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Euro-zone

            Prior to answering the effects of the entering of UK into the euro zone, we should state that this is not a very easy task (entering the euro zone). It is believed that sterling is overvalued against the euro. The farther the value is from the equilibrium value, the more difficult it would be for the UK to enter euro. However this overvaluation of the English currency seems to have beneficial effects for the UK, because it keeps the inflation in very low levels. A possible entrance in the euro zone would reverse this situation and could raise inflation. This could result in greater fluctuations in interest rates. Also Sterling strength has been more pronounced against the euro. It has been relatively stable against the euro over the last two years.
             On the other hand this overvaluation of the Sterling had as a result the fall in the profitability of trade, which also resulted in the raise of unemployment over the last two years. Also this overvaluation is closely related to the current account deficit. This is because over-valuation results in the economy importing cheaper goods and pushing out uncompetitive exports. However this is not the case with the other European countries, which have increased their surplus, through divergent investments in the manufacturing and service sector. This increase in surplus in the service and investment income has helped to reduce the overall deficit.
             According to Ajay Jaiswal an analysis of data for different regions with which the UK has trade suggests that euro has not hurt the UK manufacturing sector as much as other factors (like cheaper imports from Asia). This implies that euro is not the most dominant obstacle facing UK manufacturing. Many UK companies are relocating their production bases to Asia as compared to the euro zone.
             The service sector and investment income has prospered despite the level of exchange and downturns in the global economy.


Essays Related to Euro-zone

1. Changes in the Eurozone

Because of the differences among Eurozone nations and the problems that the Euro presents, this situation will not end without significant changes - and a complete breakup of the Eurozone is a distinct possibility. If the Eurozone falls apart, Greece financial issues will have much to do with it. ... Because Germany's economy relies so heavily on exports, the success of other Eurozone nations is one of its top priorities, and a breakup of the Eurozone would have positive and negative effects. ... However, a breakup of the Eurozone could also hurt Germany. ... Despite these hurdles that w...

  • Word Count: 1601
  • Approx Pages: 6
  • Grade Level: Undergraduate

2. European Debt - Financial Crisis

There are also 10 countries in Europe that are a part of the Eurozone but do not use the Euro as their currency. ... One major effect of multiple countries within the Eurozone is when a country within the Eurozone experiences a crisis it may affect the economic conditions of the other countries. ... There are different questions on what will happen to the Eurozone countries, will there be any countries that drop out? ... The main concern is should Greece stay or leave the Eurozone. ... A danger of Greece leaving the Eurozone would lead to an extremely costly Eurozone breakup. ...

  • Word Count: 1475
  • Approx Pages: 6
  • Has Bibliography
  • Grade Level: High School

3. Germany, Greece and Existing Debt

Since they are members of the Eurozone, Greece can't just print money to spend like the United States is able to do. ... Allowing their economy to deteriorate further would lead to a drop in international confidence in both the Euro and the Eurozone economy. ... Some also believe that they pursued their own national interests by unwillingly adjusting fiscal policy to help correct the Eurozone crisis. ... Of course there are different scenarios that could arise with the worst possibility being Greece leaving the Eurozone. All these scenarios depend on the projections by analysts on the imp...

  • Word Count: 731
  • Approx Pages: 3
  • Grade Level: High School

4. The Greek Debt Crisis

Since early 2010, the Eurozone has been facing a major debt crisis. Greece as a Eurozone nation from the mid-1990's have been persistently spending more than its total accrued tax revenues. ... The message from Europe was vote ''YES" or you will be out of the Eurozone. The "YES" vote will be in favor of Greece remaining a part of the 19-member Eurozone. ... If talks fail to resume, then Greece would be forced to live the Eurozone. ...

  • Word Count: 875
  • Approx Pages: 4
  • Has Bibliography

5. Should the UK Join the Euro?

These twelve countries have become part of the Eurozone which consists of Germany, France, Italy, Spain, Portugal, Belgium, Luxembourg, the Netherlands, Austria, Finland, Greece and Ireland, each of these countries in the Eurozone replaced their old national currencies with the Euro. ... This will happen because if Britain's economic structures and business structures become more like those of Eurozone nations then the incentive for investment in the UK is the same as it would be in the rest of the Eurozone, thus "creating better conditions for firms considering investment in the UK- than...

  • Word Count: 1513
  • Approx Pages: 6
  • Grade Level: Undergraduate

6. Consumerism and the Economy

The Eurozone, with a similar GDP in size (roughly 17 billion dollars), is 2.5% below. ... Many points, but two are evident: i) in the US, bank financing contributes to growth, but not so in Europe yet (it will do so in 2015), as it kept a financial system with relevant episodes of false balance sheets; the US recapitalized its banks in 2008, and thereby, we can infer that a banking system has contributed to GDP growth, and thus, to employment (6% unemployment vs. 11% in the Eurozone).  In the Eurozone, banks' assets are equivalent to 3.4 times our GDP; thus, in a banking crisis, we are m...

  • Word Count: 773
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7. Financial Defaults in Greece and Argentina

Argentina had pegged its own currency to the dollar. It still had its own currency the Pasco, so when things got messy and they defaulted they just unpegged their currency to the dollar. Yes the value plummeted to a mere 30% of what it was worth prior to the default but a depreciating currency has i...

  • Word Count: 487
  • Approx Pages: 2
  • Grade Level: Undergraduate

8. The Stability and Growth pPact

First, as the ECB clearly favors the SGP, there is the issue of whether some sort of pact could act as an effective coordination mechanism between fiscal and monetary policy in the eurozone (Buti, Roeger and in't Veld, 2001). ... The argument that a fiscal policy crisis in one member state could force higher interest rates in the eurozone as a whole is still the main fear of the ECB, and there is little empirical evidence that this would be the case (Eichengreen and Wyplosz, 1997). ...

  • Word Count: 1678
  • Approx Pages: 7
  • Grade Level: Graduate

9. The Debt Situation in Greece

The European Financial Stability Facility (EFSF) will be dispersing the next amount and the ECB and the IMF will monitor Greece very closely.3 In May 2010, they signed a three-year program, which would provide EUR80bn from Eurozone countries and EUR30bn from the IMF. ... The euro will again become a superior currency and European's can proudly honor the fundamentals of the Eurozone as a collective organization. ...

  • Word Count: 1464
  • Approx Pages: 6
  • Has Bibliography

10. Greece - From Boom to Bust

This pulled back a curtain of slightly meddled with statistics to reveal debt levels that exceeded limits set by the Eurozone ("Greece's Financial" para. 2). ... The second-best and more likely outcome is for Greece to leave the Eurozone [or European Union], voluntarily or involuntarily" ("Greece on Fire" para. 5). ...

  • Word Count: 1589
  • Approx Pages: 6
  • Grade Level: High School

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