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Old 14th December 2008, 12:17 PM   #6
Legazpi
Mega Forero
 
Join Date: Mar 2008
Location: Madrid (Arganzuela)
Posts: 834
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The best argument against joining the euro is to simply imagine what would have happened to the UK economy if it had joined the euro back in 2002. Since 2002 up until last month, euro interest rates have been significantly lower than the those for the pound. So the UK would have had an even bigger housing/credit boom than it did.

However the double-whammy is that the UK would now be affected even more by the credit crunch, and would therefore now need to lower interest rates even more to kick-start the economy. But the euro interest rate is now higher than that for the pound, so it would be making things even worse.

In short, the most important tool for controlling and economy is interest rates. Having one interest rate being applied to several different economies (as is the case with the euro) is a recipe for disaster. Yes the pound is tanking, but the UK economy as a whole is in a better situation than it would be if it were tied to the euro.

Last edited by Legazpi; 14th December 2008 at 12:19 PM.
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