Time to join the euro?

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British holidaymakers may have to make do with a few less beers this year as the pound has dropped 15% against the euro since last summer. More countries - such as Malta and Cyprus - have adopted the euro so the list of destinations for a bargain break continues to shrink.

 

On the other side of the pond the US dollar is on a downward trajectory so the USA remains good value (if you can tolerate the intrusive security involved in going there). There has been speculation, however, that the dollar may lose its role as the world's reserve currency (which brings a number of benefits) to the euro in the next 10-15 years. Heavy American indebtedness is a major reason for the dollar's decline. This has partly arisen as a result of what Nobel prize-winning economist Joseph Stiglitz has described in a new book as the 'three trillion [million million] dollar war' in Iraq.

 

Britain's economic profile, unfortunately, has some similarities to that of the USA -with big indebtedness at personal, government and trading levels - though not in quite so pronounced a manner as that of the US. The question is: do we risk becoming the poor man of Europe with a junk currency? And should hard-headedness rule over sentiment for having a picture of Missy Queen on our banknotes?