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The Euro versus the Pound sterling

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

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  1. 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

  2. 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

  3. 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

  4. The 5 economic tests • Contents • History of the tests • Significance

  5. 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

  6. What about Sweden And Denmark ? • The Danish referendum • 28th September 2000 • NO : 53 % YES : 47% • Social, not economical • Democracy • National sovereignty • Political alliances

  7. 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

  8. UK : joining the Euro or not ? • UK should join the Euro • Exchange rate risks • Competitiveness • Tourism • Exchange-transactions costs • National finance

  9. UK : joining the Euro or not ? • UK should join the Euro • Finance leading position • Foreign investments • Economical discussions • Competitive interest rate • Political influence

  10. 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

  11. Conclusion • Traditional independence • Good macroeconomics institutions • Do not fit British problems • Willing to enter Euro • Economical, not political

  12. 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”

  13. 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 ?

  14. Thanks for your attention Le Fang lee.lola@gmail.com Guillaume Dupré guillaume.dupre@hotmail.fr

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