Economic growth and EMU: a note on UK membership

Abstract

One of the arguments against monetary union is that it can impose growth costs on fast growing countries following the loss of their exchange rate policy. Thus, differential growth rates among potential members can be seen as an obstacle to forming a monetary union. This letter shows that as a member of EMU, the UK will be able to maintain its current growth rate without facing serious balance of payments problems. Thus, the ‘differential growth rates’ argument against EMU cannot be considered an obstacle to UK membership.