emupc - The pros and cons of EMU by David Currie July 1997...

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The pros and cons of EMU by David Currie July 1997
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The pros and cons of EMU The pros and cons of EMU by David Currie This paper is an updated summary of a report published by the Economist Intelligence Unit in February 1997. That report was written with the support of: ABN-Amro Hoare Govett Banca Nazionale del Lavoro Deutsche Morgan Grenfell Kleinwort Benson Group Peregrine Investments Holdings Prudential Reuters J Rothschild Assurance N M Rothschild & Sons Schroders
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The pros and cons of EMU Preface T he introduction of the single currency in Europe raises issues that are of vital importance to this country’s interests. Whether or not the United Kingdom eventually participates in the single currency, it will affect us. British business has important markets and investments in Continental Europe, and European busi- nesses sell in Britain and invest in our industries. A single currency will affect our financial services. It will affect employment. We have a responsibility to get involved in the debate about the economic future of the Union. For too long the debate in Britain has been polarised by extreme views. The issues involved are complex and varied, and reasonable people may disagree about them. But it is essential that they are considered carefully and with proper regard for the facts. This report, by David Currie, is a summary of a paper which he wrote for the Economist Intelligence Unit earlier this year. It is an admirably clear and objective analysis of the issues surrounding EMU. I hope that by publishing his analysis in shorter and more accessible form the Government can help it to reach a wider audience, and shed further light on this important subject. The views expressed in the report are the author’s, and do not nec- essarily reflect the views of the Government. As the author states in his introduction, the report does not attempt to push a particular line, but to promote a better informed and more reasoned debate. Any decision about Britain joining the single currency must be determined by a hard-headed assessment of Britain’s economic interests. In the meantime I commend this report as an excellent survey of the issues. Iinn the Rt Hon Gordon Brown MP Chancellor of the Exchequer July 1997
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The pros and cons of EMU Contents 1 Introduction 1 Why EMU excites such strong emotions 1 The UK perspective 2 Will EMU happen? 3 Monetary Union and National Sovereignty 3 One money, one nation? 3 Money and the state 4 Internationalisation and the erosion of sovereignty 4 The exchange rate matters 5 Box: Is monetary freedom worth having? 6 The macroeconomic consequences of EMU 6 The ERM debacle does not seal EMU’s future 6 Savings of money and time 6 Controlling inflation 7 Government borrowing 8 Box: Unfunded pension liabilities: a hidden risk?
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emupc - The pros and cons of EMU by David Currie July 1997...

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