'Is it time to ditch the pound?' poll results/discussion

Zygnoth

From an Irish perspective, I think Britain would struggle to join the Euro.

To me, the idea of separate sterling notes in Northern Ireland, Scotland and England/Wales seems strange. I've had personal experience of long walks in England because I (stupidly, in retrospect) asked the taxi driver beforehand if Scottish notes were alright. Maybe a first step for the U.K. would be to unify the currency in the country first - no price changes and some of the benefits of unity become apparent.

In Ireland, shop prices did rise when the Euro came in and salaries were more-or-less converted. However, with the economic expansion, this was readily absorbed by the public. I've personally found the Euro to be a great advantage when buying abroad or buying online. When I buy from Amazon.co.uk, I'm still subject to conversion rates and charges.

I reject the idea of losing the national currency as such a great loss - every other country who joined did a similar thing. For about £35, you could buy a set of the main sterling notes and coins and keep them in a set - as I personally have. Don't forget that each country prints their own coins - so you can still retain the queen on the back of all UK coins. While you inevitably get coins from other countries, I have found that most coins in Ireland still have the harp on the rear.

To people who look at Euro prices on clothes, etc., this is the subject of much outrage in Ireland as well. Due to the reduced strength of sterling vs. Euro (£14 = €15 in my books), lots of people are noticing that the sterling price is a lot cheaper. This is mainly due to old stickers and companies reaching for a quick profit. I've been told recently that shops in Dublin are removing the sterling prices due to customers complaining. So I would advise most people to ignore the Euro prices in U.K. shops.

Last year I took a trip to Denmark and Sweden - both of which do not use Euro and are members of the E.U. While I was not surprised by Denmark keeping the Krone (I'm told they are quite nationalistic), I was disappointed to find the Swedish still using Krona. The U.K. is not the only country who is resisting changing it's currency.

Obviously, I'm pro-Euro as it would help my travelling across a huge amount and I'd love to be able to bring British prices back home as means of stimulating competition.

On a final note (I hope I'm not wrong about this) but I think the Euro debate has two separate points. One is related to changing the physical notes and the other is about locking to the Euro exchange rate. If I'm not mistaken, I think a country can lock to the Euro but keep their own currency which could be a possible first step for the U.K. as well.

SuperFlyGuy

If we forget all the little Englander rhetoric and look at the pros and cons, dispassionately, here are the real issues.

Pros

• A saving of £4.5 billion in converting £ into a foreign currency,
  
• Saving conversion costs will mean competitive pricing with current European traders using the Euro
  
• Existing exchange rate system can cause unplanned loss of profits if the markets move against the £, vice versa the Euro,
  
• A single and transparent currency will tempt more UK businesses to compete in mainland Europe,
  
• A prosperous combined Europe could think of challenging the USA in existing and new markets, say, China,
  
• A single European market - without trading restrictions - should benefit the UK as we produce quality goods and services,
  
• A strong GB pound restricts our exports, a stable Euro will encourage exports,
  
• A weak GB pound means higher prices for imports, a stable Euro will encourage imports,
  
• Many non-European countries already use the UK as a base, more will follow with investment in a single market,
  
• UK will have more of a say in European trade policy: we will maintain most of our economic control measures (but not the interest rate!),

...and of course, we can all go on holiday and spend with confidence as 2 GB Euros are a straight swap for, say, 2 Spanish Euros.

Cons

• A single currency may be the final push towards tax harmonisation with
  Europe: some say tax's could rise by a fifth,
  
• The cost to the UK of implementing the Euro could be an enormous £36
  billion* - the annual education budget is £40 billion,
  
• It is claimed that our trade with Europe has increased without us joining the Euro and single market, so, why join,
  
• As only a fifth of our GDP (gross domestic product) is exported, why change the system for all UK businesses,
  

The UK economic landscape mirrors the USA more than it does Europe.

To be honest I would probably go for it as I holiday in Europe a lot, but as far as keeping the pound as it's English, who cares! if we still thought that we would still have slavery and the poor houses! Plus as I always point out we should have followed our brothers and sisters in Europe over Iraq rather than the worlds biggest war monger the US

Sage99

Nice post, pleasure to read.

I am definitely for the Euro.

MikeH99

SuperFlyGuy wrote: »

If we forget all the little Englander rhetoric and look at the pros and cons, dispassionately, here are the real issues.

A reasonable start, but not entirely balanced.

Beyond a brief mention at the end of a 'pro' point, you somehow manage to miss the rather serious 'Con' of loss of control of interest rates. Having to accept a single eurozone rate will (a) not necessarily be suitable for national conditions, which could have a very negative effect on homeowners and the economy - and (b) will not be under any form of democratic control, unlike the Bank of England (see the Bank of England Act 1998 for details).

Not having the right monetary policy for economic conditions is potentially far more costly for the entire economy than the very small proportion of businesses who trade with the eurozone having to hedge against exchange rate fluctuations, or those of us lucky enough to be able to afford holidays in Europe having to spend a few quid changing currency when we go away.

You also don't mention as a 'Con' all the evidence of price rises when currencies change, like at decimalisation or when the euro was launched in other countries.

In the 'Pros', beyond those which are rather vague and aspirational such as "challenging the USA", I'm not sure where you get the idea the Euro is 'stable' whereas only the pound fluctuates. The euro was considered weak at its launch and has since fluctuated considerably in value against the dollar - much more so than sterling. Let's not forget at least as much of our trade is with America and the rest of the world as with Europe. A floating currency is a better bet for us to bridge the two, nevermind to react like it has recently to help us out of tough times.

You also only list the 'Pro' sides of a 'strong GB pound' and 'weak GB pound'. Fluctuations can work in our favour too, like the currently weak pound very helpfully making our exports cheaper, or a stronger pound would make imports cheaper.

I'm also not convinced that the euro is likely to cause "competitive pricing". Prices depend on much more than just the currency. Even in the 'sterlingzone' prices of many things are cheaper up north than down south, because traders know distance is often barrier to people actually buying those cheaper things. And because related supply costs vary. Similarly joining a single European currency will not in itself bring down prices here just because we can see more easily that something is cheaper in, say, Italy.

Finally, you claim as a 'Pro' that a single market without restrictions benefits us "as we produce quality goods and services". We're already a member of the EU single market, and the reality is we have a huge trade deficit with EU countries - but a surplus with the rest of the world. So that's already not working in our favour.

On balance I believe we're better off with our own currency and economic policy - with a global trading outlook, not an overly euro-obsessive one.

Commercially, Europe is not the future. The last thing we need to do is tie ourselves even more to a declining market when in the 21st century all the action will be happening elsewhere.

MikeH99

Sage99 wrote: »

"British families have more of their mortgages in floating interest rates than people on the continent,"

....a highly undesirable practise as it makes it very difficult for people to plan ahead. It also makes it easy for swindling lenders to tempt people in with a low rate and then constantly increase it until they are at their financial limits, and I do not see how this is an argument for the retention of the pound. Explain please.

Well, you say its "undesirable", but long term fixed rate mortgages are available here and not at all popular. Yes, people are tempted by a low rate, and then they switch when their mortgage becomes uncompetitive. But the basic point as regards the euro is that homeowners are far more directly affected in this country by interest rate changes than they are on the continent, but the single eurozone rate will not necessarily take this into account. That could be disastrous.

Sage99 wrote: »

“We have a much bigger financial services sector,”

....than the whole of the Euro zone? I find this difficult to believe, and again I do not see how this is an argument for the retention of the pound. Explain please.

No, probably not bigger than the whole of the eurozone, but certainly far bigger than any other eurozone member and it is, uniquely, a huge factor in the performance of the British economy. That said, I'm not sure it matters to the City of London which currency Britain uses, as huge volumes of all currencies are traded at the push of a button every day. The City isn't an argument for keeping the pound, but it's not one for joining the euro either.

Sage99 wrote: »

“More of our trade and investments are denominated in U.S. dollars.”

Yet again I just do not see why this is an argument for the retention of the pound. Justify please.

Because since its launch the euro has fluctuated far more against the dollar than sterling has. Historically, what we would have gained in stability with the eurozone, we would have lost in stability with America. Better to keep a floating rate to bridge the two, and respond to national economic conditions ... as it is currently.

Sage99 wrote: »

“All of these factors mean that the right level of interest rates set for people in Greece, Germany or Italy is not necessarily the right one for us.”

Surely if it is the right level for mainland Europe, then it is the right level for the UK also. Do not forget that our economy is closely tied to that of mainland Europe. Japan, which imports nothing from us and sells us a great deal is a considerable loss to the UK economy and our economic relationship with the US is very much one way.

This reply exhibits both a terrible lack of appreciation for the diversity of Europe's economies and little knowledge of Britain's trading patterns. Witness the housing bubbles in Spain and Ireland in recent (pre credit crunch) years while the eurozone interest rate has been more suited to France and Germany's needs. On trade, the raw fact is that we trade as much with America and the rest of the world than with Europe, and, more interestingly relative to what you said, we in fact have a trade surplus with America and the world ... and a huge deficit with EU countries. You claim "Japan imports nothing from us", yet even Nissan's factory in Sunderland makes cars which are exported back to the company's home market in Japan.

Sage99 wrote: »

"Giving up our currency would mean we would lose a vital tool for trying to run the British economy in the interests of the people of Britain - and that means an unacceptable loss of the independence of this country."

But we would be in a position of influencing the Euro, which we do not at the moment, and can act in the interests of the British people by using a far more powerful tool, especially over the next century as Europe unites into one of the most powerful areas of the world. I am also rather doubtful about the rulers of Britain having any concerns with regards to the people who populate the UK, given what happened in the 1920s and 1930s, and as for the 1910s and 1940s!

Rather a lot of vague and unlikely aspiration here - eg. "as Europe unites into one of the most powerful areas of the world". Actually the figures show Europe faces relative economic decline in the next century. But as far as influence goes, I don't see how trading complete control of the British economy for a 1/27 say in what interest rate Italy and others have is a good deal or at all useful. Our economy is surely better off with more appropriate, local interest rates and decision-making.

Sage99 wrote: »

“The lack of any coordination between European monetary policy, emerging from a committee of central banks, and European fiscal policy, emerging from a committee of finance ministers, will further lessen the possibility for alleviating local economic difficulties.”

Which is better... a dictator or a committee. I believe that the general consensus of opinion is that dictators have the advantage in making speedy decision, but committees are far better at making correct ones. Surely the government of a social culture requires accuracy rather than speed? As for the ‘local economies’, the increasing unification of smaller units into larger ones means that the locality will become that of the Euro zone in the near future. Just look at how globilized and interdependant the banks are becoming... and how vulnerable a relatively small independent bank is.

A committee is certainly better, and a Bank of England committee making decisions based on the needs of Britain rather than a European Central Bank committee trying to bridge the impossibly diverse needs of the whole eurozone is better still for our prosperity.

You claim that smaller units are becoming unified, but the trend is the opposite. Large, forced federations of diverse countries and cultures like the Soviet Union, Yugoslavia, Czechoslovakia have been breaking down into their constituent countries, as people realise local decision-making means better governance and greater democratic control. Even here in the UK, there's a strong sentiment in Scotland for independence, and the same exists in parts of Spain. The EU, I'm afraid, is going against the tide of history, still stuck in the 1950s when it was thought up.

Sage99 wrote: »

“ This can be shown with the South-North migrations of millions of American and Italian citizens in the early years of their currency unions.”

Is this a bad thing? The easier movement of labour to where it is needed?

Not necessarily, but it can cause considerable regional instability. For example, language barriers mean it's more difficult for people in Britain to relocate to other European countries during a downturn here. Whether a single currency zone needs a single language to work properly and not cause regional (ie. national) unemployment blackspots is an interesting question.

Sage99 wrote: »

“There are economic costs and risks arising from losing the option to devalue the domestic currency in order to restore international competitiveness. This might lead to growing social dislocation and rising economic inequality within the European Union.”

Devaluing the currency is a device that I have always failed to understand. Any gains from increased export competitiveness are quickly lost as the increasing cost of imports causes inflation and the consequential rise in export prices. This then leave only the lasting effect of making the whole population poorer. I remember this happening during Harold Wilson’s era. As far as I can understand, it would be better if the currency was stable and constant.

No currency is "stable and constant". That is a fantasy. As the pound has effectively devalued against the dollar and euro in recent weeks, I guess we will see the effects right now. Devaluation is sometimes useful as a short term shot in the arm for the economy, bringing longer-term gains from a quicker return to economic growth than would otherwise have been possible.

Sage99 wrote: »

“There are obvious structural differences within the countries of Europe so, even if EMU begins in a state of convergence, economic shocks, such as crisis of supply of primary products, will lead to imbalances and there won't be a mechanism to restore the balance.”

I assume the differences you refer to are political structures of rule. I would have thought that a uniform currency would actually help to cope with economic shocks as the problem would be much more clearly defined. I do not see how having a separate currency system will help.

The problem is that while the currency may be uniform, the effects of any economic shocks won't be. Right now, for example, Greece, Spain and Ireland are in a much worse way economically than, say, Germany. This is when centralised, rather than local, control and 'one size fits none' decisions become a problem.

Sage99 wrote: »

“Adjusting to a new European currency will involve substantial costs for businesses and banks. Adjustment to economic divergence by migration of labour or capital will be costly; there is no clear EC commitment to relieving these costs.”

I don’t think the word ‘substantial’, on a national level, is justified here. While I do not have a high opinion of the education system, I really do think you will be pleasantly surprised by the ease with which the people of the businesses and banks adapt, and the equipment costs should be low owing to the volume of equipment involved... and given the level of unemployment, a migration of labour may be very beneficial to the UK economy. Other states, even poor eastern one, have managed and so can the UK.

I'm sure we will be able to cope, intellectually and organisationally, with adapting. I believe the issue raised was cost, which will certainly be "substantial" and will impact on the entire economy, even though the vast majority of businesses do not trade internationally. What a waste! And guess who will be expected to pay for it, most likely in higher prices.

I hope this provides some of the explanations you were looking for ... just in case the original commenter doesn't get back to you!

Atb.

jkc_2

no to the euro
but thats not the way itl go
the pound has been let slide to ease the way in to the euro.
why?
has any one read the bible recently?
theres a great bit in revelations about 4 nations.
im not a bible freek but just thought id read it as i have
never done so before. hmmm may be im going loopy and put two and two together to make 6. the only thing is it says 10 nations not 12 and isnt there
12 nations in europe now. not sure. just some thing to think about any way.

Hippocampus

teddyco wrote: »

Do you want to see a guillotine in Picadilly? Do you want your children to sing La Marseillaise?
Britain should NEVER embrace that raggedy old Euro!

Reasoned argument. It's part of what made Britain Great.

Well said, Teddyco. :rolleyes:

(Yes, I KNOW sarcasm is the lowest form of wit, but I'm just out of bed and my coffee hasn't kicked in yet. )

Hippocampus

jkc wrote: »

no to the euro
but thats not the way itl go
the pound has been let slide to ease the way in to the euro.
why?
has any one read the bible recently?
theres a great bit in revelations about 4 nations.
im not a bible freek but just thought id read it as i have
never done so before. hmmm may be im going loopy and put two and two together to make 6. the only thing is it says 10 nations not 12 and isnt there
12 nations in europe now. not sure. just some thing to think about any way.

We have a ways to go yet. It means a global currency, so just the Euro isn't the marker we've been looking for.

Although it needn't be a common currency that is meant: if physical cash money disappears, and all transactions are done electronically, I think that would fall within the interpretation, personally speaking. Can that day be too far away either?

gb57

Well, Ruth and the others who get "angry" about propaganda against Europe, and what they sarcastically call "Little Englanders" (how dare you, just because we have different views to yours does not mean we are xenophobic and inward-looking).

The EU spends billions per year on pro-EU propoganda, including materials aimed at primary school children. The EU is a corrupt institution whose accounts were not signed off by the auditors for many years. The EU is riddled with corruption and excess. Euro-MPs and employees have inflated salaries and expenses for many years, and even abuse that to make more money. Their pension rights are outrageous, as are there "entitlements" to sick leave, early retirement, etc.

Our German, French and Dutch friends (even the pro-Euro ones) were horrified at the price increases in their countries after the introduction of the Euro. Many of them want out of the Euro now, and are unhappy about the way in which the EU is becoming a dictatorship (don't vote the way we want? - keep on having "referenda" until you give the right answer).

A loose trading assocation (which is what we voted for when we voted for the Common Market), should be all that the EU is about. You cannot take a large nuber of disparate nations and meld them into one (look at what happened in Yugoslavia). The fact that there has not been another major European war since 1945 has nothing to do with the EU. The idea that had we joined years ago everyone in Europe would be speaking English is a racist thought if ever I heard one - why should they? I used to love travelling in Europe, with different languages and cultures, now it is all becoming homogenous and it is not the same.

We should not join the Euro. The EU should return to a "Common Market" and all countries should work hard to abolish the corrupt and expensive administration in Brussels, and things like the Common Agricultural Policy.

rickbonar

I've been to Holland, France and Belgium quite a lot over the last 15 years or so.
Initially I was in favour of the euro and the EU but experiencing the places and what was happening here and there and the underhand and surrepticious way of sheperding us toward it I realised what a con it is and indeed each country is losing it's identity and individuality.

It is very interesting to hear what the people of those countries say with regard to the euro. I've yet to speak to anyone that says it was a good thing for them. All say that prices went UP overnight in the respective countries and it at every available opportunity hence companies had it as an excuse to up prices- not by a few pennies either!
Now this happened here with decimalisation back the early 1970s, in fact many say it started the vast inflation rates that dogged us for the next 20 years.
(You see how long they been quietly planning this)
It was voted on by us by a small yes as a common market...and quote " we can leave anytime in the future". THIS ISN'T TRUE ... they haven't given the opportunity to leave....

Now there little benefit for you or me in fact there are a lot of downsides... countries like Turkey, Slovakia, Bulgaria, Slovenia are all desperately eager to join. We end up subsidising them and their willingness to work for the minimum wage here £5.00 an hour. (10 x what they get in Bulgaria .... average wage £25 per week back home). £200 or £5 an hour here is less than the rent of many flats and houses.
Our Bulgarian friends however are quite happy to live 15 to a room or live in a tent.

It was all the dream of one pioneer and he brought us a number of things - the autobahn, the volkwagen beetle, development of practical rocket and jet technology used today on aircraft. the deathcamp and the concept of the integrated Europe.

Brussels have nearly finished the dream of this great man otherwise known to you and I as: Adolf Hitler