First, if you want to know the difference between the UK, England, and Great Britian; watch this funny video, which Guy Spier posted:
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The financial world always keeps a check and balance on all the currencies of the world and in recent times when there was a high debate on the crisis, the pound sterling, currency of England became the focal point.
In a Maastricht treaty, held by the EU, UK opted out on adapting to the euro as the local currency and established that they would not for a lifetime.
Since then, majority of the public, in different polls taken at different periods, resisted on joining the EU and adapting to the euro as their new currency.
It was Tony Blair, former prime minister of the England, who declared that if England was to join the EU, five economic tests had to be carried out and passed. Following are those five tests.
1: if the business cycles and the economic structures compatible so that there would be harmony in joining euro and living up to the interest rates on a lifetime basis.
This test argued with the economic situation of England at that time and still does in that it asks for markets to be open to euro and its interest rates those were to be imposed on all sectors including the housing. This did not see as favourable as England wanted or in many cases needed it to be. So there were significant structural differences that did not meet requirements in the test.
2: If problems emerged, would there be enough flexibility to deal with them?
Since the crack of crisis in recent years, England has shown flexibility in terms of convergence to heap down the losses and to regain the economic fitness and since trying to achieve this aim, their economy stands at a GDP of 2.3 trillion (approximately), even after all this this test was established failed due to non-confidence of England In their flexibility, or thought it was insufficient.
3: Would EU joining bring better conditions to established firms and them making decisions of bringing investments?
It was argued that this criterion could only be met if there was compatibility between the economic structures and the business cycles and the test showed that there was a structural deficit and also the second test suggested that there was insufficient confidence to meet flexibility issues if problems were faced.
4: What benefits would the admission bring to the UK’s financial services industry; in particular, the whole sale market?
It was established that the admission to the EU would bring England some fruits and that in terms of its strengthening of the financial hub of England, the great city of London, would benefit from the Eurozone membership.
5: In summary, would the admission bring stability, growth and employment to England?
Yes the admission to the EU would yield such fruits there was no doubt in this phenomenon but the high ranked officials of the economic established believed that this was only possible if the first two criterions were met and since they did not therefore, this test becomes void.
These 5 tests proved to be the focal point of UK’s argument not to join the EU. In hindsight, the decision was a great one. Whether one believes that austerity or more stimulus is needed now, most would agree that England having its own Central bank, is now in a much better situation than the countries that use the Euro.