Should the Uk Join the Euro?
?
Coursework
Should Britain join the EMU?
Florian Langhammer (P01257652)
Module: Business Environment UK (M07544)
Module/seminar Maureen Pike leader: Date: 17/11/2001
Table of Contents
1. Historical introduction of the EMU ….……………….………………….………………………………………….. 3
2. Discussion on Britain’s decision whether to join the EMU ……….……….……………………….……. 4 1. Recent developments since 1. January 1999 …………………………………….…………….. 4 2. Macroeconomic perspectives …………………………………………………………………………….. 4 1. Advantages …..………………………………………………………………………………..………… 4 2. Disadvantages ………………………………………………………………………………………….. 5
3. Conclusion ……………………………………………………………………………………………….………………………… 8
4. Bibliography ……………………….……………………………………………………………………………………………… 9
5. Appendix …………………………….…………………………………………………………………………………………… 10
1. Historical introduction of the EMU
With the Maastricht Treaty the EC heads of state and government agreed on a three-legged "European Union" (EU) on December 9 and 10, 1991, which should include a common foreign and security policy, cooperation on domestic and security policy and the creation of a European Economic and Monetary Union (EEMU).
The European Monetary Union (EMU) is to be effected according to a concrete time schedule - the three-stage plan which was agreed upon in the Maastricht Treaty and the conversion plan which was decided December 1995.
To ensure the stability of a single currency, especially in the initial phase, the states participating in the EMU must satisfy the following convergence criteria as constituted in the Maastricht treaty:
1. Inflation criteria: Price stability with no more than 1.5 percentage points above the inflation rate of the top three member states.
2. Interest rate criterion: Long-term nominal interest rates not more than 2 percentage points above the corresponding rate in the three member states with the best results in
Coursework
Should Britain join the EMU?
Florian Langhammer (P01257652)
Module: Business Environment UK (M07544)
Module/seminar Maureen Pike leader: Date: 17/11/2001
Table of Contents
1. Historical introduction of the EMU ….……………….………………….………………………………………….. 3
2. Discussion on Britain’s decision whether to join the EMU ……….……….……………………….……. 4 1. Recent developments since 1. January 1999 …………………………………….…………….. 4 2. Macroeconomic perspectives …………………………………………………………………………….. 4 1. Advantages …..………………………………………………………………………………..………… 4 2. Disadvantages ………………………………………………………………………………………….. 5
3. Conclusion ……………………………………………………………………………………………….………………………… 8
4. Bibliography ……………………….……………………………………………………………………………………………… 9
5. Appendix …………………………….…………………………………………………………………………………………… 10
1. Historical introduction of the EMU
With the Maastricht Treaty the EC heads of state and government agreed on a three-legged "European Union" (EU) on December 9 and 10, 1991, which should include a common foreign and security policy, cooperation on domestic and security policy and the creation of a European Economic and Monetary Union (EEMU).
The European Monetary Union (EMU) is to be effected according to a concrete time schedule - the three-stage plan which was agreed upon in the Maastricht Treaty and the conversion plan which was decided December 1995.
To ensure the stability of a single currency, especially in the initial phase, the states participating in the EMU must satisfy the following convergence criteria as constituted in the Maastricht treaty:
1. Inflation criteria: Price stability with no more than 1.5 percentage points above the inflation rate of the top three member states.
2. Interest rate criterion: Long-term nominal interest rates not more than 2 percentage points above the corresponding rate in the three member states with the best results in
Bibliography: *Books • Griffith, A and Wall, S (2001), 9th ed., Applied Economics, The euro debate • Donnelly, B (2000), “UK’s prosperity outside the euro”, The Times, London, Feb. 1, 2000. • Taylor, C (2001), “Strains in the eurozone: Economic divergences within Europe may in time force some countries out of the common currency”, Financial Times, London, July 30, 2001. • Wren-Lewis, S (2000), University of Exeter, “The Economics of EMU”, New Economy by Peter Robinson, London, 2000 • Wolf, M (2001), “Nobody can know whether euro benefits would be clear”, Financial Times, London, June 1, 2001. *Internet Sources • WestLB website, “Euro Information”, 2001 http://www.westlb.de/index/1,1061,30126,00.htm • Britain in Europe, “Briefings, Facts“, 2001 http://www.britainineurope.org.uk • BBC “News Business Euroland”, 2001 • In summary, will joining EMU promote higher growth, stability and a lasting increase in jobs? Source: Wolf, M (2001), Financial Times. Should Britain join the EMU? Module: Business Environment UK (M07544)