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The Euro versus the Pound sterling. Should the UK join the Euro ?. Msc in European Business 2006 European Economics. Miss Le Fang Mr Guillaume Dupré. Contents. The Economic and Monetary Union The 5 economic tests What about Sweden and Denmark ? UK : joining the Euro or not ? Conclusion
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The Euro versus the Pound sterling Should the UK join the Euro ? Msc in European Business 2006 European Economics Miss Le Fang Mr Guillaume Dupré
Contents • The Economic and Monetary Union • The 5 economic tests • What about Sweden and Denmark ? • UK : joining the Euro or not ? • Conclusion • UK – Euro : what future ? • Questions
The Economic and Monetary Union • What’s the EMU • History: • Founding Document of the EMU • Founding Member States of the EMU • The Launch of the Euro • Exchange rates 1 EUR in EUR British Pound 0.6693581.49397
The 5 economic tests • Contents • History of the tests • Significance
The Five Tests • Sustainable convergence between Britain and the • Euro-economies • 2. Whether there is sufficient flexibility to cope with • economic change • 3. The effect on investment • 4. The impact on UK financial services industry • 5. Whether it is good for employment
What about Sweden And Denmark ? • The Danish referendum • 28th September 2000 • NO : 53 % YES : 47% • Social, not economical • Democracy • National sovereignty • Political alliances
What about Sweden And Denmark ? • The Swedish referendum • 14th September 2003 • NO : 56 % YES : 42 % • High growth, low unemployment • Generous State • Independence • Euro-countries : low activity
UK : joining the Euro or not ? • UK should join the Euro • Exchange rate risks • Competitiveness • Tourism • Exchange-transactions costs • National finance
UK : joining the Euro or not ? • UK should join the Euro • Finance leading position • Foreign investments • Economical discussions • Competitive interest rate • Political influence
UK : joining the Euro or not ? • UK shouldn’t join the Euro • Arguments against adopting the Euro • The economic costs of the Euro • Position of the UK • Other factors • Do not hate but hard to decide
Conclusion • Traditional independence • Good macroeconomics institutions • Do not fit British problems • Willing to enter Euro • Economical, not political
UK – Euro : what future ? • 2007 : Gordon Brown ? • Finance minister • Euro sceptic • Icon of the British economy • The after “Bliar”, Iraq war • New Prime minister = “wait & see”
Questions • If you were British, what you would you decide ? • Would you consider UK more European if it joins the Euro ? • Can we imagine a global currency ?
Thanks for your attention Le Fang lee.lola@gmail.com Guillaume Dupré guillaume.dupre@hotmail.fr