NobleSavage
Veteran Member
Was it just a pride thing or were there legitimate reasons?
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Why didn't the UK adopt the Euro?
- Thread starter NobleSavage
- Start date
There are lots of reasons. Pride was one, but not anywhere near the most important. In no particular order:
The Euro is of less benefit to the UK
-The Pound Sterling is a major world currency that is widely accepted and respected throughout the world. Most of the EU currencies were far less so
-We're one of the largest banking centres in the world. Foreign eXchange costs are thus less of an issue for us that for most European countries.
-Adopting a new currency is expensive
Adopting the euro means shifting control of monetary policy to Europe
-Britain historically hasn't had the same financial cycles as the rest of Europe. We're strongly linked to the US, and to ex-commonwealth countries. This plus different financial policies has led to the country have smoother rises and falls compared to the continent. The UK is generally slower to go into recession, doesn't go as deeply, and slower to come out. Similarly with booms. Sticking our economy into a set of interest rates and monetary policies primarily intended for countries in a different pattern means we don't get the decisions that are best for the UK.
-Concern over banks leaving the City of London and moving to Germany.
Political Concerns
-Europe isn't that popular. It's particularly unpopular amongst the supporters of the strongest parties.
-Part of the point of adopting the Euro is to encourage greater economic integration, and possibly to pave the way to an actual union. The UK has consistently opposed this, instead trying to increase the size of the EU, at the expense of closer integration.
-Dislike of the French and to a lesser extent, the Germans.
-Maybe pride, a bit?
The Euro is of less benefit to the UK
-The Pound Sterling is a major world currency that is widely accepted and respected throughout the world. Most of the EU currencies were far less so
-We're one of the largest banking centres in the world. Foreign eXchange costs are thus less of an issue for us that for most European countries.
-Adopting a new currency is expensive
Adopting the euro means shifting control of monetary policy to Europe
-Britain historically hasn't had the same financial cycles as the rest of Europe. We're strongly linked to the US, and to ex-commonwealth countries. This plus different financial policies has led to the country have smoother rises and falls compared to the continent. The UK is generally slower to go into recession, doesn't go as deeply, and slower to come out. Similarly with booms. Sticking our economy into a set of interest rates and monetary policies primarily intended for countries in a different pattern means we don't get the decisions that are best for the UK.
-Concern over banks leaving the City of London and moving to Germany.
Political Concerns
-Europe isn't that popular. It's particularly unpopular amongst the supporters of the strongest parties.
-Part of the point of adopting the Euro is to encourage greater economic integration, and possibly to pave the way to an actual union. The UK has consistently opposed this, instead trying to increase the size of the EU, at the expense of closer integration.
-Dislike of the French and to a lesser extent, the Germans.
-Maybe pride, a bit?
bilby
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It seems to me that current Commonwealth countries have more influence on British fiscal policy than the ex-Commonwealth nations; The Republic of Ireland is in the Eurozone, and neither The Gambia nor Zimbabwe are exactly economic powerhouses. Perhaps the Hong Kong SAR could be considered ex-Commonwealth; although they do participate still in some Commonwealth activities, such as the Commonwealth Games.
Of course it is also possible that you made a trivial error that conflated 'ex-Imperial' and 'Commonwealth', but for me to recognise this would be to pass up a perfect opportunity to be a smartarse, and where's the fun in that?
Of course it is also possible that you made a trivial error that conflated 'ex-Imperial' and 'Commonwealth', but for me to recognise this would be to pass up a perfect opportunity to be a smartarse, and where's the fun in that?
... I'll own up to the trivial error. Because smartarsery on that scale deserves some recognition, and I'd hate to see you go without it.
Perspicuo
Veteran Member
UK is missing one vital growing-up experience: losing WWII and getting over itself, like Germany did.
Bomb#20
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Would preferring for Greek governments to be perpetually subsidized by German taxpayers rather than by British taxpayers count as a legitimate reason? Or is that giving policy-makers' foresight too much credit?
Wiploc
Veteran Member
Greece wouldn't be in nearly as much trouble if it had its own fiat currency.
London is one of the largest banking centres (ie, casino) in the world. In fact, with the demise of our industrial base, we don't have that much else going for us, so it's natural we would want to preserve this asset and not see it controlled too much.
If ever the Euro becomes a stronger currency than the pound, this may change. But that's not going to be soon, it seems.
If ever the Euro becomes a stronger currency than the pound, this may change. But that's not going to be soon, it seems.
Hickdive
Member
Back in the early 1990s the UK was part of the Exchange Rate Mechanism (ERM) with a basket of European Countries. The idea was to harmonise and stabilise exchange rates with a view to a possible single currency in the future. The tool to achieve that was central bank base rates.
In 1992, on a day that was to become known as Black Wednesday, the Bank of England was forced to repeatedly raise interest rates by currency traders dumping the pound onto the currency markets. In a few hours the BoE base rate rose from 10% to 15%. There had been yet another house price boom in the UK in the years leading up to 1992 and many mortgage holders saw their forecast repayments go from barely manageable to greater than their monthly salary in those hours. The effect, had it gone unchecked, would have been to render a majority of mortgages in the country "toxic debts", to use a later term. As it was, the UK withdrew from the ERM and interest rates were re-adjusted the following day back to 10%.
However, those two days thereafter meant that UK voters were forever going to be suspicious of any kind of monetary ties with other EU members. The big political parties saw committing the country to the Euro as a major vote loser and so the issue wasn't pushed. Gordon Brown, when he was Chancellor of the Exchequer (Finance Minister) would only go so far as committing himself to a referendum on the issue of joining the Euro if three key economic tests were met but he never specified what those tests were!
So, Britain didn't join because the UK electorate in the mid-to-late nineties were deeply suspicious of being financially tied to the EU and the major political parties viewed committing themselves to joining as political suicide.
Nowadays, you'd have more chance of selling a shit sandwich to British voters than you would have of convincing them to join the Euro.
In 1992, on a day that was to become known as Black Wednesday, the Bank of England was forced to repeatedly raise interest rates by currency traders dumping the pound onto the currency markets. In a few hours the BoE base rate rose from 10% to 15%. There had been yet another house price boom in the UK in the years leading up to 1992 and many mortgage holders saw their forecast repayments go from barely manageable to greater than their monthly salary in those hours. The effect, had it gone unchecked, would have been to render a majority of mortgages in the country "toxic debts", to use a later term. As it was, the UK withdrew from the ERM and interest rates were re-adjusted the following day back to 10%.
However, those two days thereafter meant that UK voters were forever going to be suspicious of any kind of monetary ties with other EU members. The big political parties saw committing the country to the Euro as a major vote loser and so the issue wasn't pushed. Gordon Brown, when he was Chancellor of the Exchequer (Finance Minister) would only go so far as committing himself to a referendum on the issue of joining the Euro if three key economic tests were met but he never specified what those tests were!
So, Britain didn't join because the UK electorate in the mid-to-late nineties were deeply suspicious of being financially tied to the EU and the major political parties viewed committing themselves to joining as political suicide.
Nowadays, you'd have more chance of selling a shit sandwich to British voters than you would have of convincing them to join the Euro.