EU - should the UK have joined the Euro currency?

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Gareth
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EU - should the UK have joined the Euro currency?

Postby Gareth » Wed Jun 29, 2016 10:57 am

This is really a question for people who wish to remain in the European Union. I'm interested in this because I don't remember any discussion, either face to face, in news or social media, suggesting that the UK should stop using Sterling in favour of the Euro. Is it because, fundamentally, people in the UK are ambivalent about the European project?

I just read the Wikipedia article about the Euro and, in particular, its introduction. I wonder how the UK would look now if it had adopted the Euro before the 2008 crash; with limited room for manoeuvre, would successive governments have been able to rescue the banks and begin to restore the economy to growth? What kind of pain would we have endured?
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hir
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Re: EU - should the UK have joined the Euro currency?

Postby hir » Wed Jun 29, 2016 11:38 am

Gareth wrote:This is really a question for people who wish to remain in the European Union. I'm interested in this because I don't remember any discussion, either face to face, in news or social media, suggesting that the UK should stop using Sterling in favour of the Euro. Is it because, fundamentally, people in the UK are ambivalent about the European project?

I just read the Wikipedia article about the Euro and, in particular, its introduction. I wonder how the UK would look now if it had adopted the Euro before the 2008 crash; with limited room for manoeuvre, would successive governments have been able to rescue the banks and begin to restore the economy to growth? What kind of pain would we have endured?



Tony Blair wanted to join. Gordon Brown said no. There was no public debate as such.

sussex2
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Re: EU - should the UK have joined the Euro currency?

Postby sussex2 » Wed Jun 29, 2016 11:47 am

In my opinion yes we should have.

martine
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Re: EU - should the UK have joined the Euro currency?

Postby martine » Wed Jun 29, 2016 12:08 pm

sussex2 wrote:In my opinion yes we should have.

Wow really?

I'm really glad we didn't (and I voted remain) - with Greece being propped up and some others also to a lessor extent, I can't see how such different economies can be successfully merged.

It would also make leaving much more difficult (and I voted remain remember) - but perhaps that's why you think we should have joined?
Martin - Bristol IAM: IMI National Observer and Group Secretary, DSA: ADI, Fleet, RoSPA (Dip)

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jont-
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Re: EU - should the UK have joined the Euro currency?

Postby jont- » Wed Jun 29, 2016 1:36 pm

Gareth wrote: with limited room for manoeuvre, would successive governments have been able to rescue the banks and begin to restore the economy to growth? What kind of pain would we have endured?

Should we have rescued the banks? Or should we have locked up their chief execs for bringing the world economy to it's knees?

martine
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Re: EU - should the UK have joined the Euro currency?

Postby martine » Wed Jun 29, 2016 2:07 pm

jont- wrote:[Should we have rescued the banks? Or should we have locked up their chief execs for bringing the world economy to it's knees?

Yes and Yes
Martin - Bristol IAM: IMI National Observer and Group Secretary, DSA: ADI, Fleet, RoSPA (Dip)

sussex2
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Re: EU - should the UK have joined the Euro currency?

Postby sussex2 » Wed Jun 29, 2016 2:57 pm

martine wrote:
sussex2 wrote:In my opinion yes we should have.

Wow really?

I'm really glad we didn't (and I voted remain) - with Greece being propped up and some others also to a lessor extent, I can't see how such different economies can be successfully merged.

It would also make leaving much more difficult (and I voted remain remember) - but perhaps that's why you think we should have joined?


A part of my reason is that it may have given a lot of people more of a feeling of belonging, made us less different and perhaps given more understanding.

martine
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Re: EU - should the UK have joined the Euro currency?

Postby martine » Wed Jun 29, 2016 3:28 pm

...along with loads of problems (like Greece) and less control of our own economy (like interest rates). Euro curreny membership is vital if the EU is to achieve it's aim of one state and preceeds a European central bank and ultimately central government. I and many others don't want that level of EU integration thanks.
Martin - Bristol IAM: IMI National Observer and Group Secretary, DSA: ADI, Fleet, RoSPA (Dip)

sussex2
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Re: EU - should the UK have joined the Euro currency?

Postby sussex2 » Wed Jun 29, 2016 3:42 pm

Historically we have always had a great degree of integration and our finances have always been linked.
If we were now to break away from that it would be truly revolutionary and I wonder how many people understand that.

hir
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Re: EU - should the UK have joined the Euro currency?

Postby hir » Wed Jun 29, 2016 6:10 pm

sussex2 wrote:In my opinion yes we should have.


For the Euro to survive in the longer term the Eurozone must introduce an open, transparent and effective fiscal transfer mechanism. A mechanism whereby Brussels can rapidly transfer funds to regions (read, countries) which it deems are in urgent, or long-term, need of those funds. The purpose of these transfers would be to eliminate, for example, the current account trade deficits of a particular region (read, country). We are not talking about long-term loans as has happened with Greece. There is no adequate fiscal transfer mechanism at present. The Germans (one of the richer members of the monetary union) strongly oppose its introduction. Greece ( one of the poorer members) requires it. All politically cohesive national systems, whether they be a federal system or a single country, rely on a mechanism of fiscal transfers from its wealthier regions to its poorer regions in order to try and achieve economic, political and social stability. This is effected through the national taxation system of each monetary area. The EU does have a form of fiscal transfer in the guise of EU Cohesion Policy Programme whereby the European Union uses fiscal transfers to national and regional levels to foster economic and social cohesion. But this scheme depends upon member states submitting applications which are then vetted and subsumed into a morass of bureaucracy. Nor are the sums involved sufficiently large enough to deal with the economic and monetary imbalances between the richer and poorer Eurozone countries. For a Eurozone fiscal transfer mechanism to work in a way that will save the Euro there needs to be a political will on the part of all Eurozone member states, both rich and poor, to hand financial sovereignty to a central political authority that is empowered to make fiscal transfers rapidly and almost at will. This is, and I suspect will forever be, politically unacceptable to Germany. German taxpayers have expressed their total opposition to... "baling out the work-shy southern Eurozone member states.

An open and transparent fiscal transfer mechanism can be introduced only once political union has taken place. By way of examples look at the history of the USA and the introduction of the US dollar, or the fiscal transfers from what used to be West Germany to what used to be East Germany after reunification. For the Eurozone to work effectively, and before it can survive in the longer term, there must be a political union of all its members. The leaders of the Euro member states are clearly hoping that the Euro will help drive the creation of a new or united country.

So, either the Euro in its present configuration will fail as a result of economic and monetary tensions brought about by the absence of an effective fiscal transfer mechanism, or the Eurozone will become a political union which will have the power to transfer funds for reasons of social and economic expediency. If the latter scenario ever becomes reality it will be the richer northern states who will be the donors and the poorer southern states the beneficiaries. If the UK had joined the Euro, we would have been a donor state in this situation.

For all of the above reasons I believe we were right not to join the Eurozone.


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