Single Currency To Britain's Business Sector example essay topic

The debate has waged for several years now, ever since news of a single European Economic Union came first surfaced nearly fifteen years ago. The idea was simple, and focused on allowing multi-national European countries greater ease, and cost effective benefits when trading between countries. In a sense, the EEC was trying to implement an economic model similar to that of the United States, where amongst all fifty of the states there existed a single currency under a central federal bank that controlled the national interest rate level and other currency issues. Thus trade between the states was eased, promoting companies both with nation-wide interests, and those wishing to build from regional to nation wide platforms. However, since the official launch of the "Euro" in January of 1999, Britain, along with Sweden and the Dutch population, have chosen to remain isolated from this conglomerate, creating what many term a "two-speed" European economy. But why does the Britain business sector choose to remain isolated from this currency?

This essay will attempt to examine both the positive and negative aspects of joining the single currency, while analyzing the forces behind Britain's involvement. So what exactly are the benefits of a single currency for Britain's business sector? First of all, firms that export a lot to other countries within the euro zone don't have to bear the costs of exchanging profits into their home currency anymore. Multinationals also save a lot of money if all their subsidiaries trade in the same currency. Smaller firms suddenly are finding customers in regions they thought they could never be bothered to export to. The disappearance of these transaction costs is bound to boost economic growth, and will make goods cheaper for consumers.

And even the weak euro has been a boon for the euro zone, as its exports to the United States and the UK have become more competitive. The Financial Times noted, while the value of the euro has been decreasing, exports have risen from 50 billion euros, to now 75 billion euros annually. Furthermore, one currency across Europe increases the urge for companies to do business across the continent. For a start, it is easier to raise the cash to do a deal. Secondly, the fact of the single currency makes it easier to do business in other European countries, encouraging companies already lured by the prospect of boosting their revenues by entering new markets.

As George Jacobs stated, business strategies have been revolutionized, "Everybody is now forced to think in Continental or Global terms because there is no such thing as a national market". This has helped national business sectors expand, and begin to compete on a global level against larger western companies. It is unarguable, that these outcomes would be most beneficial to British companies, but the question remains, at least in the eyes of the British business sector, as to whether these outcomes are a possibility or just a myth dreamed up by EU officials in Belgium. However it is important to note, regardless of whether these outcomes are myths or not, the actual importance of joining a single currency to Britain's business sector is startling. The majority of Britain's business sector has a consumer base which is not contained within the U.K., but rather pan-European. The U.K. market is quite small, and while there remains a few business that only cater to this market, the majority focus on targeting the entire European market base.

In fact, it was reported in The Wall Street Journal's European Edition that, "Over 75% of Britain's business sector has a consumer market base, corporate or otherwise, which spans outside of the U.K. primarily into the European sector". Thus joining the single currency cannot merely be viewed as.