The Euro versus the Pound sterling

1
The Euro versus the Pound sterling

• Should the UK
• join the Euro ?

Msc in European Business 2006 European Economics
Miss Le Fang Mr Guillaume Dupré
2
Contents

• The Economic and Monetary Union
• The 5 economic tests
• What about Sweden and Denmark ?
• UK joining the Euro or not ?
• Conclusion
• UK Euro what future ?
• Questions

3
The Economic and Monetary Union

• Whats the EMU
• History
• Founding Document of the EMU
• Founding Member States of the EMU
• The Launch of the Euro
• Exchange rates
•  1 EUR  in EUR 
• British Pound   
  0.669358  1.49397 

4
The 5 economic tests

• Contents
• History of the tests
• Significance

5
The Five Tests

• Sustainable convergence between Britain and the
• Euro-economies
• 2. Whether there is sufficient flexibility to
  cope with
• economic change
• 3. The effect on investment
• 4. The impact on UK financial services industry
• 5. Whether it is good for employment

6
What about Sweden And Denmark ?

• The Danish referendum
• 28th September 2000
• NO 53 YES 47
• Social, not economical
• Democracy
• National sovereignty
• Political alliances

7
What about Sweden And Denmark ?

• The Swedish referendum
• 14th September 2003
• NO 56 YES 42
• High growth, low unemployment
• Generous State
• Independence
• Euro-countries low activity

8
UK joining the Euro or not ?

• UK should join the Euro
• Exchange rate risks
• Competitiveness
• Tourism
• Exchange-transactions costs
• National finance

9
UK joining the Euro or not ?

• UK should join the Euro
• Finance leading position
• Foreign investments
• Economical discussions
• Competitive interest rate
• Political influence

10
UK joining the Euro or not ?

• UK shouldnt join the Euro
• Arguments against adopting the Euro
• The economic costs of the Euro
• Position of the UK
• Other factors
• Do not hate but hard to decide

11
Conclusion

• Traditional independence
• Good macroeconomics institutions
• Do not fit British problems
• Willing to enter Euro
• Economical, not political

12
UK Euro what future ?

• 2007 Gordon Brown ?
• Finance minister
• Euro sceptic
• Icon of the British economy
• The after Bliar, Iraq war
• New Prime minister wait see

13
Questions

• If you were British, what you would you decide ?
• Would you consider UK more European if it joins
  the Euro ?
• Can we imagine a global currency ?

14
Thanks for your attention

Le Fang lee.lola_at_gmail.com
Guillaume Dupré guillaume.dupre_at_hotmail.fr