The euro is becoming the European benchmark. Due to its federal representativeness and the economic weight of the Eurozone countries, it like the dollar, will have a global destiny. If we measure the economic weight of the EU countries, we come to data comparable to the United States: 38.3% of the GDP of industrialized countries against 32.5% of the United States and 20.9% of world trade compared to 19.6% in the USA.
As for the United Kingdom, the situation is difficult, since it represents one of the main European economies, the world’s leading financial center, a currency that has survived the glory days, and a strong tradition of independence. However, what will be the place of England in the presence of the future eurozone is still unclear.
As you know, the British economy has changed a lot in recent years, and to a greater extent, of course, this was due to the exit from the European Union. It has been twenty years since the euro replaced the franc. A real revolution for the European economy. But the UK has always avoided the euro. Even before considering leaving the European Union, the British have always wanted to keep their pound sterling.
How to do business in these realities?
There is nothing terrible about this fact, but it just needs to be taken into account when doing business, since the British economy is very dependent on the European Union and funds continue to flow from and to Europe.
The most convenient and natural way to cope with this situation nowadays is to have a euro bank account in UK. After all, despite the fact that even after the financial crisis of 2008, when the pound fell sharply, 71% of British still did not want the introduction of the euro. Thus, it is more convenient to just have a euro account in order to do business with the European Union was also convenient.
Not everyone in Britain is ready to give up the euro
The British industrialists mostly chose the European camp. Since the United Kingdom joined the common market in 1973, the growing importance of trade with Europe has more than offset the decline in British trade with the Commonwealth, former allies and the kingdom’s obligations.
Industrialists, who are mainly pro-euro, fear that the United Kingdom’s abstention will widen the gap separating them from the eurozone economy. This distance will lead to a discrepancy between the pound and the euro.
The pound may rise sharply, which will make British products uncompetitive. Conversely, if the pound had fallen sharply, the Euroland countries would not have been able to remain without a reaction. 25% of the British GNP was affected. The economic stakes are such that some British industrialists (including American and Japanese industrialists based in England) are taking initiatives to immunize their companies against any sharp fluctuations in the pound.
Some are considering publishing their accounts in euros. More importantly, other companies, such as Ford or GM-Vauxhall, are talking about indexing their employees’ salaries in euros in order to remain competitive compared to companies in the Eurozone.
The main reason for abandoning the euro
One of the most compelling reasons for the British authorities’ refusal to create a Monetary Union was concern for preserving their monetary sovereignty. Let’s not forget that the pound was undoubtedly the world currency throughout the 19th century and until 1914. It then shared the lead with the dollar before losing its dominant position and becoming a medium-impact currency.
However, it is difficult to say what the fate of the pound will be after the euro. People are arguing whether it will be able to develop strictly independently of the two largest economic blocs — America and Europe. Now there are two scenarios: either the pound will deviate from the euro in order to fluctuate in parallel with the dollar. This scenario causes fear among British industrialists.
On the other hand, it can be supported by a city that likes the volatility of the currency. In this case, the British economic cycle will tend to approach the economic cycle of the continent. This convergence scenario will satisfy English and international manufacturers. This will reflect the economic reality, and the effective membership of the United Kingdom in the common market.
Whatever the scenario, English monetary sovereignty will be only relative! The relationship between Britain and the euro remains unclear, but the facts remain that 50% of trade takes place with the European Union both within states and within small businesses, which means you just need to adjust to these realities and open an account in the UK in euros.
