Should Britain Adopt the Euro as its Currency?

When the EU countries changed to a single currency at the beginning of the century, Britain opted out, keeping the pound. It was understood at the time that this would probably be only temporary, and that the situation would be under frequent review. Events have prevented the government from having much time to look at the question again.

When any country now applies to join the EU, they have to commit to changing to the single currency as soon as they meet the convergence criteria.

Given the fact that the euro is now the world’s strongest currency, looking likely to replace the dollar as the first choice reserve currency, and given the continued poor performance of sterling against the euro, is it now perhaps time for Britain to make the change?

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One Response to Should Britain Adopt the Euro as its Currency?

  1. filosofia says:

    As an update to this post, I should say that I put the question on BlogCatalog, and a few replies came back. I won’t say that any of them contained any very sophisticated economic analysis, because they didn’t. One thing was very clear though. The British have a very strong sentimental attachment to their pound.

    This is probably not surprising as the pound has served them well for several centuries, and it has been a symbol of British prestige and stabilty. So they are reluctant to part with it. This is the case, even when you point out to them that it doesn’t make sense to stay out of the single currency.

    One person even thought it would be unpatriotic to get rid of the pound. He would no doubt keep the pound in spite of any damage it might cause to British interests and industry from an economic point of view. A situation like this is typical of those which arise when people cling to an idea or a belief so strongly they refuse to look at the practical realities.

    Just think about how the Germans must have felt when they had to give up their beloved deutschmark for the euro. The DM had not been around as long as the pound, but for Germans, it had become a symbol of their post-war regeneration miracle; a strong and stable currency, second only to the US dollar. And they were faced with changing it for a currency which, for all anyone knew, might turn out to be just a joke currency, like Monopoly money. But they took that risk, and they never looked back.

    The choice for the British is far easier. Now it is well known that the Euro is a tough currency that can hold its own and more. And as the pound plummets in value, looking like it will fall to parity with the euro soon, and maybe further, if current trends continue, surely now is the time for the Brits to banish sentimentality, and make some practical calculations.

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