member
We can't join the Euro even if we wanted to, national debt must be 3% or less to join the euro the UK's national debt is 6%

including the 700 billion pension deficit? and the 400 billion we have in pfi schemes that allways seams to miss the figures?
 

eric pisch

Distinguished Member
it depends how you measure "deeper ****"

For example, Spain's unemployment has risen to 13.9%, way above ours.
BBC NEWS | Business | Spain's jobless rate hits 13.9%

Spain's problem is going to be exacerbated by the fact it is in the Euro, not helped, because it now cannot devalue it's currency to help make its products and service more attractive overseas. How many British for example are going to think twice about that holiday in Spain now because of the Euro.

On the other hand, being in the Euro has meant that despite their problems there hasn't been a run on their currency like ours.

Spain also has the problem they where in rescission long before the credit crunch started by building 2 million homes that had no buyers which then collapsed the market.
 

McFaber

Prominent Member
We can't join the Euro even if we wanted to, national debt must be 3% or less to join the euro the UK's national debt is 6%

They'd get around that if wanted to...
Besides, the countries who joined the Euro more recently had national debts far greater than even 6%.

nheather is pretty much spot on IMO, but having thought about it, I'm sure disavantages would only be relatively short term....Hence the term 'one step back, two steps forward'..
Whether everyone would be prepared to put up with this in the shorterm is another question...:)
 

pandemic

Prominent Member
it depends how you measure "deeper ****"

For example, Spain's unemployment has risen to 13.9%, way above ours.
BBC NEWS | Business | Spain's jobless rate hits 13.9%

Your also forgetting France and Germany who both have massive unemployment at least 2.5-3 times more than the UK and increasing.
UK unemployed < 2 million
France/Germany > 5 million

We just like to fear monger in the UK, currently of the last 4 recession here this is the smallest one so far.
 

nheather

Distinguished Member
Britain has a number of factors that doesn't help its cause

1 - A population that is fear-mongering and prone to panic

2 - A government that is pretty open and transparent (even though you may think so). Some of the dealings regarding this recession would have been best done behind closed doors rather than openly.

3 - A vindictive press that revels in misery

I think these things have served to amplify the UK's situation. Without those I wouldn't be surprised if UK is in no different a situation than the rest of Europe.

As for imports being priced to reflect the true exchange rate - it won't happen. Imports will certainly increase but not to the extent of the exchange rate. This is because for each marketable item there is a price point above which sales will drop off rapidly.

Consider a trivial example of a bottle of French wine which was selling at £5.

£5 at 1.4 is 7 euros.

If the seller still wants to receive 7 euros then he should try and sell at £7.50.

Trouble is, the sales he will get at £7.50 will be vastly reduced so he will try to sell at £6 or pull out of the UK market altogether.

This is the problem with non-staple goods - consumers have a choice of whether to buy or not. Importers are going to have a very hard time selling in the UK. They will either see their markets diminish because the true price is too high or they will have to take a hit on profits (or drop the market).

This is what I meant by having an independent currency actually helps us.

Cheers,

Nigel
 

xit2050

Prominent Member
Your also forgetting France and Germany who both have massive unemployment at least 2.5-3 times more than the UK and increasing.
UK unemployed < 2 million
France/Germany > 5 million

We just like to fear monger in the UK, currently of the last 4 recession here this is the smallest one so far.

I don't know where you get your numbers, but they are not correct.
According to Eurostat there are a little over 2,3 million unemployed in France and a little over 3 million in Germany.
EUROPA - Eurostat - Data Navigation Tree
 

andykn

Prominent Member
including the 700 billion pension deficit? and the 400 billion we have in pfi schemes that allways seams to miss the figures?

The pension deficit is not a debt so is not counted. If it was, no country would be able to meet the 3% limit as they all have public sector pension schemes, often more generous than ours.

The 400 billion PFI figure would be missed because only you are aware of it, according to The Daily Telegraph it's only 48bn:

Government told to add PFI debt - Telegraph
 
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Bill Hicks

Banned
Is it time to adopt it?

Hell yeah!
Seeing that it's nearly as strong as our pound and the fact that it's a total pain in the arse getting sterling changed into Euro's everytime I go to the continent, then why not.

As long as they don't try to do what they have done in the Euro starter countries and bump up the prices at it's introduction!
 

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