What drives a monetary system

Why don't the British take part in monetary union? (Archive)

This text is an archive text, it will no longer be updated. Great Britain is no longer a member of the European Union.

In principle, the EU states that met the convergence criteria had to introduce the euro on January 1, 1999 - this is what the Maastricht Treaty says. Only Great Britain and Denmark had kept the option of not participating in monetary union open - even if they were to meet the convergence criteria (opting-out clause). The British government will leave the decision on whether to participate in Economic and Monetary Union to a referendum.

The UK government argued that the country was at a different stage in the economic cycle than the rest of the EU. Vital areas of the British economy are not yet ready. Great Britain has not yet been a member of the European Monetary System II. A two-year membership is a prerequisite for the introduction of the euro.

With its eurosceptic stance, Great Britain is continuing its line of tradition in European politics. So far, the island has acted rather wait-and-see in all direction-setting decisions. Great Britain did not join the EC until 1973, initially did not want to participate in the EU internal market and did not want to adopt the social protocol of the Maastricht Treaty. After a period of deliberation, however, the country has always decided to go along with what was initially a very critical step towards integration.

Financial crisis: decline in British currency drives debate over euro
If the national pride of the British could be read from an exchange rate diagram, it would be completely in the basement after a steep dive. The beloved British currency, the pound, rushes to ever new lows. All Brits who would like to spend their ski holidays in the euro country this year are poorly off. On the other hand, king is whoever travels to the island with euros in their pockets. A trip to the luxury department store Harrods at Christmas can almost turn into a bargain tour.

This week the pound even approached the exchange rate of 1: 1 to the euro. A shock for the British, who are already badly shaken because of the financial crisis. The island's eurosceptics are now closer to the introduction of the euro than ever before.

That might sound a little exaggerated. But the fall of the pound is dramatic, and the question of whether Britain would not be better off under the umbrella of the unloved euro in the financial crisis has probably already been secretly asked by many politicians. If the traveler got just 103 euros for 100 pounds this week at the Eurostar station in London, eight years ago it was 65 euros more, newspapers calculated for the insecure British. There was talk of a “catastrophe” and a “debacle”. On Thursday, the pound officially fell to 1.127 euros - a low since the euro was introduced as book money in 1999.

Prime Minister Gordon Brown is now careful not to be too hastily drawn into a euro debate. This is currently not an issue, the prime minister recently brushed aside Barroso's remarks. His Minister of Economics, Peter Mandelson, on the other hand, provided new topics for discussion. In the long term, joining the euro zone is targeted, he said. Only now, nobody wants to know anything about the euro. But the subject is on the table: "You can't stop people from thinking," said economist Will Hutton. The euro is lurking in the anteroom of Downing Street, so to speak.

Because the prospects are still bleak. The English central bank recently cut interest rates to two percent - the lowest it has been in 57 years. And low interest rates make it less attractive for investors to hold pounds. The UK is also expected to slide into recession in the coming year. The expected high national debt also calls doubters on the scene. The prospect that British exports will be more in demand with a weak pound is not comforting either. Because Great Britain does not live from industry but mainly from the service sector.

In addition to the euro earners (the “happiest people in the world”, as a BBC moderator put it), the tourism industry in the country is happy about the currency's decline. "In a way, that's good news for us," said PR manager Elliott Frisby from the Visit Britain tourist office, "we're going to point out to people in Germany or France that there are great offers for Great Britain."



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