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Originally posted by Bad_Rich_Chic
Careful - that's an awfully Anglo/liberal idea there. I agree with you, but not everyone does, including a number of people setting policy from time to time in various European countries.
I overstate it. (What, hyperbole? No!) I don't think the EU will unravel entirely. However, I think that the various states will not integrate further politically, and will function more independently of each other than they have in the recent past (and therefore will offer no effective political counterweigh to the US, except to the extent that they occasionally support Russia for nuissance value). I think economically they will continue to integrate somewhat for now as a natural process rather than a matter of policy; but, economics always coming second to politics, that will last only so long as political expediency doesn't dictate otherwise (which I think is coming very soon for some of them). That's a description of what I think the reality will be, though not the policy. (But then when has policy in the EU reflected reality, anyway?)

I am not highly confident that the Euro will survive. I'd give it about a 75% chance over the medium term, but think there is a very high chance that at least one significant country will leave it in the next decade or so.
I'll bet you a buck that in 2020 the UK will not have joined.
I disagree. You're points about currency risk (and transaction costs, etc., etc.) are very valid, but the British business community isn't so slow in the head that they haven't been evaluating those risks for the past several years, and they aren't screaming for it yet. To say nothing of the business-related down sides of sharing Italian (and Romanian, and now French and German) fiscal policy.

But I think pointing to business pressures to join the Euro misses the point. Ultimately, it is not a business decision, or even really an economic one, but a political one. The UK is unlikely to switch from a currency that is well and (now) independently managed to a currency that has proven itself to be incompetently managed, and even if competently managed would not be managed in British interests (particularly given the extent to which the British economy remains very out of sync with continental economies, which aren't particularly in sync with each other, for that matter).

It is my understanding that the British Business community wanted to join the Euro, but they just did not have the clout. The instability of the currency is really more of a focus of the press. A single currency is better than a weak currency. When making business decisions, the business community hates uncertainty more than anything. When you are making long term investment plans every extra variable is a nightmare. If Lloyds makes a twenty percent return on its money in France, but the Pound devalues twenty five percent against the Euro they lose money. If Lloyds makes a twenty percent loss in its French subsidiary, and the Euro loses twenty five percent against the pound Lloyd ends up making money. That may not sound like a problem, but an unforseen profit is much harder to take advantage off than a forseen profit. At least with a weak currency you can predict what is going to happen and make sound business decisions based on it. That does not even factor in the loss of money over currency exchangtes. In politics persistence is everything. Political issues go in and out of importance, and passions on these issues wax and wain. But the international business community wants as few currencies as possible. They will keep pushing forever until it happens. None of the European population really wanted the Euro but it happened anyway becaue of the consistent business pressure. Actually, Europeans have never really cared much for the EU. It is really the business community that keeps pushing it. Eventually they will win because they will never quit and time is on their side.