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SHOULD BRITAIN

ADOPT THE EURO ?

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Should Britain Adopt the

Euro?History of the European Community

(EC)

Merits & Demerits joining the Euro

Conclusion

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History*

establishment of the European Coal andSteel Community (ECSC) in 1952

found by 6 countriesEuropean Economic Community (EEC)

27 member countries in the EU

16 countries have already adopted the euro(euro-zone member)

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Elimination of Transaction Costs(Minford, 2004)

elimination of commission charge

favoured by businesses and individuals

Retailing sales increase

Very insignificant

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Increase in price transparency

(Minford, 2004)

Prices are easy to compare

Consumer benefits from higher

price competition

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Riddance to Exchange Rate

Uncertainty(Artis, 2000, Minford, 2004, Barrell, 2002)

change in future exchange rate

only benefits the Britain-Euro trades

USA, Japan--- more uncertainty?

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Transition Costs

(Minford, 2004)one-off cost, e.g. printing new

currency, accounting systems ,etc.

High changeover costs

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Lose of sovereignty(Franklin, 1990)

symbolises the nation

Power

indicates surrender?

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Loss of the Independent

Central Bank(Franklin, 1990)give up its own management in the

monetary policysame interest rate set by European CentralBank (ECB)

affects the long-term growth performanceunsuitable interest rate

UK trends vary

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Conclusions

Not to join

free trade as a EU member

shock and time lag

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REFERENCES

-Artis, M., (2000). Should the UK Join EMU? National

Institute Economic Review. 2000; 171; 70.

-Barrell, R., (2002). The UK and EMU: Choosing the

Regime. National Institute Economic Review. 2002;

180; 54, p. 60.

-Franklin, M., Wilke, M., (1990). Britains Future in

Europe. London, Pinter Publishers Limited.

-Minford, P., (2004). Britain, the Euro, and the Five

Tests. Cato Journal, Vol. 24, Nos. 12 (Spring/Summer

2004), pp. 75-87.

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*THE END*;)