Should the UK Join the Euro?

The Euro dates back to January 1st, 1999, when it became the legal tender for participating European countries within the EU. With the single currency comes a central bank, called the European Central Bank, which conducts monetary policy covering all the members of the Eurozone. There are no longer any separate national monetary policies, and no country can introduce any policies of their own, such as ones involving interest rates and exchange rates. The UK obtained a special opt-out agreement in the original Maastricht Treaty of the EU, stating that it would only have to join if the government decided to do so.
This topic has been debated time and time again, and it will most likely continue to be debated for quite a long time. While there are definitely some economic benefits to being within the Eurozone, there are also major cons to having the Euro that go along with several other political as well as social (or rather, cultural) negatives. While this may change in the future, at this point in time it seems to be disadvantageous for the UK to join the Euro.

Economics
The biggest argument against the UK making a move to join the Eurozone stems from the huge loss of autonomy when it comes to economy policy and governmental control. If the UK were to join the Eurozone, all control it has over monetary policy would be handed over to the European Central Bank, who would then prescribe policies at its whim. This could prove to be disastrous given certain economic circumstances. For instance, the lack of exchange rate controls removes a highly effective mechanism for adjustments of imbalances between countries that can arise from shocks to their economies. This has worked well for the UK in the past, and, as such, this option should be retained. Furthermore, the UK would no longer be able to stimulate its economy during a recession by devaluing its currency and increasing exports. The UK is thought by some to be more sensitive to interest rate changes than other EU countries (mainly because of the high number of owner-occupation on variable-rate mortgages in the housing market), and joining a currency union with no monetary flexibility would correspondingly require the UK to have more flexibility in labor markets and in the housing markets. Problems such as these are only a few examples of how the loss of power to change and implement economic policy would be highly disadvantageous for the UK. Furthermore, many assert that the UK is already a big competitor on the global scale, so the argument that the UK would lose economic influence if it were to not join the Eurozone is decidedly weak.

Political
On the political front, the debate seems to be a little more straightforward. Following along with having more economic influence, supporters claim that moving to the Eurozone would garner the UK more political say and influence within the region. The UK would have a stronger voice when it came to deciding policies and creating more integration. However, many more view the move to the Eurozone as, essentially, a political disaster. With this move, the British government will have virtually no say on monetary policy. Instead, it will be completely controlled by the European Central Bank, and the UK government will have no way to deal with any crises that may occur within the economy. With the way the government is currently set up, if there are massive problems occurring, the citizens are able to bring in a new government through elections to fix problems within the economy. Under the European Central Bank, even bringing in a new government would be essentially useless.
Opponents of the Eurozone also believe that this move would bring less political influence, rather than more (as supporters believe). The European Union, some assert, is basically a French and German institution; it is their brainchild that caters mainly to their needs and interests. Upon joining the EU, Britain attempted to gain some political clout within the system, but most of her interests and desires were either ignored or strongly contested. Some would say that it has never been in the interest of the UK to be within the Union at all. If the UK were to join the Eurozone, they would be put even further under the EU’s rules and regulations that do not cater to the needs of Britain at all, which are decidedly different from the needs of mainland Europe. There are hopes of Britain becoming the leader of mainland Europe, but some say that it is not a realistic goal, nor is it advantageous or beneficial for the nation to be in such a position.

Social
In addition to the economic and political realms, joining the Eurozone also has an effect upon the social realm of the UK. Supporters believe that having a European currency will strengthen the “European Identity”. Having more and more countries sharing the same legal tender creates a bond that gives a sense of community and togetherness to those involved. It is this very point, though, that opponents resist. Proponents of the Pound have a very nationalistic view of the currency situation, and believe that the Pound is something inherently British, and taking this away would be taking something away from the very fabric of English culture and society. This feeling of autonomy is incredibly prominent throughout the people, and this view that the Pound should be kept, if only to preserve their cultural independence, is not in any danger of fading. If the Euro were to replace the Pound, many feel that a part of the country itself would be lost.

Conclusion
It is clear that the debate regarding the choice to join the Eurozone is substantial and complex. While it may have died down a few years prior to today, it is returning with much more importance due to the current economic crisis. Some believe that now is the time, more than ever, to join the Eurozone and avoid many economic hardships to come. Others believe that by the time the UK were to actually change to the Euro (as it is a years-long process), the current recession will have passed and the UK would only have a substantially higher sum of debt to deal with, as the process to change over to the Euro would be a massively expensive one. The UK already benefits from intra-European trade due to the agreements made in the past, and many believe Britain to have its own special identity unique to itself, which would be forever tarnished if the Pound were to disappear from the hands of the British people. The loss of governmental economic power would leave the UK at the mercy of the other European powers, and its economy could possibly fall into disrepair with no governmental control to sustain it. It seems that the cons, at least at the present time, outweigh the pros, and the UK should remain tied to their traditional currency.

Jennifer Verran-Lingard
Class of 2010
College of Arts & Science

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