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Originally posted by Spanky
It is not in French interest to kill it as an economic entity. This view comes with looking at economics as a zero sum game.
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Careful - that's an awfully Anglo/liberal idea there. I agree with you, but not everyone does, including a number of people setting policy from time to time in various European countries.
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In addition, the Europeans are so intertwined economically, if it started to unravel the people would immediately feel the pain. People don't see the benefits right now, but if the EU unraveld the pain would hit and they would go right back.
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I overstate it. (What, hyperbole? No!) I don't think the EU will unravel entirely. However, I think that the various states will not integrate further politically, and will function more independently of each other than they have in the recent past (and therefore will offer no effective political counterweigh to the US, except to the extent that they occasionally support Russia for nuissance value). I think economically they will continue to integrate somewhat for now as a natural process rather than a matter of policy; but, economics always coming second to politics, that will last only so long as political expediency doesn't dictate otherwise (which I think is coming very soon for some of them). That's a description of what I think the reality will be, though not the policy. (But then when has policy in the EU reflected reality, anyway?)
I am not highly confident that the Euro will survive. I'd give it about a 75% chance over the medium term, but think there is a very high chance that at least one significant country will leave it in the next decade or so.
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I think Britain is going to have to join the Monetary Union eventually.
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I'll bet you a buck that in 2020 the UK will not have joined.
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Its business community will eventually start screaming about the currency risk they go through that their European counterparts don't have to worry about. As someone who has worked in international finance, currency risk is huge factors of multinationals. Since the closer Economic Union is in the business communities interest, all stuff below the radar screen will still move towards a closer union.
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I disagree. You're points about currency risk (and transaction costs, etc., etc.) are very valid, but the British business community isn't so slow in the head that they haven't been evaluating those risks for the past several years, and they aren't screaming for it yet. To say nothing of the business-related down sides of sharing Italian (and Romanian, and now French and German) fiscal policy.
But I think pointing to business pressures to join the Euro misses the point. Ultimately, it is not a business decision, or even really an economic one, but a political one. The UK is unlikely to switch from a currency that is well and (now) independently managed to a currency that has proven itself to be incompetently managed, and even if competently managed would not be managed in British interests (particularly given the extent to which the British economy remains very out of sync with continental economies, which aren't particularly in sync with each other, for that matter).
