Macroeconomics Case Study

UK and the Euro

OR

Abstract:
The case study throws light on the issues of whether the UK, which is the second largest economy in Europe, would join the Economic and Monetary Union (EMU) of the European Union (EU) and adopt the euro as its currency. UK is a member of the EU but in 1997 it announced five economic tests to judge whether and when it would be in the UK's interests to join the EMU. Gordon Brown, the Chancellor of the Exchequer, in his address to the Parliament on June 9th 2003, announced the results of the five economic tests, but no concrete results have been derived on this issue yet.

Pedagogical Objectives:

To discuss whether it would be beneficial for the country to adopt the euro as its single legal tender.

Keywords : UK and the euro, Economic and Monetary Union (EMU), Assessment of the five economic tests, European Union (EU), Convergence criteria of the EMU, Single currency and investments in the UK, Monetary Policy Case Study, Price differentials and macroeconomic stability, Nominal and real interest rates in the UK and the euro area, GDP (gross domestic product) growth rate in the UK and the euro zone, Referendum in the UK, Bank of England, EMU and the UK's financial services industry, Labour markets in the UK, Maastricht Treaty, Exchange Rate Mechanism