What are the empirical disadvantages for UK joining the European Union?
Supporters of a single currency argue that by permanently fixing European exchange rates uncertainty would be reduced which would stimulate trade between EU countries, while facilitating investment together with an expansion in output and employment. Whilst it is undoubtedly true that a stable environment encourages international trade and investment, experience of past quarter of a century has demonstrated that a ‘dramatic’ increase in internationalisation can occur without a fixed exchange rate. An exchange rate which is too rigid, over a long period, which collapse because it prevents individual economies adjusting to the divergent impact upon production and employment structure caused by external shocks and changes in the pattern of demand and specific product ranges. If the UK joins the EU and cannot devalue and is experiencing slower productivity growth or an external shocks such as an OPEC oil price rise, it depends upon wage and price flexibility as well as labour mobility to p
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