gcse economics - international trade - european monetary union

HOW WOULD THE UK’s ECONOMICS CHANGE?

1. A single currency (the Euro) would replace the £. The Euro would be used throughout Europe

2. There would be no exchange rates between Euro countries. This is because the £, Deutschmark, Franc would no longer exist

3. A central interest rate for the whole of Europe. The UK would no longer have its own interest rate

ADVANTAGES OF EMU	DISADVANTAGES OF EMU
No need to change money into foreign currencies. This will save time and money. This is good for businesses and tourists	The UK government will not be able to change interest rates in order to manage our economy
It is easier to compare prices in different countries. This is because all figures are quoted in Euro’s.	Businesses have to change their tills and payment systems
Reduced exchange rate uncertainty. International trade becomes easier because exchange rates can’t effect prices	Businesses have to change their tills and payment systems
More foreign businesses may choose to set up in the UK if we are using the same currency as the rest of europe	The UK government won’t be able to lower the exchange rate in order to become more competitive

The Euro commenced on 010102.

At present the UK has not joined EMU although it may do in the future

The UK trades £ for Euros when trading with its European partners. Therefore changes in the exchange rate between the £ and Euro are very important.

ACTION

a. Do you agree with EMU?
b. Can you remember the 3 key features of EMU?

These GCSE Economics revision notes have been kindly provided by Peter Davies of Mill Hill School, Ripley

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