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Eurozone - Essay Example

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Summary
Eurozone or Euro area is the name given to the economic and monetary union of seventeen countries from Europe. Their membership represents the fact that they have chosen to use euro as their sole currency for all purposes…
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Eurozone

Download file to see previous pages... 249-256, 2010). Denmark, Sweden, and United Kingdom are the countries, which are a part of the European Union, but they are not a part of Eurozone. The rest of the seven countries will join the Eurozone after fulfilling the requirements. Eurozone came into being on January 1, 1999 with eleven members, which met the criteria. Exactly after two years Greece also joined the Eurozone and today the country is facing huge financial and economic troubles (Sladek, pp. 12, 2010). This would be discussed later in the paper. However, the major objective of the paper is to discuss that why Britain should not join the Eurozone especially considering the recent economic disaster in Greece. Discussion Ever since this debate started, the public opinion in the United Kingdom has been against the adoption of Euro. In the polls of 2005, 57 percent of the people opposed, in 2008, the percentage increased to 59 and in the year 2009, the percentage of people against the euro increased to 68 percent (Lynn, pp. 249-256, 2010)....
ld minimize the shocks of the recession, it lowered its interest rates to record low level of 0.5 percent so that investments could be encouraged in the country (Pelagidis & Mitsopoulos, pp. 377, 2011). Furthermore, the devaluation of pound in the international arena in the recent past is exactly what the country needed to boost its economy since it helped the economy to boost its exports. If UK joins the Eurozone then it will lose all hope to make any gains on the possible depreciation of Euro since more than 60 percent of UK’s trade would be taking place with Eurozone countries (Farkas & Murphy, pp. 58-59, 2011). Furthermore, the housing market of UK is such that it responds very quickly to the interest rates since they have high variable mortgages. Therefore, small fluctuations on the interest rate may mean huge effects on the consumer spending and their disposable incomes (Alesina & Giavazzi, pp. 85-89, 2010). Through IMF, UK will contribute almost 1 billion pounds to bailout package of Greece. This figure would have been more than double if Prime Minister David Cameron had not interfered in the process. More importantly, this figure would have even greater if Britain would have been a member of Eurozone. Furthermore, in the wake of the recent events where billions of dollars have been provided to the corrupt and irresponsible Greece government for bailout, there remains no room for second thoughts on the idea that UK should never join the Eurozone. The current crisis in Greece, which is quickly pushing their government to default and the subsequent bailout packages for Portugal, Ireland, and Italy mean that the Euro would lose its value in the international markets and it, is highly likely that investors may also lose their faith in the currency (Pelagidis & ...Download file to see next pagesRead More
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