By Marcus Leach
Lord Heseltine recently commented that that the survival and eventual stabilisation of the euro will convince the UK to join the currency club.
In reply, Caxton FX comments that the UK is better off sticking with the pound.
Caxton FX’s analyst, Richard Driver, said that the UK has done well to resist calls to join the euro over the past ten years and with the eurozone debt crisis worsening by the week, the arguments against membership ring truer now more than ever.
“British membership of the euro would be disastrous for UK exporters,” said Richard. “The Government is having a hard enough time as it is in its project to rebalance the UK economy in favour of manufacturing and exports and joining the euro would take away one of the key competitive advantages we have — the devalued pound.
“Having our own central bank is another key advantage of remaining outside of the eurozone. If the Bank of England was unable to maintain the power to pursue quantitative easing to boost the economy, we would probably already be back in recession, as it stands we may just avoid it.”
Mr Driver believes that the Eurobond is the only viable long-term solution to the eurozone debt crisis. However, UK membership of the euro and potential subscription to a common bond would result in Britain losing its access to cheap debt.
“UK growth may not be back on track until 2014, so I would be amazed if there was any genuine consideration of euro membership in the next couple of years and even then, the arguments against would still outweigh as the risks are evidently huge," he added.
“Lord Heseltine’s recent comments come at a very odd time as euro membership for the UK has never looked so unappealing.”
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