Is it time to join the euro?

baileysbattlebus

ninky wrote: »

I don't quite understand your 'us' v 'them' terminology. Isn't the EU 'us' as much as 'them'. We are in it, after all.

It's a bit like Texas talking about the US like it was a separate concern (actually, I think maybe they do this sometimes....)

Yes, we are in it and it costs the UK billions and we get little in return - neither does Germany.


France is a higher gross contributor than the UK, but is also a much bigger beneficiary. So as a net contributor they are smaller.

The biggest net contributors are Germany and the UK - Germany being the biggest.

And the CAP (common agricultural policy) means we pay considerably more for food than we need to.

Here is a report on the contributions and benefits of each of the member states - no wonder they are queueing up to join.

The report is fairly long - but some of the tables make interesting reading

http://www.brugesgroup.com/CostOfTheEU2008.pdf

Generali

Guy_Montag wrote: »

Generali - do you think the Euro could survive if the poorer countries left.

E.g. Italy bottles it, leaves the euro, would that be an end of the currency? Or would the currency continue, indeed stronger than before? If so, is there an advantage to Germany, France & the Low Countries kicking the rubbish ones out & getting the Brits in?

Good question old chap.

My guess is that if any country quits the Euro, it immediately makes obvious the additional political risk inherent in the Euro which just doesn't exist in any other reserve currency. The chances of California leaving the dollar are remote whereas all it would take would be an election result in Germany and the Euro is another curiosity for economic historians to mull over.

How would the market react to say Portugal quitting the EUR? My guess is that risk premiums would rise sharply. At that point it would be a political decision for the likes of Germany and Holland to decide whether the EUR is important enough politically to them that they are prepared to pay extra for the borrowing.

Now it's impossible to say what sort of premium bond investors would want for their additional perceived risk and whether electorates have the desire to pay the extra tax necessary to cover it but at some point, Euro membership would become too expensive to be politically possible.

I have no way of knowing when or if that point will ever be reached. There has to be a reasonable chance of it happening at some point.

Degenerate

chris_spackman wrote: »

The pound is the last thing we can have to remind us what a great nation we are and it would be sad to see that ripped away from us. Am i right in thinking that most countries wish they had their own back such as the Franc etc?

Why do people make these pointless "national pride" arguments when there are compelling economic reasons against joining anyway? It makes me embarassed to be British. If the Euro made economic sense, I'd be clamouring for us to join.