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Should the UK ditch the pound and adopt the Euro ? Poll Discussion
in MoneySaving polls
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Former_MSE_Archna Former MSE
As the debate over the reintroduction of a form of new consitution for Europe hots up; let's return to the old chestnut of the Euro. It's been in place for five years years now, and many people have held the notes in their hands while travelling through Europe. So should the UK ditch the pound and adopt the Euro?
C. Don't care
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C. Don't care
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Personal point of view:
Having had to juggle 3 currencies in the last 3 years (euros, swiss francs and pounds), I'm completely fed up with moving exchange rates, bank charges and increasing financial taxes.
Work point of view:
I lost count of the times we made a quotation for a project in a currency, then a few months later everything had to be revised because of the exchange rates, or we say that currency x is the basis, but then the other party just uses currency y and doesn't want to accept the currency loss, etc etc....
Let's all have just one currency and be happy
The UK would be better off out of the EU alltogether !
The economies of Europe are very different so I fail to understand how one interest rate can suit them all: for example Britain has a high percentage of home ownership so a change in interest rates would have a much larger impact on people's disposible income (and therefore spending power) than in a country where most people rent their homes. Maybe a very simplistic argument, its a long time since I studied economics but I think I have the theory right. Surely the Eurozone is pretty much a more rigid version of the old Exchange Rate Mechanism....and we all know what happened on Black Wednesday!
That's my "financial" reasoning, I also think that a country's currency is part of its identity and I wouldn't want to lose Sterling for sentimental reasons either. Yes the Euro may be a bit more practical for many people, but its big businesses who will benefit the most not us little people, and I really don't feel that the benifits are strong enough to outweigh the potential negatives. Anyway, isn't it true that many people living in the Eurozone are becoming more and more unhappy with the Euro and are wanting to go back to their old currency?
2 cups of coffee 7 euros ( I know I'm in a tourist area but I wouldn't dream of paying £5 for 2 coffees at home)
So rather than say I believe we should embrace the Euro, I would rather say that I hope that we do. If nothing else, the convenience of being able to shop in France, Spain or Germany without having to crunch numbers whilst performing on the spot conversion estimates would make holidays more relaxing. A rather superficial view, I know, but still valid I think.
Ultimately, we all live on the same piece of land, it just pokes up out of the sea in different places.
When I've spoken to people abroad - expats, tourists (from UK and other countries visiting elsewhere in the UK), locals they almost without exception will say that things are more expensive since the change to the euro.
German friends for example said that they used to find it was cheap to visit Spain and Portugal but now the beer prices are the same as at home although food tends to be cheaper.
The price of a beer when they were home in Germany of course was rounded up too under the euro - Irish friends said the same.
My brother and girlfriend in Portugal can have lunch with a glass of wine for between 5 and 8 euros but you will pay a lot more for that in the Algarve i.e. the tourist area.
However, I'd suggest that most people from the UK visiting parts of Europe where the euro is the local currency will be tourists and many will be business people visiting cities. Does anyone realistically expect these cities or tourist spots to be cheap?
The developed tourist areas have all been cashing in - it's less to do with the euro and more to do with popularity and therefore prices going up (the same is happening in countries such as Czech Republic before there was ever any mention of the euro being brought in there).
Holidaymakers will always talk of how everything always seemed cheaper before and for half of them they'll be complaining about the meat being different or the tea not being the same as at home.
I'm not an economist so not well placed to comment on the reasonably put economic argument put by Vampire girl on why we shouldn't join but the house ownership thing certainly sounds like a reasonable argument against - but then don't they tend to go for longer term fixed rate mortgage deals on the continent which means things are more stable in the housing market.
I know that this is a complex area and I must admit if being thinking about the economic side of things for a while and I'm not fixed in my beliefs about benefits or lack of them in joining euro.
I would certainly be happy not to have to change money on the frequent occasions that I travel to the continent.
I'd love to be able to deposit the cash I come back with in a UK bank account (even if we keep the pound).
I'd love to be able to compare like for like with regard to prices afterall this is the Money Saving Expert website. Can you imagine the outcry from people when it is staring them in the face how much we are ripped off in the UK.
How could they possibly round prices up under the euro when we are already more expensive.
Going back to the £5 for two coffees - you could pay that here easily. Just go to Starbucks - price for two coffees ranges from £3.50 to £6 depending on which coffee and size. I don't recall visiting UK tourist areas or cities such as London or York and thinking "hey that was cheap".
I'd love to see people coming on this thread and giving good reasons for not joining the Euro - the figure for not joining was 68% when I started typing this and I can't help but wonder what proportion of these are people who are scared that foreigners will be running the country and how many are people who actually have some sound logic behind their anti-euro stance.
In short I think the economy destroying interest rates that would put many people out of work outweigh the benefits of not changing currencies for holidays.
Incidentally, the company I work for has more issues with the dollar tehn the Euro. Joining the Euro wouldn't make a blind bit of difference to them as the Euro/Dollar exchange rate would replace the Sterling/Dollar exchange rate as teh issue. Joining the dollar would be in their interest though! :rolleyes:
From a practical point of view I would be quite happy to use Euro notes - my g/f is slovenian and this would make life more convenient us to'ing and fro'ing across Europe.
But to relinquish the economic levers of power for the sake of the minor inconvenience of changing currency (no problem if you travel with your Nationwide flex card - access to your cash abroad free of charge with a decent exchange rate to boot!) is a no brainer.
There is also the issue of democracy; although our interest rates are set independently, this can be brought back under government control in an emergency. And we could vote out that government.
Under the Euro, we lose control of interest rates forever and with them the ability to democratic elect people who change our economic plight.
Having the euro would be very useful because it lowers the barriers of trade with Europe, eliminates an unecessary cost and it would keep our politicians in line.
The comment about interest rates is a red herring. A simple understanding of economics will tell you that there are two levers that allow you to control inflation. One is the base interest rate, and the other is taxation - monetary policy vs. fiscal policy.
An increase or decrease in interest rates is exactly equivalent to an increase or decrease in taxation - except that the plebs don't complain as much about interest rate changes!
So if interest rates were set in Europe to manage the European level economy, the chancellor in the UK still has the option of altering tax rates to deal with local conditions.
The problem in the UK is that we have created a political climate where the prudent alteration of tax rates throughout the cycle has become politically untenable. So we have the ridiculous pretense of 'no tax rises' and the introduction of complex obfuscation rules to raise taxation 'by stealth'.
The country would be better off if we could have a mature adult debate about the subject. But I can't see that happening.
There is also a further control that can be used to offset central interest rates - risk management. I find it interesting that no politician has proposed using this yet.
The most certain way to increase the cost of a loan is to increase the risk of it. For example you could take the sting out of the housing market by eliminating a lenders ability to repossess a home. That would instantly make the cost of buying houses more expensive without increasing the cost of borrowing for businesses.
I'd quite like to see the Euro introduced in Britain, but I can't see it somehow. There is far too much emotional attachment to Sterling.