Should the UK ditch the pound and adopt the Euro ? Poll Discussion

thanmuwa

parkside_stroller wrote: »

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.

I was in Ireland when the conversion to the Euro happened.... free calculators were given out to anyone who wanted them to check that the conversion to Euros was exact, and boy did shop-keepers and publicans get an earful if they new price was even 1 cent above what it should be!

Now when I go back to Ireland, the price of a pint (for example ) is higher.... by about the same amount that a pint here has risen, and mainly for the same reason, tax increases. Prices have risen here too, since the Euro! On a related point, cost of living in the UK is related as much to taxes as interest rates, and the earlier point that taxation is crude doesn't seem accurate to me..... After all, how many times do you pay various stealth and regular taxes in a single month!

The argument that the "one-size-fits-all" aspect of the Euro won't suit the UK is specious for two reasons:
1 - The dollar covers 50 states + various other worldwide territories with vastly different economic conditions just fine. Regional variations are dealt with by local taxes and so on.
2 - The Irish republic has similar levels of house ownership etc, and is doing more than well with the Euro, despite dire predictions by the naysayers along the lines of the ones mentioned above.

Really and truly, it comes done to patriotism/jingoism. Here is a simple test of that: If the question were "Should all of Europe adopt the Pound Sterling?", my straw polls get a much higher yes than "Should the UK adopt the Euro?"

As an aside, if I were to be patriotic as an Irishman, I would want the UK to stay out of the Euro, because it is doing wonders for Irish business as the only native English speaking country in the Eurozone, ideally suiting us for the interface between the Euro and the international (English speaking) economy.... Your loss is our gain! Also, the permanent consigning to history of the Irish Pound as the last significant economic reminder of our colonial past has led to a great feeling about the future in Ireland.... a brave new world! Apologies if anyone thinks that I have politicised an economic issue, but it was hardly a rational economic debate in the first place! :rotfl:

sgreenwood

Recently did an open-top bus tour in London. As we went through the ‘city’ the guide informed me that there were more Japanese banks in the city than any city in Japan; more American banks than anywhere in America and more foreign banks full stop in the city than in any other country in the world. In essence, London is the financial capital of the world.

If we go into the Euro, all of this banking activity will essentially disappear by moving to Frankfurt (ever wondered why the German Government love the Euro so much?). The resultant cost to the Stock Exchange and the UK economy would be horrendous if the corporate banking fraternity were to move out of London.

So, whilst it’s a pain to ‘juggle’ currencies for us mere travellers, it’s a small price to pay for living in such a well structured, well funded and essentially stable economy.

andrewbolt

Vampgirl wrote: »

Thats not the point that's being made. The point is that the ECB set a single rate for the whole of the Eurozone, and one rate doesn't necessarily suit all the varied economies under that umbrella. Whereas the BoE sets the rate specific to the needs of the UK economy.

That is a different point from the one that amused me: that we would be trading a democratically-set interest rate for a bureaucratically-set one.

I don't know enough about the economics to dispute your point. I'm quite ready to believe that various regions can have differing economic needs, and that those needs are best met by having a different interest rate (and hence currency) for each region.

.. but then if is EuroZone bad, why is SterlingZone ok? Do England, Scotland, Wales and the North of Ireland all have common economic needs that are fundamentally different from Germany and France?

Presumably there are different economic regions within the UK, and some of those would be better of with the Euro than the pound?

Or is it actually the case that, say, rich regions will always be best off on their own, whereas poor regions will benefit from uniting with the rich regions -- and, on average, Europe would drag the UK economy down?

In fact, what is constitutes the 'needs of the UK economy'? Are we talking about the cost of living? House prices? Taxes? Or would all of these be caught up in spiraling inflation if we joined the Euro?

Andrew

mee_2

There are two sides to the argument that need to be considered:
1) Impact on individuals (both EU residents and tourists)
2) Impact on monetary policy

With regard to 1) I think that there is little argument for maintaining an independent pound, while continuing to be part of the EU. The slow march towards a federal Europe (exactly how loose of a federation remains to be seen) means that integration is the way forward. In the same way as a French person can access their bank account in Spain, why shouldn't a Brit be able to do so. Add to that the benefit to toursists of a single currency, and the convenience argument wins out, in my view.

(plus there's the benefit of taking away the banks' commission on foreign exchange!)

Point 2) is more serious, and bears thinking about. Joining the Euro would mean a loss of control over monetary policy, but effectively this was achieved when Mr Brown handed control of the MPC to the Bank of England. And as for the fundamentals of the French and German economies driving the ECB's decisions, it is flawed to assume that this would continue if the UK were to join - the ECB would need to include considerations of the effect on the UK's economy of interest rate changes, and be driven by this as much as other major EU economies.

So my view is that overall it would be an advantage in the long run, although painful (and perhaps inflationary) in the short run while we adjust.

-- Mike

crazymo

purely from a personal interest I say switch to the Euro as I am in the throws of buying a property abroad and it is a nightmare getting the money over to Spain with a good rate of interest, just a few cents difference can mean thousands of pounds difference

Drunkstar

I am with the Monster Raving Loony party. Invire Europe to join the pound

thanmuwa

sgreenwood wrote: »

Recently did an open-top bus tour in London. As we went through the ‘city’ the guide informed me that there were more Japanese banks in the city than any city in Japan; more American banks than anywhere in America and more foreign banks full stop in the city than in any other country in the world. In essence, London is the financial capital of the world.

If we go into the Euro, all of this banking activity will essentially disappear by moving to Frankfurt (ever wondered why the German Government love the Euro so much?). The resultant cost to the Stock Exchange and the UK economy would be horrendous if the corporate banking fraternity were to move out of London.

So, whilst it’s a pain to ‘juggle’ currencies for us mere travellers, it’s a small price to pay for living in such a well structured, well funded and essentially stable economy.

Well, Tour guides are renowned for their financial knowledge and unerring accuracy, :rolleyes: but still, a bit hard to swallow....
I bet EVERY international Japanese bank has a branch in Tokyo, near the stock exchange they are likely to be listed on. Plus the purely national banks (ie no branch in London) probably have an office in Tokyo too. The same for New York and national/international American banks. By the way, isn't New York the financial capital of the world?
I also fail to see why banks would go to great expense to relocate to Frankfurt (where most of them probably have an office anyway) just because they had one less currency to deal with. I doubt they are in London because of some special magical powers attached to Sterling. In fact, if both trade in Euros, I reckon the London Stock Exchange is likely to take business away from Frankfurt rather than the other way around.

ps The Eurozone is well structured, well funded and more stable than Sterling (if you take low interest rates as an indicator of a stable economy).

MarkLS12

1. The use of the word "ditch" in the question biases the poll before it starts.
2. I don't understand why money savers are happy to fork out between 2 and 5% in bank charges every time they change money.
3. "Things are more expensive since the euro" of course they are, things in Britain are more expensive now than in 2002 too.
4. "We lose control of interest rates" we don't have control of interest rates. The BoE doesn't care what we think, no more that the ECB would.

rjdjcd

Do we want to give even more control over the UK to the Eurocrats in Brussels. At least now our Government can use both taxation and monetry policy to keep things on track. Look at how other countries keep fudging the issues when they hit so called EU limits on borrowing etc.

Glowboy

I'm opposed to the UK joining the Euro, which is not entirely unrelated to my general euroscepticism. I remain to be convinced that getting deeper into a centralised (federalised?) bureaucracy is in the UK's best interests; ergo we shouldn't adopt its currency either.

It's true that businesses can be inconvenienced by FX fluctuations but this applies to a load of currencies, not just the euro. Some of the UK's biggest companies run their businesses in USD and most financial institutions have plenty of hedging arrangements in place to limit the impact of variations in the exchange rate.

As to the impact on travellers, I don't see the problem. If I'm travelling on business my expenses go on a corporate credit card. For personal travel, I have a FlexAccount which I use to withdraw cash locally; any spare euros go into a jar and are then taken with me next time as a float.

Sterling has been established for hundreds of years and is fit for purpose. Our economy is in a decent state, the financial markets work well. If it ain't broke don't fix it.