Euro-zone

Euro-zone Prior to answering the effects of the entering of UK into the euro zone, we should state that this is not a very easy task (entering the euro zone). It is believed that sterling is overvalued against the euro. The farther the value is from the equilibrium value, the more difficult it would be for the UK to enter euro. However this overvaluation of the English currency seems to have beneficial effects for the UK, because it keeps the inflation in very low levels. A possible entrance in the euro zone would reverse this situation and could raise inflation. This could result in greater fluctuations in interest rates. Also Sterling strength has been more pronounced against the euro. It has been relatively stable against the euro over the last two years. On the other hand this overvaluation of the Sterling had as a result the fall in the profitability of trade, which also resulted in the raise of unemployment over the last two years. Also this overvaluation euro, uk, zone, sterling, value, service, sector, overvaluation, manufacturing, against, years, very, two, trade, surplus, result, raise, over, last, investment, inflation, income, however, entering, effects, economy, deficit, cheaper, been, because, asia, unemployment, uncompetitive, through, task, suggests