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Great Britain and the euro
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Great Britain and the euro: a never-ending story
European Monetary Union (EMU) is set out as a fundamental component of the European Union in both the Maastricht and Amsterdam treaties. ... In this way the two issues of the future of European unity and monetary policy are inextricably bound, with the single currency being an issue of great importance to the politics of European integration. National political debates in countries that are members of the EU but have not yet joined the euro are particularly significant because the rejection of the single currency by member states may endanger the legitimacy of the integration project as a whole. Britain’s involvement in the European Union has been a continuous source of contentious political and public debate over the last few decades. More specifically, within the context of European integration the question of Britain adopting the single currency has created cleavages in political parties, has divided the business community, and has separated the general public. ... The present essay first aims to give a short historical overview of the long, tortuous path to a single European currency and of Britain’s role in this process. After that the main views and arguments currently voiced by British politicians, business leaders and trade unionists either for or against Britain joining the euro will be enlarged on. ... When EMU stage one began in 1990 with the liberalisation of capital transactions and increased cooperation between national banks, Margaret Thatcher took Britain into the ERM, but its sojourn in that mechanism ended as early as 1992. ... Whereas most EU member states accepted this deadline, Britain secured an opt-out from this final stage, thus cutting itself off from monetary policies of mainland Europe. ... In 1997, Britains newly elected Labour government announced that it was in favour of the euro in principle but that five economic tests would have to be met before a referendum on the issue could be held. ... Furthermore, the exchange rates between the euro and national currencies were fixed. In 1999, the euro came into effect, yet it was then used principally for non-cash transactions. Finally, on January 1st , 2002, euro notes and coins became legal tender in 12 countries (Greece had joined in 2001), so that the euro can now be used for any cash transactions in these 12 out of 15 EU member states. The other three members, namely Denmark, Sweden and Great Britain, have not (or not yet) joined the euro; however, especially in Britain there has been quite a lively debate about the advantages and disadvantages of euro membership.
When Gordon Brown, Chancellor of the Exchequer, announced in 1997 that five economic tests would have to be passed before a referendum on Britain’s euro membership could be held, he emphasised that the Treasury would need a considerable period of time to make a well-founded assessment. ... The economic tests cover a number of fundamental macroeconomic questions: Firstly, is there sufficient convergence of business cycles and economic structures between Britain and eurozone members?
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Paper Information
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Title: Great Britain and the euro
Words: 2418
Rating: None
Pages: 9.7
submitted by: Joachim
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