United Kingdom and the euro
Encyclopedia
The United Kingdom
's currency is the pound sterling
and it has no plans to adopt the euro
in the foreseeable future. The UK negotiated an opt-out
from the part of the Maastricht Treaty
that required it to adopt the common currency, and the coalition government elected in 2010 pledged not to join the euro for the lifetime of the parliament.
British public opinion has consistently opposed joining the euro. Opinion polls in 2005 (57 percent opposed), 11–12 December 2008 (59 percent opposed) and 6–8 January 2009 (64 percent saying they would vote no to a change of currency) demonstrate this opposition. In a poll taken for BBC Radio 4 between 19–21 December 2008, 71% of respondents said they would vote No whilst 23% of participants would vote Yes, and 6% were undecided. The economic recession in Britain and the fall in value of the pound have not contributed to a change in public opinion. A poll conducted in early May 2009, showed increased opposition, with 75% of respondents pledging to vote against joining the euro. However, an April 2010 YouGov
poll, the percentage of people not wanting to join the euro and the percentage of people wanting to join the euro decreased, by 10% and 2% respectively, and the percentage of unsure people increased by 12%, in comparison to the poll by the ICM in the previous year. By August 2011 the percentage of people not wanting to join the euro reached a new high of 85%.
declared that "five economic tests
" must be passed before the government could recommend the UK joining the euro
and promised to hold a referendum on membership if those five economic tests were met. The UK would also have to meet the EU's
economic convergence criteria
(Maastricht criteria), before being allowed to adopt the euro. Currently, the UK's annual government deficit to the GDP
is above the defined threshold. The government committed itself to a triple-approval procedure before joining the Eurozone
, involving approval by the Cabinet
, Parliament
, and the electorate in a referendum
.
Gordon Brown
, Blair's successor, ruled out membership in 2007, saying that the decision not to join had been right for Britain and for Europe
.
In the UK general election 2010, the Liberal Democrats
increased their share of the vote, but lost seats. One of their aims was to see the UK rejoining ERM II and eventually joining the Euro, but when a coalition was formed between the Liberal Democrats and the Conservatives
, the Liberal Democrats agreed that the UK would not join the euro during this term of government.
was published on 9 June 2003 by Gordon Brown
, when he was Chancellor of the Exchequer
. Though maintaining the government's positive view on the euro, the report opposed membership because four out of the five tests were not passed. However, the 2003 document also noted the considerable progress of the UK towards satisfying the five tests since 1997, and the desirability of making policy decisions to adapt the UK economy to better satisfy the tests in future. It cited considerable long-term benefits to be gained from eventual, prudently-conducted EMU membership.
Some believe that removing the United Kingdom's ability to set its own interest rates would have detrimental effects on its economy. One argument is that currency flexibility is a vital tool and that the sharp devaluation of sterling in 2008 was just what Britain needed to rebalance its economy. Another objection is that many continental European governments have large unfunded pension liabilities. They fear that if Britain adopts the euro, these liabilities could put a debt burden on the British taxpayer, though others have dismissed this argument as spurious.
Some argue that as intra-European exports are 60% of the UK's total exports, a single currency would enhance the single market by reducing the cost of exchanging currency for businesses and travellers, and reducing currency risk. An interesting parallel can be seen in the 19th century discussions concerning the possibility of the UK joining the Latin Monetary Union
.
Academic research on the effect of an entry on the UK economy has generally found that it would have a positive effect. The most evident impact would likely be a positive effect on trade with the other members of the Eurozone. It could also have a stabilizing effect on the stock market prices in the UK. A simulation of the entry in 1999 found that it would have had an overall positive, though small, effect in the long term on the UK GDP if the entry had been made with the rate of exchange of the pound to the euro at that time. With a lower rate of exchange, the entry would have had more clearly a positive effect on the UK GDP. A 2009 study about the effect of an entry in the coming years found that the effect would likely be positive, improving the stability for the UK economy.
In June 2003, Gordon Brown stated that the best exchange rate for the UK to join the euro would be around 73 pence per euro. (On 26 May 2003 the Euro had reached 72.100, a value not exceeded until 21 December 2007). The euro rose above 80 pence in 2008 and peaked at 97.855p on 29 December 2008. With the impact of the Global financial crisis of 2008 on the British economy: failing banks, plunging UK property values and the pound at 85.98p against the euro on 19 November 2008, some British analysts stated that adopting the euro was far preferable to any other possible solutions for Britain's economic problems. On 29 December 2008, the BBC reported that the euro had reached roughly 97.7p, due to poorer economic forecasts. This report stated that many analysts believed that parity with the euro was only a matter of time.
During 2009, the value of the euro against the pound fluctuated between 96.100p on 2 January and 84.255p on 22 June. In 2010 the value of the euro against the pound fluctuated between 91.140p on 10 March and 81.040p on 29 June. On 31 December 2010 the euro closed at 86.075p. The weakness and the volatility of the pound have raised concerns for the costs it entails for British consumers at home, and Britons living or travelling abroad. On the other hand, a report in Britain's Daily Telegraph has argued that the high euro has caused problems in the eurozone outside Germany. The Liberal Democrats have expressed interest in seeing Britain join the euro in the long term.
believe the single currency is merely a stepping stone to a unified European superstate which they strongly reject, or argue against it on other grounds. In December 2008, bookmakers were offering odds-on bets that the United Kingdom would adopt the euro by 2014.
were to join the eurozone, this would affect the Crown dependencies
and some British overseas territories that also use the pound sterling
, or which have a currency on a par with sterling. In the Crown Dependencies, the Isle of Man, Jersey
, Guernsey
, and Alderney
pounds all share the ISO 4217
code GBP. In the British Overseas Territories
, the Gibraltar
, Falkland Islands
, British Indian Ocean Territory
and Saint Helena pounds are also fixed so that £1 in the local currency equals £1 in sterling. The British Antarctic Territory
and South Georgia and the South Sandwich Islands
do not have their own currencies and use the pound sterling.
When France adopted the euro, so did the French overseas departments and territories that used the French franc
. The CFP franc
, the CFA franc
and the Comorian franc
, that are used in overseas territories and some African countries, had fixed exchange rates with the French franc, but not at par – for various historical reasons they were worth considerably less, at 1 French franc = 18.2 CFP francs, 75 Comorian francs or 100 CFA francs. The CFA franc and the Comorian franc are linked to the euro at fixed rates with free convertibility maintained at the expense of the French Treasury
. The CFP franc is linked to the euro at a fixed rate.
It has been suggested that the sterling zone territories therefore have four options:
Gibraltar
is in a separate position, as it is within the EU (as part of the UK's membership). If the UK were to adopt the euro it might not be possible to implement an opt-out for Gibraltar. It is unclear whether Gibraltar would be subject to its own referendum or would be included in a UK referendum, since Gibraltar votes as a part of the UK in European parliamentary elections.
and Northern Ireland
print and issue banknotes of their own design. The Banking Act, 2008 amended the right of Scottish and Northern Irish banks to produce banknotes. This does not apply in Wales
which uses Bank of England
notes.
In November 1999, in preparation for the introduction of the euro notes and coins across the Eurozone
, the European Central Bank
announced a total ban on the issuing of banknotes by entities that were not National Central Banks ('Legal Protection of Banknotes in the European Union Member States'). A move from sterling to the euro would end the circulation of sub-national banknotes as all euro banknotes have an identical design. However, as national variation is a requisite of euro coins, it remains an option for the Royal Mint to incorporate the symbols of the Home Nations
into its designs for the British national sides of euro coinage.
's biggest redesign of the national currency since decimalisation
in 1971. German newspaper Der Spiegel
suggested that this decision was to reinforce the idea that the euro will not be adopted in the UK for a long while. It is however an unwritten convention that the coin designs should be changed every 40 years to keep the coinage fresh.
, the First Minister of Scotland
called for more Scottish businesses to accept the euro to encourage tourism from the Eurozone, noting that this is already done by organisations such as Historic Scotland
.
At that time, some shops in Northern Ireland
accepted the euro at parity, causing a large influx of shoppers from across the Irish border
. This made some shops the most successful in their company for several weeks.
Between February 2009 and March 2010 the value of the pound fluctuated between 84 and 95 pence per euro. This compares with its value between March and October 2008, when the value of the euro was about 78 pence, and its value of about 70 pence between April 2003 and August 2007. The lowest value of the pound was on 29 December 2008, when it took 97.855 pence to buy one euro.
are against joining the Euro.
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
's currency is the pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
and it has no plans to adopt the euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
in the foreseeable future. The UK negotiated an opt-out
Opt-outs in the European Union
In general, the law of the European Union is valid in all of the twenty-seven European Union member states. However, occasionally member states negotiate certain opt-outs from legislation or treaties of the European Union, meaning they do not have to participate in certain policy areas...
from the part of the Maastricht Treaty
Maastricht Treaty
The Maastricht Treaty was signed on 7 February 1992 by the members of the European Community in Maastricht, Netherlands. On 9–10 December 1991, the same city hosted the European Council which drafted the treaty...
that required it to adopt the common currency, and the coalition government elected in 2010 pledged not to join the euro for the lifetime of the parliament.
British public opinion has consistently opposed joining the euro. Opinion polls in 2005 (57 percent opposed), 11–12 December 2008 (59 percent opposed) and 6–8 January 2009 (64 percent saying they would vote no to a change of currency) demonstrate this opposition. In a poll taken for BBC Radio 4 between 19–21 December 2008, 71% of respondents said they would vote No whilst 23% of participants would vote Yes, and 6% were undecided. The economic recession in Britain and the fall in value of the pound have not contributed to a change in public opinion. A poll conducted in early May 2009, showed increased opposition, with 75% of respondents pledging to vote against joining the euro. However, an April 2010 YouGov
YouGov
YouGov, formerly known as PollingPoint in the United States, is an international internet-based market research firm launched in the UK in May 2000 by Stephan Shakespeare, now Chief Executive Officer, and Nadhim Zahawi...
poll, the percentage of people not wanting to join the euro and the percentage of people wanting to join the euro decreased, by 10% and 2% respectively, and the percentage of unsure people increased by 12%, in comparison to the poll by the ICM in the previous year. By August 2011 the percentage of people not wanting to join the euro reached a new high of 85%.
History
The government of former Prime Minister Tony BlairTony Blair
Anthony Charles Lynton Blair is a former British Labour Party politician who served as the Prime Minister of the United Kingdom from 2 May 1997 to 27 June 2007. He was the Member of Parliament for Sedgefield from 1983 to 2007 and Leader of the Labour Party from 1994 to 2007...
declared that "five economic tests
Five economic tests
The five economic tests were the criteria defined by the UK treasury under Gordon Brown that were to be used to assess the UK's readiness to join the Economic and Monetary Union of the European Union , and so adopt the euro as its official currency...
" must be passed before the government could recommend the UK joining the euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
and promised to hold a referendum on membership if those five economic tests were met. The UK would also have to meet the EU's
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
economic convergence criteria
Convergence criteria
The euro convergence criteria are the criteria for European Union member states to enter the third stage of European Economic and Monetary Union and adopt the euro as their currency...
(Maastricht criteria), before being allowed to adopt the euro. Currently, the UK's annual government deficit to the GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
is above the defined threshold. The government committed itself to a triple-approval procedure before joining the Eurozone
Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...
, involving approval by the Cabinet
Cabinet of the United Kingdom
The Cabinet of the United Kingdom is the collective decision-making body of Her Majesty's Government in the United Kingdom, composed of the Prime Minister and some 22 Cabinet Ministers, the most senior of the government ministers....
, Parliament
Parliament of the United Kingdom
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...
, and the electorate in a referendum
Referendums in the United Kingdom
Referendums are only occasionally held by the government of the United Kingdom. Eleven referendums have been held so far , the first in 1973; only two of these covered the whole UK...
.
Gordon Brown
Gordon Brown
James Gordon Brown is a British Labour Party politician who was the Prime Minister of the United Kingdom and Leader of the Labour Party from 2007 until 2010. He previously served as Chancellor of the Exchequer in the Labour Government from 1997 to 2007...
, Blair's successor, ruled out membership in 2007, saying that the decision not to join had been right for Britain and for Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
.
In the UK general election 2010, the Liberal Democrats
Liberal Democrats
The Liberal Democrats are a social liberal political party in the United Kingdom which supports constitutional and electoral reform, progressive taxation, wealth taxation, human rights laws, cultural liberalism, banking reform and civil liberties .The party was formed in 1988 by a merger of the...
increased their share of the vote, but lost seats. One of their aims was to see the UK rejoining ERM II and eventually joining the Euro, but when a coalition was formed between the Liberal Democrats and the Conservatives
Conservative Party (UK)
The Conservative Party, formally the Conservative and Unionist Party, is a centre-right political party in the United Kingdom that adheres to the philosophies of conservatism and British unionism. It is the largest political party in the UK, and is currently the largest single party in the House...
, the Liberal Democrats agreed that the UK would not join the euro during this term of government.
Economics
An assessment of British membership based on five economic testsFive economic tests
The five economic tests were the criteria defined by the UK treasury under Gordon Brown that were to be used to assess the UK's readiness to join the Economic and Monetary Union of the European Union , and so adopt the euro as its official currency...
was published on 9 June 2003 by Gordon Brown
Gordon Brown
James Gordon Brown is a British Labour Party politician who was the Prime Minister of the United Kingdom and Leader of the Labour Party from 2007 until 2010. He previously served as Chancellor of the Exchequer in the Labour Government from 1997 to 2007...
, when he was Chancellor of the Exchequer
Chancellor of the Exchequer
The Chancellor of the Exchequer is the title held by the British Cabinet minister who is responsible for all economic and financial matters. Often simply called the Chancellor, the office-holder controls HM Treasury and plays a role akin to the posts of Minister of Finance or Secretary of the...
. Though maintaining the government's positive view on the euro, the report opposed membership because four out of the five tests were not passed. However, the 2003 document also noted the considerable progress of the UK towards satisfying the five tests since 1997, and the desirability of making policy decisions to adapt the UK economy to better satisfy the tests in future. It cited considerable long-term benefits to be gained from eventual, prudently-conducted EMU membership.
Some believe that removing the United Kingdom's ability to set its own interest rates would have detrimental effects on its economy. One argument is that currency flexibility is a vital tool and that the sharp devaluation of sterling in 2008 was just what Britain needed to rebalance its economy. Another objection is that many continental European governments have large unfunded pension liabilities. They fear that if Britain adopts the euro, these liabilities could put a debt burden on the British taxpayer, though others have dismissed this argument as spurious.
Some argue that as intra-European exports are 60% of the UK's total exports, a single currency would enhance the single market by reducing the cost of exchanging currency for businesses and travellers, and reducing currency risk. An interesting parallel can be seen in the 19th century discussions concerning the possibility of the UK joining the Latin Monetary Union
Latin Monetary Union
The Latin Monetary Union was a 19th century attempt to unify several European currencies, at a time when most circulating coins were still made of gold and silver...
.
Academic research on the effect of an entry on the UK economy has generally found that it would have a positive effect. The most evident impact would likely be a positive effect on trade with the other members of the Eurozone. It could also have a stabilizing effect on the stock market prices in the UK. A simulation of the entry in 1999 found that it would have had an overall positive, though small, effect in the long term on the UK GDP if the entry had been made with the rate of exchange of the pound to the euro at that time. With a lower rate of exchange, the entry would have had more clearly a positive effect on the UK GDP. A 2009 study about the effect of an entry in the coming years found that the effect would likely be positive, improving the stability for the UK economy.
In June 2003, Gordon Brown stated that the best exchange rate for the UK to join the euro would be around 73 pence per euro. (On 26 May 2003 the Euro had reached 72.100, a value not exceeded until 21 December 2007). The euro rose above 80 pence in 2008 and peaked at 97.855p on 29 December 2008. With the impact of the Global financial crisis of 2008 on the British economy: failing banks, plunging UK property values and the pound at 85.98p against the euro on 19 November 2008, some British analysts stated that adopting the euro was far preferable to any other possible solutions for Britain's economic problems. On 29 December 2008, the BBC reported that the euro had reached roughly 97.7p, due to poorer economic forecasts. This report stated that many analysts believed that parity with the euro was only a matter of time.
During 2009, the value of the euro against the pound fluctuated between 96.100p on 2 January and 84.255p on 22 June. In 2010 the value of the euro against the pound fluctuated between 91.140p on 10 March and 81.040p on 29 June. On 31 December 2010 the euro closed at 86.075p. The weakness and the volatility of the pound have raised concerns for the costs it entails for British consumers at home, and Britons living or travelling abroad. On the other hand, a report in Britain's Daily Telegraph has argued that the high euro has caused problems in the eurozone outside Germany. The Liberal Democrats have expressed interest in seeing Britain join the euro in the long term.
Non-economic factors
Some British euroscepticsEuroscepticism
Euroscepticism is a general term used to describe criticism of the European Union , and opposition to the process of European integration, existing throughout the political spectrum. Traditionally, the main source of euroscepticism has been the notion that integration weakens the nation state...
believe the single currency is merely a stepping stone to a unified European superstate which they strongly reject, or argue against it on other grounds. In December 2008, bookmakers were offering odds-on bets that the United Kingdom would adopt the euro by 2014.
Sterling zone
If the United KingdomUnited Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
were to join the eurozone, this would affect the Crown dependencies
Crown dependency
The Crown Dependencies are British possessions of the Crown, as opposed to overseas territories of the United Kingdom. They comprise the Channel Island Bailiwicks of Jersey and Guernsey in the English Channel, and the Isle of Man in the Irish Sea....
and some British overseas territories that also use the pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
, or which have a currency on a par with sterling. In the Crown Dependencies, the Isle of Man, Jersey
Jersey pound
The pound is the currency of Jersey. Jersey is in currency union with the United Kingdom, and the Jersey pound is not a separate currency but is an issue of banknotes and coins by the States of Jersey denominated in pound sterling, in a similar way to the banknotes issued in Scotland and Northern...
, Guernsey
Guernsey pound
The pound is the currency of Guernsey. Since 1921, Guernsey has been in currency union with the United Kingdom and the Guernsey pound is not a separate currency but is a local issue of banknotes and coins denominated in pound sterling, in a similar way to the banknotes issued in Scotland and...
, and Alderney
Alderney pound
The island of Alderney has its own currency, which by law must be the same as the United Kingdom .Schedule 2 of the Government of Alderney Law provides that the States of Alderney may, by Ordinance, prescribe "the legal currency and denominations of the legal currency, so however that that...
pounds all share the ISO 4217
ISO 4217
ISO 4217 is a standard published by the International Standards Organization, which delineates currency designators, country codes , and references to minor units in three tables:* Table A.1 – Current currency & funds code list...
code GBP. In the British Overseas Territories
British overseas territories
The British Overseas Territories are fourteen territories of the United Kingdom which, although they do not form part of the United Kingdom itself, fall under its jurisdiction. They are remnants of the British Empire that have not acquired independence or have voted to remain British territories...
, the Gibraltar
Gibraltar pound
The Gibraltar pound is the currency of Gibraltar. It is exchangeable with the UK pound sterling at par value.-History:...
, Falkland Islands
Falkland Islands pound
The pound is the currency of the Falkland Islands, a British Overseas Territory in the South Atlantic Ocean. The symbol is the pound sign, £, or alternatively FK£, to distinguish it from other pound-denominated currencies...
, British Indian Ocean Territory
British Indian Ocean Territory
The British Indian Ocean Territory or Chagos Islands is an overseas territory of the United Kingdom situated in the Indian Ocean, halfway between Africa and Indonesia...
and Saint Helena pounds are also fixed so that £1 in the local currency equals £1 in sterling. The British Antarctic Territory
British Antarctic Territory
The British Antarctic Territory is a sector of Antarctica claimed by the United Kingdom as one of its 14 British Overseas Territories. It comprises the region south of 60°S latitude and between longitudes and , forming a wedge shape that extends to the South Pole...
and South Georgia and the South Sandwich Islands
South Georgia and the South Sandwich Islands
South Georgia and the South Sandwich Islands is a British overseas territory and overseas territory of the European Union in the southern Atlantic Ocean. It is a remote and inhospitable collection of islands, consisting of South Georgia and a chain of smaller islands, known as the South Sandwich...
do not have their own currencies and use the pound sterling.
When France adopted the euro, so did the French overseas departments and territories that used the French franc
French franc
The franc was a currency of France. Along with the Spanish peseta, it was also a de facto currency used in Andorra . Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money...
. The CFP franc
CFP franc
The CFP franc is the currency used in the French overseas collectivities of French Polynesia, New Caledonia and Wallis and Futuna. The initials CFP originally stood for Colonies Françaises du Pacifique...
, the CFA franc
CFA franc
The CFA franc is the name of two currencies used in Africa which are guaranteed by the French treasury. The two CFA franc currencies are the West African CFA franc and the Central African CFA franc...
and the Comorian franc
Comorian franc
The franc is the official currency of Comoros. It is nominally subdivided into 100 centimes, although no centime denominations have ever been issued.-History:...
, that are used in overseas territories and some African countries, had fixed exchange rates with the French franc, but not at par – for various historical reasons they were worth considerably less, at 1 French franc = 18.2 CFP francs, 75 Comorian francs or 100 CFA francs. The CFA franc and the Comorian franc are linked to the euro at fixed rates with free convertibility maintained at the expense of the French Treasury
Trésor public
The Trésor public is the national administration of the Treasury in France. It is headed by the general direction of public accountancy in the Ministry of the Economy, Finance and Industry....
. The CFP franc is linked to the euro at a fixed rate.
It has been suggested that the sterling zone territories therefore have four options:
- Enter the eurozone as a non-EU member and issue a distinct national variant of the euro—just as Monaco and the VaticanVatican euro coinsVatican euro coins are issued by the Philatelic and Numismatic Office of the Vatican City State and minted by Istituto Poligrafico e Zecca dello Stato , in Rome, Italy...
have done. The EU has demanded that 'monetary agreements' be entered into by non-EU members who wish to issue their own euro coinage, and has pressured AndorraAndorran euro coinsAndorran–European relations are based on a customs union between the Andorra and the European Union .-Customs Union:The "Agreement between the European Economic Community and the Principality of Andorra" establishes a customs union with most favoured nation status between the EU...
into not issuing their own coins until this is resolved. Such agreements, the EU has stated, must include adherence to EU banking and finance regulation. - Use standard euro coins issued by the UK and other eurozone countries. This may be perceived by some as losing an important symbol of independence.
- Maintain their existing currency, but peg at a fixed rate with the euro. Maintaining a fixed rate against currency speculators can be extremely expensive, as the UK found on Black WednesdayBlack WednesdayIn politics and economics, Black Wednesday refers to the events of 16 September 1992 when the British Conservative government was forced to withdraw the pound sterling from the European Exchange Rate Mechanism after they were unable to keep it above its agreed lower limit...
. However, if the UK supports the keeping of the fixed rates of these small currencies, it would be so trustworthy that no speculation would take place. - Adopt a free-floating currency, or a currency fixed to another currency, as the JerseyJerseyJersey, officially the Bailiwick of Jersey is a British Crown Dependency off the coast of Normandy, France. As well as the island of Jersey itself, the bailiwick includes two groups of small islands that are no longer permanently inhabited, the Minquiers and Écréhous, and the Pierres de Lecq and...
government has hinted.
Gibraltar
Gibraltar
Gibraltar is a British overseas territory located on the southern end of the Iberian Peninsula at the entrance of the Mediterranean. A peninsula with an area of , it has a northern border with Andalusia, Spain. The Rock of Gibraltar is the major landmark of the region...
is in a separate position, as it is within the EU (as part of the UK's membership). If the UK were to adopt the euro it might not be possible to implement an opt-out for Gibraltar. It is unclear whether Gibraltar would be subject to its own referendum or would be included in a UK referendum, since Gibraltar votes as a part of the UK in European parliamentary elections.
Banknotes
Currently, some private banks in ScotlandScotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...
and Northern Ireland
Northern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...
print and issue banknotes of their own design. The Banking Act, 2008 amended the right of Scottish and Northern Irish banks to produce banknotes. This does not apply in Wales
Wales
Wales is a country that is part of the United Kingdom and the island of Great Britain, bordered by England to its east and the Atlantic Ocean and Irish Sea to its west. It has a population of three million, and a total area of 20,779 km²...
which uses Bank of England
Bank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...
notes.
In November 1999, in preparation for the introduction of the euro notes and coins across the Eurozone
Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...
, the European Central Bank
European Central Bank
The European Central Bank is the institution of the European Union that administers the monetary policy of the 17 EU Eurozone member states. It is thus one of the world's most important central banks. The bank was established by the Treaty of Amsterdam in 1998, and is headquartered in Frankfurt,...
announced a total ban on the issuing of banknotes by entities that were not National Central Banks ('Legal Protection of Banknotes in the European Union Member States'). A move from sterling to the euro would end the circulation of sub-national banknotes as all euro banknotes have an identical design. However, as national variation is a requisite of euro coins, it remains an option for the Royal Mint to incorporate the symbols of the Home Nations
Home Nations
Home Nations is a collective term with one of two meanings depending on the context. Politically, it means the nations of the constituent countries of the United Kingdom...
into its designs for the British national sides of euro coinage.
New Sterling coin designs
The United Kingdom released new coin designs in 2008 following the Royal MintRoyal Mint
The Royal Mint is the body permitted to manufacture, or mint, coins in the United Kingdom. The Mint originated over 1,100 years ago, but since 2009 it operates as Royal Mint Ltd, a company which has an exclusive contract with HM Treasury to supply all coinage for the UK...
's biggest redesign of the national currency since decimalisation
Decimalisation
Decimal currency is the term used to describe any currency that is based on one basic unit of currency and a sub-unit which is a power of 10, most commonly 100....
in 1971. German newspaper Der Spiegel
Der Spiegel
Der Spiegel is a German weekly news magazine published in Hamburg. It is one of Europe's largest publications of its kind, with a weekly circulation of more than one million.-Overview:...
suggested that this decision was to reinforce the idea that the euro will not be adopted in the UK for a long while. It is however an unwritten convention that the coin designs should be changed every 40 years to keep the coinage fresh.
Parity with the euro
During the final months of 2008, the pound declined in value dramatically against the euro. This led many to believe that parity between the pound and the euro was imminent and created some media discussion about the possibility of adopting the euro. Alex SalmondAlex Salmond
Alexander Elliot Anderson "Alex" Salmond MSP is a Scottish politician and current First Minister of Scotland. He became Scotland's fourth First Minister in May 2007. He is the Leader of the Scottish National Party , having served as Member of the Scottish Parliament for Gordon...
, the First Minister of Scotland
First Minister of Scotland
The First Minister of Scotland is the political leader of Scotland and head of the Scottish Government. The First Minister chairs the Scottish Cabinet and is primarily responsible for the formulation, development and presentation of Scottish Government policy...
called for more Scottish businesses to accept the euro to encourage tourism from the Eurozone, noting that this is already done by organisations such as Historic Scotland
Historic Scotland
Historic Scotland is an executive agency of the Scottish Government, responsible for historic monuments in Scotland.-Role:As its website states:...
.
At that time, some shops in Northern Ireland
Northern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...
accepted the euro at parity, causing a large influx of shoppers from across the Irish border
Republic of Ireland
Ireland , described as the Republic of Ireland , is a sovereign state in Europe occupying approximately five-sixths of the island of the same name. Its capital is Dublin. Ireland, which had a population of 4.58 million in 2011, is a constitutional republic governed as a parliamentary democracy,...
. This made some shops the most successful in their company for several weeks.
Between February 2009 and March 2010 the value of the pound fluctuated between 84 and 95 pence per euro. This compares with its value between March and October 2008, when the value of the euro was about 78 pence, and its value of about 70 pence between April 2003 and August 2007. The lowest value of the pound was on 29 December 2008, when it took 97.855 pence to buy one euro.
Polls
Polls on the question of whether the UK should join the euro. The wording of the question may have varied, but the figures show that the majority of British peopleBritish people
The British are citizens of the United Kingdom, of the Isle of Man, any of the Channel Islands, or of any of the British overseas territories, and their descendants...
are against joining the Euro.
| Date | YES | NO | Unsure | Number of participants | Held by | Ref |
|---|---|---|---|---|---|---|
| 9–10 June 2003 | 33% | 61% | 7% | 1852 | YouGov YouGov YouGov, formerly known as PollingPoint in the United States, is an international internet-based market research firm launched in the UK in May 2000 by Stephan Shakespeare, now Chief Executive Officer, and Nadhim Zahawi... |
|
| 10–15 February 2005 | 26% | 57% | 16% | 2103 | Ipsos MORI | |
| 11–12 December 2008 | 24% | 59% | 17% | 2098 | YouGov YouGov YouGov, formerly known as PollingPoint in the United States, is an international internet-based market research firm launched in the UK in May 2000 by Stephan Shakespeare, now Chief Executive Officer, and Nadhim Zahawi... |
|
| 19–21 December 2008 | 23% | 71% | 6% | 1000 | ICM ICM -Organizations:*International Confederation of Midwives* International Creative Management, a talent and literary agency* ICM Research, a polling company ; a subsidiary of Creston plc, a marketing services company registered in England and Wales* ICM Registry LLC, the company that sponsors the .xxx... |
|
| 6–9 January 2009 | 24% | 64% | 12% | 2157 | YouGov YouGov YouGov, formerly known as PollingPoint in the United States, is an international internet-based market research firm launched in the UK in May 2000 by Stephan Shakespeare, now Chief Executive Officer, and Nadhim Zahawi... |
|
| 1–4 May 2009 | 23% | 75% | 2% | 1002 | ICM ICM -Organizations:*International Confederation of Midwives* International Creative Management, a talent and literary agency* ICM Research, a polling company ; a subsidiary of Creston plc, a marketing services company registered in England and Wales* ICM Registry LLC, the company that sponsors the .xxx... |
|
| 17–18 April 2010 | 21% | 65% | 14% | 1433 | YouGov YouGov YouGov, formerly known as PollingPoint in the United States, is an international internet-based market research firm launched in the UK in May 2000 by Stephan Shakespeare, now Chief Executive Officer, and Nadhim Zahawi... |
|
| 2-4 July 2011 | 8% | 81% | 11% | 2002 | Angus Reid Angus Reid Public Opinion Angus Reid Public Opinion is an international public affairs practice. It was established in 2006 under the name Angus Reid Strategies by Dr Angus Reid, a Canadian sociologist who founded his first research company in 1979. Reid sold the Angus Reid Group to Paris-based Ipsos SA in 2000... |
|
| 9-12 August 2011 | 9% | 85% | 6% | 2700 | YouGov YouGov YouGov, formerly known as PollingPoint in the United States, is an international internet-based market research firm launched in the UK in May 2000 by Stephan Shakespeare, now Chief Executive Officer, and Nadhim Zahawi... |
External links
- HM Treasury – Official UK Treasury euro website
- European Central Bank – Graph showing euro-sterling exchange-rate from 1999 to the present
- The UK's five tests BBC
- Reuters – Factbox - A look at sterling milestones as euro parity looms
- What has Europe ever done for us? A humorous argument against Eurosceptics