What would be the likely impact on the UK economy if the Euro was adopted?
Chapter 5 – Analysis and interpretation of results
1 . Introduction to chapter
This chapter discusses about trade and exports between UK and other EU countries and various possibilities of positive and negative impacts of trade and exports after EU have adopted Euro and some of countries economy such as Germany and Spain have grown to a large extent in terms of industrial exports and in real estate development
2 . Analysis and interpretation of results
Germany and France have maximized the advantage of the emergence of Euro currency and have reformed its domestic [banner_entry_middle]
as well international economic policies including labor reforms which are the primary reasons for fast development of economy . On the other hand , France and Holland continue to endeavor to stabilize the economy resulting in its slower growth of economy as compared to Germany and Spain
Research Question 1 – Will trade between the UK and other European countries using EMU increase if the UK adopted the Euro
In an article written by Laurent Fabius , German Finance Minister for the economy (2001 ) the overall functioning of financial capital markets in entire EU countries have witnessed a significant change in bond market Also a large amount of discrepancies were removed that were previously suffered by EU countries due to currency crisis , weak currencies etc Adoption of euro as currency has enabled a new direction to tax reforms and fiscal policies . Germany and France in to boost economic expansion with the adoption of euro , have expanded capital and labor market . Euro successfully ensured such reforms and responded to new challenges of respective countries
Chief Economist Marc Touati Monthly Economic Report (2007 ) states that France recorded a trade deficit of 30 billion of Euros in 2006 and 2007 For the year 2007 , the growth in France is expected to be low as there are less exports , more imports , less investments which results in less growth . There are also less job creations and limited purchasing power
Spain gained massively with the advantage of adoption of euro currency In an extraordinary manner Spanish companies and people were offered an access to international markets and some of the companies like Telefonic , Banco Santander and ACS have become leaders in markets . In an article written by Sebastian Royo (2006 ) on The European Union and Economic Reforms : The case of Spain (WP ) the GDP of Spain in 2004 was 97 .2 There is a huge development in Spain ‘s infrastructure as well in FDI investments
Germany is the largest economy in euro zone . On an average there was a GDP growth of 6 per cent per annum ever since Germany adopted euro currency . Economist Peter Bofinder said The chief advantage of the euro is that it provides Germany with stable basis for its commerce within Europe
According to information blog of Federal Foreign office Berlin , as compared to the era of Deutschmark currency , Germany economy achieved more than half of country ‘s trade with the adoption of euro currency Also inflation in Germany since January 2002 had been… [banner_entry_footer]
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