Forced to join the Euro?

[smifffymoto]

With the current financial crisis and recession,will GB plc be forced to join the Euro.When GB plc is back on the straight and narrow will Sterling be strong enough to continue alone against the Dollar and the Euro

[moles]

We dont meet the criteria to join the Euro. We are not allowed to join.

[jagracer]

What's the criteria then?

[chris watton]

jagracer said:

What's the criteria then?

Not having anyone called Gordon Brown overseeing the economy?

[moles]

Was announced in the last couple of weeks that we cannot join even if we wanted too. Cant find the article but think it was due to the amount of debt we currently shoulder.

[moles]

Found it: http://www.telegraph.co.uk/finance/comment/ambrose...

[siscar]

The issue is whether the 'PIGS' can remain in the euro (Portugal, Ireland, Greece, Spain). What they need right now is to be able to control their own fiscal policy but now a major part of that is out of their control. So they are saddled with a relatively strong currency in a recession, which is a potential disaster for them. The UK joining in would be complete madness, but then again from an economic perspective the Euro is madness. It's something constructed by politicians and the one good thing that can be said for Gordon Brown is that he knows enough about economics to have kept us out of it.

[smifffymoto]

Funny how France,spain and the like have been able to fiddle the books for years and just shrug it off.If needed the rules will just be re-written,too our gross disadvantage.Where governments are concerned it's not about right and wrong, just got to save face and appear to have the upper hand

[jesusbuiltmycar]

siscar said:

The issue is whether the 'PIGS' can remain in the euro (Portugal, Ireland, Greece, Spain). What they need right now is to be able to control their own fiscal policy but now a major part of that is out of their control. So they are saddled with a relatively strong currency in a recession, which is a potential disaster for them. The UK joining in would be complete madness, but then again from an economic perspective the Euro is madness. It's something constructed by politicians and the one good thing that can be said for Gordon Brown is that he knows enough about economics to have kept us out of it.

PIGS is reallt Portugal, Italy, Greece, and Spain... Some people thyink therer should be two I's though....

[MitchT]

smifffymoto said:

With the current financial crisis and recession,will GB plc be forced to join the Euro.

I hope so. It would remove the hassle and expense of changing currencies when travelling into and out of mainland Europe from the UK and would make the UK a much more attractive place to do business with and visit as far as businesses and tourists based in mainland Europe are concerned. I'd be nipping backwards and forwards across the channel on a regular basis is it weren't for the scandalous bid/offer spread at Bureau du Changes and the sheer hassle of having to change at all.

[Soovy]

MitchT said:

smifffymoto said:

With the current financial crisis and recession,will GB plc be forced to join the Euro.

I hope so. It would remove the hassle and expense of changing currencies when travelling into and out of mainland Europe from the UK and would make the UK a much more attractive place to do business with and visit as far as businesses and tourists based in mainland Europe are concerned. I'd be nipping backwards and forwards across the channel on a regular basis is it weren't for the scandalous bid/offer spread at Bureau du Changes and the sheer hassle of having to change at all.

\


NO chance. We don't qualify.

[Bing o]

jesusbuiltmycar said:

siscar said:

The issue is whether the 'PIGS' can remain in the euro (Portugal, Ireland, Greece, Spain). What they need right now is to be able to control their own fiscal policy but now a major part of that is out of their control. So they are saddled with a relatively strong currency in a recession, which is a potential disaster for them. The UK joining in would be complete madness, but then again from an economic perspective the Euro is madness. It's something constructed by politicians and the one good thing that can be said for Gordon Brown is that he knows enough about economics to have kept us out of it.

PIGS is reallt Portugal, Italy, Greece, and Spain... Some people thyink therer should be two I's though....

PIGSUK anyone?

[Silver993tt]

siscar said:

The UK joining in would be complete madness, but then again from an economic perspective the Euro is madness.

Not really. If the UK joined the Euro when the pound is weak (like now), everything would be repriced using that exchange rate. For example, something that cost 10 pounds 18 months ago would have been 15 euros (approx), now it would be repriced at 11 euros in the UK but still cost 15 Euros in the Eurozone. This would still provide the advantage for exports in the same way as a weak pound does right now. The worst time to switch over would be to lock the pound to the Euro when the pound is strong.

Of course there are those who would moan because it would also lock asset prices (such as property) as lower levels but you can't have it both ways.

Edited by Silver993tt on Sunday 18th January 13:05

[Spiritual_Beggar]

The Euro is artificially high atm.

There are a lot of struggling economies as part of the Euro atm, and its only being kept high thanks to the strong economies of the big players (germany, france, etc.)

[AJS-]

Silver993tt said:

siscar said:

The UK joining in would be complete madness, but then again from an economic perspective the Euro is madness.

Not really. If the UK joined the Euro when the pound is weak (like now), everything would be repriced using that exchange rate. For example, something that cost 10 pounds 18 months ago would have been 15 euros (approx), now it would be repriced at 11 euros in the UK but still cost 15 Euros in the Eurozone. This would still provide the advantage for exports in the same way as a weak pound does right now. The worst time to switch over would be to lock the pound to the Euro when the pound is strong.

Of course there are those who would moan because it would also lock asset prices (such as property) as lower levels but you can't have it both ways.

On the other hand a salary of 30K Pounds would have been 45K Euros 18 months ago, would be converted at 33K Euros now. Not so attractive. The help for exporters is a bit of a red herring. It's only true in the very short term until prices re-adjust to reflect the fall, ie inflation, that happens when the currency falls.

The only good thing about joining the Euro would be that it would restrict the governments ability to borrow money either by public debt or by debasing the currency as they have done recently. I don't believe the UK needs to be in the Euro to stop our government doing this. Also, taking the longer view, there's no reason to beleive that the European Union won't at some future point, and maybe sooner than we think, borrow money and debase it's currency in the same way.

At least while we still have elections in the UK there's the possibility that we can kick out the government at the next election for it's stupidity. Can't really do that with the European Commission.

[Myobb]

jagracer said:

What's the criteria then?

Criteria includes:

1) Budget deficit not to exceed 3% of actual expenditure.
2) Borrowings not to exceed a cetain percentage of GNP

and and and

Cant remember.

Anyway the standard practise of countries experiancing financial problems is to devalue which the UK has done very successfully against the Euro & Dollar by roughly 20% to 25%. This makes imports more expensive & exports & services cheaper (both desireable). In comparison the poor Euro countries cant which is undesireable (and God help the Irish, Spanish etc).

[s2art]

smifffymoto said:

With the current financial crisis and recession,will GB plc be forced to join the Euro.When GB plc is back on the straight and narrow will Sterling be strong enough to continue alone against the Dollar and the Euro

This makes no sense. The UK is one of the largest economies in the world. You might as well ask if the Canadian dollar can continue alone, or the Rouble etc. etc.

[siscar]

Silver993tt said:

siscar said:

The UK joining in would be complete madness, but then again from an economic perspective the Euro is madness.

Not really. If the UK joined the Euro when the pound is weak (like now), everything would be repriced using that exchange rate. For example, something that cost 10 pounds 18 months ago would have been 15 euros (approx), now it would be repriced at 11 euros in the UK but still cost 15 Euros in the Eurozone. This would still provide the advantage for exports in the same way as a weak pound does right now. The worst time to switch over would be to lock the pound to the Euro when the pound is strong.

Of course there are those who would moan because it would also lock asset prices (such as property) as lower levels but you can't have it both ways.

Joining it when the pound is weak may have it's advantages over joining it when the pound is weak but what you are talking about is timing. I'm saying that joining it at all is madness. The first thing that needs to be achieved is bringing economic cycles into harmony, if the pound and the euro trade for a long period without the rate changing substantially then you know that things are aligned and joining may have no bad effect. But trying to peg the rate after a period of volatility just tells you that it's not going to work.

[Silver993tt]

siscar said:

Silver993tt said:

siscar said:

The UK joining in would be complete madness, but then again from an economic perspective the Euro is madness.

Not really. If the UK joined the Euro when the pound is weak (like now), everything would be repriced using that exchange rate. For example, something that cost 10 pounds 18 months ago would have been 15 euros (approx), now it would be repriced at 11 euros in the UK but still cost 15 Euros in the Eurozone. This would still provide the advantage for exports in the same way as a weak pound does right now. The worst time to switch over would be to lock the pound to the Euro when the pound is strong.

Of course there are those who would moan because it would also lock asset prices (such as property) as lower levels but you can't have it both ways.

Joining it when the pound is weak may have it's advantages over joining it when the pound is weak but what you are talking about is timing. I'm saying that joining it at all is madness. The first thing that needs to be achieved is bringing economic cycles into harmony, if the pound and the euro trade for a long period without the rate changing substantially then you know that things are aligned and joining may have no bad effect. But trying to peg the rate after a period of volatility just tells you that it's not going to work.

It's quite normal for another currency to be pegged to the Euro (within a small range) prior to that country joining. This is normally done a couple of years before hand.

[mcflurry]

MitchT said:

smifffymoto said:

With the current financial crisis and recession,will GB plc be forced to join the Euro.

I hope so. It would remove the hassle and expense of changing currencies when travelling into and out of mainland Europe from the UK and would make the UK a much more attractive place to do business with and visit as far as businesses and tourists based in mainland Europe are concerned. I'd be nipping backwards and forwards across the channel on a regular basis is it weren't for the scandalous bid/offer spread at Bureau du Changes and the sheer hassle of having to change at all.

Sounds like you need a Nationwide card? The spread on EUR/GBP is negligble (sp)